EX 10.34
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
August 30, 1996, among Holmes Protection Group, Inc., a Delaware corporation
(the "Company"), American Scandinavian Banking Corporation, a New York
corporation (the "Bank") and Bank of Boston Connecticut, a Connecticut State
Savings Bank ("Bank of Boston"). The execution and delivery of this Agreement by
the parties hereto is partial consideration for the extension of loans from the
Bank and Bank of Boston to the Company pursuant to that certain Credit Agreement
dated as of even date herewith among the Company, Merita Bank Ltd. and Bank of
Boston (the "Credit Agreement") and in connection with Common Stock Purchase
Warrants dated as of even date herewith (the "Warrants") pursuant to which the
Company has agreed, subject to the terms and conditions of the Warrants, to
issue and sell to the Bank and Bank of Boston shares, par value $.01 per share,
of common stock of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereby agree as follows:
1. Definitions. As used in this Agreement the following terms have the
meanings indicated:
"Affiliate" shall mean any Person who is an "affiliate" as defined
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"Approved Underwriter" has the meaning set forth in Section 3(f) of
this Agreement.
"Bank" has the meaning assigned to such term in the recital to this
Agreement.
"Bank of Boston" has the meaning assigned to such term in the
recital to this Agreement.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Company or any other equity securities of the Company into which such
securities are converted, reclassified, reconstituted or exchanged.
"Company" has the meaning assigned to such term in the recital to
this Agreement.
"Company Underwriter" has the meaning set forth in Section 4(a) of
this Agreement.
"Demand Registration" has the meaning set forth in Section 3(a) of
this Agreement.
"Designated Holder" means each of the Bank and Bank of Boston and
any transferee of either of them to whom Registrable Securities have been
transferred in accordance with the provisions of Section 9(f) of this Agreement,
other than a transferee to whom such securities have been transferred pursuant
to a registration statement under the Securities Act or Rule 144 or Regulation S
under the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Holders' Counsel" has the meaning set forth in Section 6(a)(i) of
this Agreement.
"Incidental Registration" has the meaning set forth in Section 4(a)
of this Agreement.
"Indemnified Party" has the meaning set forth in Section 7(c) of
this Agreement.
"Indemnifying Party" has the meaning set forth in Section 7(c) of
this Agreement.
"Initiating Holder" has the meaning set forth in Section 3(a) of
this Agreement.
"Inspector" has the meaning set forth in Section 6(a)(viii) of this
Agreement.
"NASD" has the meaning set forth in Section 6(a)(xiv) of this
Agreement.
"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, limited liability company, government (or an
agency or political subdivision thereof) or other entity of any kind, and shall
include any successor (by merger or otherwise) of such entity.
"Public Offering" means any offer for sale of shares of Common Stock
pursuant to an effective registration statement filed under the Securities Act.
"Records" has the meaning set forth in Section 6(a)(viii) of this
Agreement.
"Registrable Securities" means each of the following: (a) any and
all shares of Common Stock issued or issuable upon exercise of any of the
Warrants and (b) any securities issued or issuable by the Company with respect
to shares of Common Stock referred to in the foregoing clause (a) by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise and
shares of Common Stock issuable upon conversion, exercise or exchange thereof.
"Registration Expenses" has the meaning set forth in Section 6(d) of
this Agreement.
"Registration Statement" means a registration statement filed
pursuant to the Securities Act.
"SEC" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Warrants" has the meaning assigned to such term in the recital to
this Agreement.
2. General: Securities Subject to this Agreement.
(a) Grant of Rights. The Company hereby grants registration rights
to the Bank and Bank of Boston upon the terms and conditions set forth in this
Agreement.
2
(b) Registrable Securities. For the purposes of this Agreement,
Registrable Securities will cease to be Registrable Securities when (i) a
registration statement covering such Registrable Securities has been declared
effective under the Securities Act by the SEC and such Registrable Securities
have been disposed of pursuant to such effective registration statement, (ii)
the entire amount of Registrable Securities proposed to be sold in a single
sale, in the opinion of counsel satisfactory to the Company and the Designated
Holder, each in their reasonable judgment, may be distributed to the public
without any limitation as to volume pursuant to Rule 144 (or any successor
provision then in effect) under the Securities Act or (iii) the Registrable
Securities are proposed to be sold or distributed by a Person not entitled to
the registration rights granted by this Agreement.
