Exhibit 10.14
AFFILIATE REGISTRATION AGREEMENT
This Registration Agreement (the "Agreement") is executed on and entered
into as of October 21, 1994, among AV Alarm, Inc., a Texas corporation (the
"Company"), and James R. Hull (the "Shareholder").
Recitals:
The Company has entered into a Stock Purchase Agreement (the "Purchase
Agreement") on this date, providing, among other things, for the purchase by
certain investors of shares of the Company's Series A Convertible Preferred
Stock, $0.01 par value (the "Preferred Stock"). Terms defined in the Purchase
Agreement and not otherwise defined herein are used herein with the same
meanings as defined in the Purchase Agreement.
The Shareholder is an affiliate of the Company and owns shares of Common
Stock, $0.01 par value, of the Company (collectively, the "Affiliate Common
Stock"). The execution and delivery of this Agreement has been agreed to by the
parties to the Purchase Agreement.
The parties agree as follows:
1. Piggyback Registrations.
(a) Right to Piggyback. If the Company proposes to register any of its
securities under the Securities Act (other than pursuant to registration solely
in connection with an employee benefit or stock ownership plan) and the
registration form to be used may be used for the registration of Affiliate
Common Stock (a "Piggyback Registration"), the Company will give prompt written
notice to all holders of Affiliate Common Stock of its intention to effect such
a registration (each a "Piggyback Notice"). Subject to subparagraph 1(c) below,
the Company will include in such registration all shares of Affiliate Common
Stock which holders of Affiliate Common Stock request the Company to include in
such registration by written notice given to the Company within 15 days after
the date of sending the Piggyback Notice.
(b) Piggyback Expenses. The Registration Expenses of the holders of
Affiliate Common Stock will be paid by the Company in all Piggyback
Registrations.
(c) Priority on Primary Registrations. If a Piggyback Registration
relates to an underwritten public offering of equity securities by 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 an orderly manner in such offering
within a price range acceptable to the Company, the Company will include in such
registration (i) first, the securities proposed to be sold by the Company, (ii)
second, the Underlying Common Stock requested to be included in such
registration, pro rata among the holders of such Underlying Common Stock on the
basis of the number of shares owned by each such holder, (iii) third, securities
other than Underlying Common Stock requested to be included in such registration
by holders of Underlying Common Stock and non-Purchaser Affiliates and (iv)
fourth, other securities requested to be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback Registration
relates to an underwritten public offering of equity securities by 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 an orderly manner
in such offering within a price range acceptable to the holders initially
requesting such registration, the Company will include in such registration (i)
first, the securities requested to be included therein by the holders requesting
such registration, (ii) second, the Underlying Common Stock requested to be
included in such registration, pro rata among the holders of such Underlying
Common Stock on the basis of the number of shares owned by each such holder,
(iii) third, the securities other than Underlying Common Stock requested to be
included in such registration by holders of Underlying Common Stock and
non-Purchaser Affiliates and (iv) fourth, other securities requested to be
included in such registration.