(c) Holders of Registrable Securities. A Person is deemed to be a
holder of Registrable Securities whenever such Person owns of record Registrable
Securities, or holds an option to purchase, or a security convertible into or
exercisable or exchangeable for, Registrable Securities whether or not such
acquisition or conversion has actually been effected and disregarding any legal
restrictions upon the exercise of such rights. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company may act upon the basis
of the instructions, notice or election received from the registered owner of
such Registrable Securities. Registrable Securities issuable upon exercise of an
option or upon conversion of another security shall be deemed outstanding for
the purposes of this Agreement.
3. Demand Registration.
(a) Request for Demand Registration. Commencing on the date hereof,
each of the Bank or Bank of Boston (the "Initiating Holder") may make one
written request to the Company to register, under the Securities Act (other than
pursuant to a registration statement on Form S-4 or S-8 or any successor
thereto) and under the securities or "blue sky" laws of any jurisdiction
designated by such holder or holders (a "Demand Registration"), the number of
Registrable Securities stated in such request; provided, however, that neither
the Bank nor the Bank of Boston shall exercise the right to a Demand
Registration until the earlier of (i) June 30, 1997; or (ii) 180 days after the
effective date of the registration statement on Form S-1 currently contemplated
by the Company and disclosed to the Bank and Bank of Boston by the Company (the
"Holdback Date"). If at the time of any request to register Registrable
Securities pursuant to this Section 3(a), the Company is engaged in, or has
fixed plans to engage in within forty-five (45) days of the time of such
request, a registered public offering or is engaged in any other activity which,
in the good faith determination of the Board of Directors of the Company, would
be materially adversely affected by the requested registration to the material
detriment of the Company, then the Company may at its option direct that such
request be delayed for a reasonable period not in excess of ninety (90) days
from the effective date of such offering or the date of completion of such other
material activity, as the case may be, such right to delay a request to be
exercised by the Company not more than once in any one-year period. In addition,
the Company shall not be required to effect any registration within sixty (60)
days after the effective date of any other Registration Statement of the
Company. A request for a Demand Registration shall state the amount of the
Registrable Securities proposed to be sold and the intended method of
disposition thereof. Upon a request for a Demand Registration, the Company shall
promptly take such steps as are necessary or appropriate to prepare for the
registration of the Registrable Securities to be registered.
(b) Incidental or "Piggy-Back" Rights with Respect to a Demand
Registration. Any Designated Holder (other than the Initiating Holder) may offer
its Registrable Securities under any Demand Registration pursuant to this
Section 3; provided, however, that neither the Bank nor Bank of Boston shall
3
have any right to registration under this Section 3(b) unless the Incidental
Registration rights granted to the Bank and Bank of Boston under Section 4 below
have become effective as provided in Section 4(c), or the Bank or Bank of Boston
participates in such registration pursuant to the rights granted to the Bank or
Bank of Boston under Section 4(g) below. If such incidental registration rights
are available under this Section 3(b), the Company shall, within ten (10) days
after the receipt of a request for a Demand Registration, (i) give written
notice thereof to all of the Designated Holders and (ii) subject to Section
3(e), include in such registration all of the Registrable Securities held by
such Designated Holders from whom the Company has received a written request for
inclusion therein within ten (10) days of the receipt by such Designated Holders
of such written notice referred to clause (i) above. Each such request by such
Designated Holders shall specify the number of Registrable Securities proposed
to be registered and the intended method of disposition thereof.
(c) Effective Demand Registration. A registration shall not
constitute a Demand Registration until it has become effective and remains
continuously effective for the lesser of (i) the period during which all
Registrable Securities registered in the Demand Registration are sold and (ii)
120 days; provided, however, that a registration shall not constitute a Demand
Registration if (x) after such Demand Registration has become effective, such
registration or the related offer, sale or distribution of Registrable
Securities thereunder is interfered with by any stop order, injunction or other
order or requirement of the SEC or other governmental agency or court for any
reason not attributable to the Bank or Bank of Boston and such interference is
not thereafter eliminated or (y) the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such Demand
Registration are not satisfied or waived other than by reason of a failure by
the Initiating Holder or (z) the Company sells for its account at least one half
of the shares included in the registration.
(d) Expenses. In any registration initiated as a Demand
Registration, the Company shall pay all Registration Expenses (other than
underwriting discounts and commissions) in connection therewith, whether or not
such Demand Registration becomes effective.
(e) Underwriting Procedures. If the Initiating Holder so elects, the
offering of Registrable Securities pursuant to a Demand Registration shall be in
the form of a firm commitment underwritten offering and the managing underwriter
or underwriters selected for such offering shall be the Approved Underwriter (as
hereinafter defined) selected in accordance with Section 3(f). In connection
with any Demand Registration under this Section 3 involving an underwriting,
none of the Registrable Securities held by any Designated Holder making a
request for inclusion of such Registrable Securities pursuant to Section 3(b)
hereof shall be included in such underwriting unless such Designated Holder
accepts the terms of the underwriting as agreed upon by the Company, the
Initiating Holder and the Approved Underwriter, and then only in such quantity
as will not, in the opinion of the Approved Underwriter, jeopardize the success
of such offering by the Initiating Holder. If the Approved Underwriter advises
the Company in writing that in its opinion the aggregate amount of such
Registrable Securities requested to be included in such offering is sufficiently
large to have a material adverse effect on the success of such offering, then
the Company shall include in such registration only the aggregate amount of
Registrable Securities that in the opinion of the Approved Underwriter may be
sold without any such material adverse effect and shall reduce, first as to the
Designated Holders ( who requested to participate in such registration pursuant
to Section 3(b) hereof) as a group, if any; and second as to the Initiating
Holder, pro rata based on the number of Registrable Securities included in the
request for Demand Registration, the amount of Registrable Securities to be
included in such registration.
4
(f) Selection of Underwriters. If any Demand Registration of
Registrable Securities is in the form of an underwritten offering, the
Initiating Holder shall be authorized to select and obtain an investment banking
firm of national reputation to act as the managing underwriter of the offering
(the "Approved Underwriter"); provided, however, that the Approved Underwriter
shall be acceptable to the Company in its reasonable judgment.
(g) Temporary Additional Demand Registration Rights. Until such time
as the rights to Incidental Registration under Section 4 become effective, each
of the Bank and Bank of Boston shall be granted three (3) additional Demand
Registrations, exercisable in the manner set forth in Section 3(a) above. The
Bank and Bank of Boston shall be co-participants with respect to three of the
four of such Demand Registrations. If either the Bank or Bank of Boston chooses
not to participate in a Demand Registration initiated by the other party, the
non-initiating party shall be deemed to have waived one of the additional Demand
Registrations available to such party under this Section 3(g). In no event shall
either the Bank or Bank of Boston be deemed to have waived more than two (2)
Demand Registrations under this Section 3(g). The registration rights under this
Section 3(g) shall terminate upon effectiveness of the Incidental Registration
rights under Section 4.
4. Incidental or "Piggy-Back" Registration.
(a) Request for Incidental Registration. Subject to Section 4(c)
below, at any time after the Holdback Date the Company proposes to file a
Registration Statement under the Securities Act with respect to an offering by
the Company for its own account or for another selling shareholder (other than a
registration statement on Form S-4 or S-8 or any successor thereto), then the
Company shall give written notice of such proposed filing to each of the
Designated Holders of Registrable Securities at least thirty (30) days before
the anticipated filing date, and such notice shall describe the proposed
registration and distribution and offer such Designated Holders the opportunity
to register the number of Registrable Securities as each such holder may request
(an "Incidental Registration"). The Company shall use its best efforts (within
ten (10) days of the notice provided for in the preceding sentence) to cause the
managing underwriter or underwriters of a proposed underwritten offering (the
"Company Underwriter") to permit each of the Designated Holders who have
requested in writing to participate in the Incidental Registration to include
its Registrable Securities in such offering on the same terms and conditions as
the securities of the Company included therein. In connection with any
Incidental Registration under this Section 4(a) involving an underwriting, the
Company shall not be required to include any Registrable Securities in such
underwriting unless the holders thereof accept the terms of the underwriting as
agreed upon between the Company and the Company Underwriter, and then only in
such quantity as will not, in the opinion of the Company Underwriter, jeopardize
the success of the offering by the Company. If in the written opinion of the
Company Underwriter the registration of all or part of the Registrable
Securities which the Designated Holders have requested to be included would
materially adversely affect such offering, then the Company shall be required to
include in such Incidental Registration, to the extent of the amount that the
Company Underwriter believes may be sold without causing such adverse effect,
first, all of the securities to be offered for the account of the Company;
second, the Registrable Securities to be offered for the account of the
Designated Holders pursuant to this Section 4, pro rata based on the amount
recommended by the Company Underwriter (and as between the Designated Holders
pro rata based on the amounts requested to be included in the registration); and
third, any other securities requested to be included in such underwriting.