2. Registration Procedures. Whenever the holders of Affiliate Common Stock
have requested that any Affiliate Common Stock be registered pursuant to this
Agreement, the Company will use its best efforts consistent with legal
requirements and, in the case of an offering by the Company, prevailing market
conditions, to effect the registration and the sale of such Affiliate Common
Stock in accordance with the intended method of distribution thereof and will as
expeditiously as possible:
(i) prepare and file with the Securities and Exchange Commission
a registration statement with respect to such Affiliate Common Stock and
use its best efforts to cause such registration statement to become
effective, provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company will
furnish to the selling shareholders' counsel selected by the holders of a
majority of the Affiliate Common Stock 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;
(ii) 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 up to six months, 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 distribution by the
sellers thereof set forth in such registration statement;
(iii) furnish to each seller of Affiliate Common Stock 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
Affiliate Common Stock owned by such seller;
(iv) use its best efforts to register or qualify such Affiliate
Common Stock 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
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jurisdictions of the Affiliate Common Stock owned by such seller, provided
that the Company will not be required (i) to qualify generally to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) to subject itself to taxation in
any such jurisdiction or (iii) to consent to general service of process in
any such jurisdiction;
(v) notify each seller of such Affiliate Common Stock, 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 Affiliate Common
Stock, 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;
(vi) cause all such Affiliate Common Stock to be listed on each
securities exchange on which similar securities issued by the Company are
then listed and to be qualified for trading on each system on which similar
securities issued by the Company are from time to time qualified;
(vii) provide a transfer agent and registrar for all such
Affiliate Common Stock not later than the effective date of such
registration statement and thereafter maintain such a transfer agent and
registrar;
(viii) 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 shares of Affiliate Common Stock being
sold or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Affiliate Common Stock;
(ix) make available for inspection by any underwriter
participating in any disposition pursuant to such registration statement
and any attorney, accountant or other agent retained by any such
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 underwriter, attorney, accountant or agent in
connection with such registration statement;
(x) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning
with the first day of the Company's first full calendar quarter after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
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(xi) permit any holder of Affiliate Common Stock which might be
deemed, in the sole and exclusive judgment of such holder, to be an
underwriter or a controlling person of the Company, to participate in the
preparation of such registration or comparable statement and to require the
insertion therein of material, furnished to the Company in writing, which
in the reasonable judgment of such holder and its counsel should be
included; and
(xii) 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 Affiliate Common Stock included in such registration
statement for sale in any jurisdiction, the Company will use its reasonable
best efforts promptly to obtain the withdrawal of such order.
If any such registration or comparable statement refers to any holder by name or
otherwise as the holder of any securities of the Company and if, in its sole and
exclusive judgment, such holder is or might be deemed to be a controlling person
of the Company, such holder shall have the right to require (i) the inclusion in
such registration statement of language, in form and substance reasonably
satisfactory to such holder, to the effect that the holding of such securities
by such holder is not to be construed as a recommendation by such holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such holder will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such holder by name or otherwise is not required by the Securities Act or any
similar federal statute then in force, the deletion of the reference to such
holder, provided, that with respect to this clause (ii) such holder shall
furnish to the Company an opinion of counsel to such effect, which opinion and
counsel shall be reasonably satisfactory to the Company.
3. Registration Expenses.
(a) Definition. The term "Registration Expenses" means 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, fees and expenses of attorneys, accountants and other
experts, and fees and expenses of underwriters and their attorneys and experts,
other than underwriters' discounts and commissions on shares of Affiliate Common
Stock and the fees and expenses of attorneys for holders of Affiliate Common
Stock.
(b) Payment. The Company shall pay the Registration Expenses in
connection with all Piggyback Registrations.
4. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify,
to the extent permitted by law, each holder of Affiliate Common Stock, its
officers and directors and each person who controls such holder (within the
meaning of the securities act) against all losses, claims, damages, liabilities
and expenses caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
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of 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 furnished in writing to the Company by such holder
expressly for use therein or by such holder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Company has furnished such holder with a sufficient number of copies
of the same. In connection with an underwritten offering, the Company will
indemnify such underwriters, their officers and directors and each person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the holders
of Affiliate Common Stock.
(b) Indemnification by Holders. In connection with any registration
statement in which a holder of Affiliate Common Stock is participating, each
such holder will furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection with any
such registration statement or prospectus and, to the extent permitted by law,
will indemnify the Company, its directors and officers and each person who
controls the Company (within the meaning of the securities act) against any
losses, claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
contained or should have been contained in any information or affidavit so
furnished in writing by such holder; provided, that the obligation to indemnify
will be individual to each holder and will be limited to the net amount of
proceeds received by such holder from the sale of Affiliate Common Stock
pursuant to such registration statement.
(c) Notice; Defense of Claims. Any person entitled to indemnification
hereunder will (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such~
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) Survival; Contribution. The indemnification provided for under
this agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling person of such indemnified party and will survive the
transfer of securities. Subject to the limitations and conditions of this
paragraph 4, the Company also agrees to make such provisions as are reasonably
requested by any indemnified party for contribution to such party in the event
the Company's indemnification provided herein is unavailable for any reason.