(b) Expenses. The Company shall bear all Registration Expenses
(other than underwriting discounts and commissions) in connection with any
Incidental Registration pursuant to this Section 4, whether or not such
Incidental Registration becomes effective; provided, however, that each
Designated Holder participating in such registration shall bear the costs of its
own legal counsel.
5
(c) Effectiveness of Incidental Registration Rights. The incidental
registration rights granted in Section 4(a) above shall not be effective until
such time as the Company has obtained consent to the grant of such Incidental
Registration rights from other shareholders (other than the Designated Holders)
who have been granted registration rights by the Company with respect to the
Company's securities. The Company shall use its reasonable best efforts to
obtain such consent as soon as is reasonably practicable after the execution of
this Agreement.
5. Restrictions on Public Sale by the Company. The Company agrees not
to effect any public sale or distribution of any of its securities, or any
securities convertible into or exchangeable or exercisable for such securities
(except pursuant to registrations on Form S-4 or S-8 or any successor thereto),
during the period beginning on the effective date of any Demand Registration and
ending on the earlier of (i) the date on which all Registrable Securities
registered on such registration statement are sold and (ii) 120 days after the
effective date of such registration statement pursuant to a Demand Registration.
6. Registration Procedures.
(a) Obligations of the Company. Whenever registration of Registrable
Securities has been requested pursuant to Section 3 or Section 4 of this
Agreement, the Company shall use its best efforts to effect the registration and
sale of such Registrable Securities in accordance with the intended method of
distribution thereof as quickly as practicable, and in connection with any such
request, the Company shall, as expeditiously as possible:
(i) use its best efforts to prepare and file with the SEC a
registration statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of such Registrable Securities in accordance with the intended
method of distribution thereof, and use its best efforts to cause such
registration statement to become effective; provided, however, that (x) before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company shall provide counsel selected by the Designated Holders
holding a majority of the Registrable Securities being registered in such
registration ("Holders' Counsel") and any other Inspector (as hereinafter
defined) with an adequate and appropriate opportunity to participate in the
preparation of such registration statement and each prospectus included therein
(and each amendment or supplement thereto) to be filed with the SEC, which
documents shall be subject to the review of Holders' Counsel, and (y) the
Company shall notify the Holders' Counsel and each seller of Registrable
Securities of any stop order issued or threatened by the SEC and take all
reasonable action required to prevent the entry of such stop order or to remove
it if entered;
(ii) prepare and file with the SEC such amendments and
supplement to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the lesser of (x) twelve (12) months and (y) such shorter period which will
terminate when all Registrable Securities covered by such registration statement
have been sold, 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;
(iii) as soon as reasonably possible, furnish to each seller of
Registrable Securities, prior to filing a registration statement, copies of such
registration statement as is proposed to be filed, and thereafter such number of
copies of such registration statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus) and such other
documents as each such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
6
(iv) 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 of Registrable Securities may request, and to
continue such qualification in effect in such jurisdiction for as long as
permissible pursuant to the laws of such jurisdiction, or for as long as any
such seller requests or until all of such Registrable Securities are sold,
whichever is shortest, and do any and all other acts and things which may be
reasonably necessary or advisable to enable any such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller; provided, however, that the Company shall not be required to (w) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 6(a)(iv), (x) subject itself to
taxation in any such jurisdiction, (y) consent to general service of process in
any such jurisdiction, or (z) if the registration statement covers less than 50%
of the Registrable Securities, qualify such Registrable Securities in more than
ten jurisdictions under the securities or "blue sky" laws of those
jurisdictions.
(v) use its best efforts to cause the Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the seller or sellers of
Registrable Securities to consummate the disposition of such Registrable
Securities;
(vi) notify each seller of Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon 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 to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made, and the
Company shall promptly prepare a supplement or amendment to such prospectus and
furnish to each seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, after delivery to the
purchasers of such Registrable Securities, such prospectus shall 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 not misleading
in light of the circumstances under which they were made;
(vii) enter into and perform customary agreements (including an
underwriting agreement in customary form with the Approved Underwriter or
Company Underwriter, if any, selected as provided in Section 3 or Section 4, as
the case may be) and take such other actions as are prudent and reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities;
(viii) make available for inspection by any seller of
Registrable Securities, any managing underwriter participating in any
disposition pursuant to such registration statement, Holders' Counsel and any
attorney, accountant or other agent retained by any such seller or any managing
underwriter (each, an "Inspector" and collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's and its subsidiaries' officers,
directors and employees, and the independent public accountants of the Company,
to supply all information reasonably requested by any such Inspector in
connection with such registration statement. Records that the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (x)
the disclosure of such Records is necessary to avoid or correct a misstatement
7
or omission in the registration statement, (y) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction or (z) the information in such Records was known to the Inspectors
on a non-confidential basis prior to its disclosure by the Company or has been
made generally available to the public. Each seller of Registrable Securities
agrees that it shall, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(ix) if such sale is pursuant to an underwritten offering, use
its best efforts to 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 Holders' Counsel or
the managing underwriter reasonably request;
(x) use its best efforts to furnish, at the request of any
seller of Registrable Securities on the date such securities are delivered to
the underwriters for sale pursuant to such registration or, if such securities
are not being sold through underwriters, on the date the registration statement
with respect to such securities becomes effective, an opinion, dated such date,
of counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the seller making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as such seller may reasonably request and are
customarily included in such opinions;
(xi) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable but no later than fifteen (15) months
after the effective date of the registration statement, an earnings statement
covering a period of twelve (12) months beginning after the effective date of
the registration statement, in a manner which satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(xii) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed, provided that the applicable listing requirements are satisfied;
(xiii) keep Holders' Counsel advised in writing as to the
initiation and progress of any registration under Section 3 or Section 4
hereunder;
(xiv) cooperate with each seller of Registrable Securities and
each underwriter participating in the disposition of such Registrable Securities
and their respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc. (the "NASD"); and
(xv) use best efforts to take all other steps necessary to
effect the registration of the Registrable Securities contemplated hereby.
(b) Seller Information. The Company may require each seller of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding the distribution of such securities as
the Company may from time to time reasonably request in writing.
8
(c) Notice to Discontinue. Each Designated Holder of Registrable
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 6(a)(vi), such
Designated Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Designated Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6(a)(vi) and, if so
directed by the Company, such Designated Holder shall deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
Designated Holder's possession, of the prospectus covering such Registrable
Securities which is current at the time of receipt of such notice. If the
Company shall give any such notice, the Company shall extend the period during
which such registration statement shall be maintained effective pursuant to this
Agreement (including, without limitation, the period referred to in Section
6(a)(ii)) by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 6(a)(vi) to and including the date
when the Designated Holder shall have received the copies of the supplemented or
amended prospectus contemplated by and meeting the requirements of Section
6(a)(vi).
(d) Registration Expenses. The Company shall pay all expenses (other
than as set forth in Sections 3(d) and 4(b)) arising from or incident to the
performance of, or compliance with, this Agreement, including, without
limitation, (i) SEC, stock exchange and NASD registration and filing fees, (ii)
all fees and expenses incurred in complying with securities or "blue sky" laws
(including reasonable fees, charges and disbursements of counsel in connection
with "blue sky" qualifications of the Registrable Securities), (iii) all
printing, messenger and delivery expenses, (iv) the fees, charges and
disbursements of counsel to the Company and of its independent public
accountants and any other accounting fees, charges and expenses incurred by the
Company (including, without limitation, any expenses arising from any special
audits incident to or required by any registration or qualification) and any
legal fees, charges and expenses incurred by the Company and, in the case of a
Demand Registration, the Initiating Holder (provided, however, that the Company
shall not be liable for payment of legal fees incurred by the Initiating Holder
in excess of $25,000) and (v) any liability insurance or other premiums for
insurance obtained by the Designated Holders in connection with any Demand
Registration or Incidental Registration pursuant to the terms of this Agreement,
regardless of whether such registration statement is declared effective. All of
the expenses-described in this Section 6(d) are referred to herein as
"Registration Expenses."