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5. Participation in Underwritten Registrations. No Person may participate
in any registration hereunder which is underwritten unless such Person (i)
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 (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements;
provided, that no holder of Underlying Common Stock or Affiliate Common Stock
included in any underwritten registration shall be required to make any
representations or warranties to the Company or the underwriters other than
representations and warranties regarding such holder and such holder's intended
method of distribution and a Statement to the effect that nothing has come to
the attention of such holder that would lead such holder to believe that the
registration statement or the prospectus included therein contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company 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 Affiliate Common Stock in this
agreement.
(b) Adjustments Affecting Affiliate Common Stock. The Company will not
take any action, or permit any change to occur, with respect to its securities
for the purpose of materially and adversely affecting the ability of the holders
of Affiliate Common Stock to include such Affiliate Common Stock in a
registration undertaken pursuant to this Agreement or materially and adversely
affecting the marketability of such Affiliate Common Stock in any such
registration (including, without limitation, effecting a stock split or a
combination of shares), provided that this subparagraph (b) shall not apply to
actions or changes with respect to the Company's business, earnings or revenues
where the effect of such actions or changes on the Affiliate Common Stock is
merely incidental.
(c) Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally or by
telex, facsimile transmission, telegram or overnight delivery service, or 72
hours after having been mailed by certified or registered mail, return receipt
requested and postage prepaid, to the recipient. Such notices, demands and other
communications will be sent to each party at the address indicated below:
If to the Company: AV Alarm, Inc.
12801 Stemmons Freeway
Suite 821
Dallas, Texas 75234
Facsimile: (214) 484-1393
Attn: James R. Hull
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with a copy to: Glast, Phillips & Murray
2200 One Galleria Tower
13355 Noel Road LB48
Dallas, TX 75240
Facsimile: (214) 419-8329
Attn: Michael Parsons
and to the Shareholder, to the address set forth opposite his name on the
signature page of this Agreement, or to such other address or to the attention
of such other Person as the recipient party has specified by prior written
notice to the sending party.
(d) 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.
(e) Amendments and Waivers. Except as otherwise provided herein, no
amendment, modification, termination or cancellation of this Agreement shall be
effective unless made in writing signed by the Company and the holders of a
majority of the then outstanding shares of Affiliate Common Stock.
(f) Successors and Assigns. The rights of the parties under this
Agreement shall inure to the benefit of, and this Agreement shall be binding
upon, the successors and assigns of the parties hereto. In addition, whether or
not any express assignment has been made, the provisions of this Agreement which
are for the benefit of the holders of Underlying Common Stock or holders of
Affiliate Common Stock are also for the benefit of, and enforceable by and
against, any subsequent holder of Affiliate Common Stock.
(g) Severability. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent necessary to render it
legal, valid and enforceable, and if no such modification shall render it legal,
valid and enforceable, then this Agreement shall be construed as if not
containing the provision held to be invalid, and the rights and obligations of
the parties shall be construed and enforced accordingly.
(h) Complete Agreement. This Agreement, those documents expressly
referred to herein, and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and preempt
any prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
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(i) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(j) Governing Law. The construction, validity and interpretation of
this Agreement will be governed by and construed in accordance with the domestic
laws of the State of Texas, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
(k) Further Assurances. Each party to this Agreement hereby covenants
and agrees, without the necessity of any further consideration, to execute and
deliver any and all such further documents and take any and all such other
actions as may be necessary or appropriate to carry out the intent and purposes
of this Agreement and to consummate the transactions contemplated hereby.
(l) Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
(m) Third Party Beneficiaries. The parties to this Agreement
acknowledge that holders of Underlying Common Stock are third party
beneficiaries of this Agreement and shall have the right to enforce the
registration and other rights granted to them herein.
(n) Other Registration Rights. The Shareholder acknowledges that
holders of Underlying Common Stock of the Company have certain registration
rights with respect to shares of Common Stock held by them, and the Shareholder
hereby consents to such registration rights.
(o) Termination. This Agreement shall terminate on October 20, 2004.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPANY:
AV Alarm, Inc.
By: /s/ James R. Hull
------------------------------------
James R. Hull,
President
SHAREHOLDER:
/s/ James R. Hull
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James R. Hull
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