7. Indemnification: Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the fullest extent permitted by law, each Designated
Holder, its officers, directors, trustees, partners, employees, advisors and
agents and each Person who controls (within the meaning of the Securities Act or
the Exchange Act) such Designated Holder from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue, or allegedly untrue,
statement of a material fact contained in any registration statement, prospectus
or preliminary prospectus or notification or offering circular (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as the same are caused by
or contained in any information concerning such Designated Holder furnished in
writing to the Company by such Designated Holder expressly for use therein. The
Company shall also provide customary indemnities to any underwriters of the
Registrable Securities, their officers, directors and employees and each Person
who controls such underwriters (within the meaning of the Securities Act and the
Exchange Act) to the same extent as provided above with respect to the
indemnification of the Designated Holders of Registrable Securities.
9
(b) Indemnification by Designated Holders. In connection with any
registration statement in which a Designated Holder is participating pursuant to
Section 3 or Section 4 hereof, each such Designated Holder shall furnish to the
Company in writing such information with respect to such Designated Holder as
the Company may reasonably request or as may be required by law for use in
connection with any such registration statement or prospectus and each
Designated Holder agrees to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, any underwriter retained by the Company and their
respective directors, officers, employees and each Person who controls the
Company or such (within the meaning of the Securities Act and the Exchange Act)
to the same extent as the foregoing indemnity from the Company to the Designated
Holders, but only with respect to (i) any such information with respect to such
Designated Holder furnished in writing to the Company by such Designated Holder
expressly for use therein or (ii) a breach of any covenant herein made by the
Designated Holder; provided, however, that the total amount to be indemnified by
such Designated Holder pursuant to this Section 7(b) shall be limited to the net
proceeds received by such Designated Holder in the offering to which the
registration statement or prospectus relates.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder (the "Indemnified Party") agrees to give prompt
written notice to the indemnifying party (the "Indemnifying Party") after the
receipt by the Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or contribution
pursuant to this Agreement; provided, however, that the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability
that it may have to the Indemnified Party hereunder. If notice of commencement
of any such action is given to the Indemnifying Party as above provided, the
Indemnifying Party shall be entitled to participate in and, to the extent it may
wish, jointly with any other Indemnifying Party similarly notified, to assume
the defense of such action at its own expense, with counsel chosen by it and
satisfactory to such Indemnified Party. The Indemnified Party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the Indemnified Party unless
(i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party
fails to assume the defense of such action with counsel satisfactory to the
Indemnified Party in its reasonable judgment or (iii) the named parties to any
such action (including any impleaded parties) have been advised by such counsel
that either (x) representation of such Indemnified Party and the Indemnifying
Party by the same counsel would be inappropriate under applicable standards of
professional conduct or (y) there may be one or more legal defenses available to
it which are different from or additional to those available to the Indemnifying
Party. In either of such cases, the Indemnifying Party shall not have the right
to assume the defense of such action on behalf of such Indemnified Party. No
Indemnifying Party shall be liable for any settlement entered into without its
written consent, which consent shall not be unreasonably withheld.
(d) Contribution. If the indemnification provided for in this
Section 7 from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the 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, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Party in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative faults 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 to
state a material fact, has been 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. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Sections 7(a), 7(b) and 7(c), any legal
or other fees, charges or expenses reasonably incurred by such party in
connection with any investigation or proceeding, provided that the total amount
to be indemnified by such Designated Holder shall be limited to the net proceeds
received by such Designated Holder in the offering.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person.
10
8. Rule 144. The Company covenants that it shall file (a) any reports
required to be filed by it under the Exchange Act and (b) take such further
action as each Designated Holder of Registrable Securities may reasonably
request (including providing any information necessary to comply with Rules 144
and 144A under the Securities Act), all to the extent required from time to time
to enable such Designated Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rules or regulations hereafter adopted by
the SEC. The Company shall, upon the request of any Designated Holder of
Registrable Securities, deliver to such Designated Holder a written statement as
to whether it has complied with such requirements.
9. Miscellaneous.
(a) Recapitalizations, Exchanges, etc. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to (i)
the shares of Common Stock and (ii) any and all equity securities of the Company
or any successor or assign of the Company (whether by merger, consolidation,
sale of assets or otherwise) which may be issued in respect of, in conversion
of, in exchange for or in substitution of, the shares of Common Stock and shall
be appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, recapitalizations and the like occurring after the date hereof.
The Company shall cause any successor or assign (whether by merger,
consolidation or otherwise) to enter into a new registration rights agreement
with the Designated Holders on terms substantially similar to this Agreement as
a condition of any such transaction.
(b) No Inconsistent Agreements. Except as set forth in Schedule
5.7(b) of the Credit Agreement, the Company has not and shall not enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Designated Holders in this Agreement or grant any additional
registration rights to any Person or with respect to any securities which are
not Registrable Securities which are prior in right to or inconsistent with the
rights granted in this Agreement. The Bank and Bank of Boston acknowledge that
the Company is at the date hereof a party to registration rights agreements with
other shareholders of the Company.
(c) Remedies. The Designated Holders, in addition to being entitled
to exercise all rights granted by law, including recovery of damages, shall be
entitled to specific performance of their rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive in any action for specific performance the defense
that a remedy at law would be adequate.
(d) 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 consented to in writing by the parties hereto.
(e) Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be made by
registered or certified first-class mail, return receipt requested, telecopier,
courier service, overnight mail or personal delivery:
11
(i) if to the Company:
Holmes Protection Group, Inc.
440 9th Avenue
New York, New York 10001-1695
Attn: Lawrence Irving
Telephone: (212) 760-0630
Telecopy: (212) 563-0129
with a copy (which shall not constitute notice) to:
Buchanan Ingersoll
College Centre
500 College Road
Princeton, New Jersey 08540
Attn: Dennis M. Stern, Esq.
Telephone: (609) 987-6800
Telecopy: (609) 520-0360
(ii) if to the Bank:
American Scandinavian Banking Corporation
c/o Merita Bank Ltd.
437 Madison Avenue
21st Floor
New York, New York 10022
Attention: Charles J. Lansdown
Telephone: (212) 318-9562
Telecopy: (212) 421-4420
with copies (which shall not constitute notice) to:
Merita Bank Ltd.
437 Madison Avenue
21st Floor
New York, New York 10022
Attn: Rossella Perna
Telephone: (212) 318-9345
Telecopy: (212) 421-4420
and
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attn: Claudette M. Christian, Esq.
Telephone: (202) 637-5650
Telecopy: (202) 637-5910
(iii) If to Bank of Boston:
Bank of Boston Connecticut
c/o BancBoston Capital, Inc.
100 Federal Street
Boston, Massachusetts 02110
Mail Stop 01-31-08
Attn: Mary J. Reilly
Telephone: (617) 434-7890
Telecopy: (617) 434-1153
(iv) if to any other Designated Holder, at its address as
it appears on the record books of the Company.
12
All such notices and communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; when delivered by courier
or overnight mail, if delivered by commercial courier service or overnight mail;
five (5) Business Days after being deposited in the mail, postage prepaid, if
mailed; and when receipt is mechanically acknowledged, if telecopied.
(f) Successors and Assigns: Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto. The Demand Registration rights of the
Bank and Bank of Boston contained in Section 3 hereof and the other rights of
the Bank and Bank of Boston with respect thereto shall be, with respect to any
Registrable Security, (i) automatically transferable to any Affiliate of the
Bank or Bank of Boston, respectively, and (ii) in all other cases, transferred
only with the consent of the Company. The incidental or "piggy-back"
registration rights of the Designated Holders contained in Sections 3(b) and 4
hereof and the other rights of each of the Designated Holders with respect
thereto shall be, with respect to any Registrable Security, automatically
transferred by such Designated Holder to any Person who is the transferee of
such Registrable Security. All of the obligations of the Company hereunder shall
survive any such transfer. No Person other than the parties hereto and their
successors and permitted assigns is intended to be a beneficiary of any of the
rights granted hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
(j) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, it being intended
that all of the rights and privileges of the Designated Holders shall be
enforceable to the fullest extent permitted by law.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein, in
the Credit Agreement and in the Warrants. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(l) Further Assurances. Each of the parties shall execute such
documents and perform such further acts as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.
13
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Agreement on the date first written above.
HOLMES PROTECTION GROUP, INC.
By: /s/ Lawrence R. Irving
----------------------
Name: Lawrence R. Irving
Title: Vice President - Finance
AMERICAN SCANDINAVIAN BANKING
CORPORATION
By: /s/ Gerard S. Murphy
--------------------
Name: Gerard S. Murphy
Title: Senior Vice President
By: /s/ Leonard O'Dea
-----------------
Name: Leonard O'Dea
Title: Vice President
BANK OF BOSTON CONNECTICUT
By: /s/ Roger J. Roche, Jr.
-----------------------
Name: Roger J. Roche, Jr.
Title: Director
14