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EXHIBIT 10.20
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT dated as of October 29, 1996, is by
and between NextWave Telecom Inc., a Delaware corporation (the "COMPANY") and
Xxxxxx Network Systems, Inc. ("XXXXXX").
THE COMPANY AND XXXXXX COVENANT AND AGREE AS FOLLOWS:
1. Definitions. For purposes of this Agreement:
(a) the term "REGISTER," "REGISTERED," and "REGISTRATION"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "ACT"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) the term "REGISTRABLE SECURITIES" means those shares of
the Company's Series B Common Stock issued by the Company upon conversion of
the convertible promissory note purchased by Xxxxxx pursuant to that certain
Subscription Agreement of even date herewith by and between the Company and
Xxxxxx (including shares received from the Company with respect to or in
replacement of such shares by reason of splits, dividends, combinations and
recapitalizations) but excluding any shares which are not "restricted
securities" pursuant to Rule 144 or other comparable provision under the Act
("RULE 144") or which may be sold without registration pursuant to Rule 144(k);
(c) the number of shares of "REGISTRABLE SECURITIES THEN
OUTSTANDING" will be determined by the number of shares of Series B Common
Stock outstanding which are Registrable Securities;
(d) the term "HOLDER" means Xxxxxx or any assignee thereof in
accordance with SECTION 13;
(e) "MARKET VALUE" for any security on any given date means
(i) the average closing price for the prior twenty five (25) trading days for
such security on the principal stock exchange on which such security is traded,
or (ii) if not so traded, the closing (or, if no closing price is available,
the average of the bid and asked prices for each trading day) for such period
on the NASDAQ if such security is listed on the NASDAQ, or (iii) if not listed
on any exchange or quoted on the NASDAQ, such value as may be mutually agreed
by the Company and the Holder, or (iv) if no such agreement can be reached,
then the fair market value thereof as determined by an independent nationally
recognized investment banking firm selected by investment banking firms
representing each of the Company and the Holder(s), respectively. The Company
shall pay all costs of all determinations of fair market value by such
nationally recognized investment banking firm.
(f) the term "PRIOR REGISTRATION RIGHTS AGREEMENTS" means,
collectively, that certain Registration Rights Agreement dated as of May 8,
1996,
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that certain Registration Rights Agreement dated as of April 8, 1996 and that
certain Registration Rights Agreement dated as of August 22, 1996.
2. Request for Registration.
(a) If the Company receives at any time after the earlier of (i)
January 1, 1998, or (ii) six (6) months after the effective date of the first
registration statement for a public offering of securities of the Company in
which the aggregate price paid by the public is at least $20,000,000 (other
than a registration statement relating either to the sale of securities to
employees, directors or consultants of the Company pursuant to a stock option,
stock purchase or similar plan or a SEC Rule 145 transaction) (the "IPO"), a
written request from a Holder(s) that the Company file a registration
statement under the Act covering the registration of such Holder's or Holders'
Registrable Securities then outstanding, then the Company will, within ten
days of the receipt thereof, give written notice of such request to all Holders
and will, subject to the limitations set forth below, of SUBSECTION 2(b) and of
SECTION 5, effect as soon as practicable, and in any event shall use its best
efforts to effect within sixty (60) days of the receipt of such request, a
registration statement under the Act of all Registrable Securities which the
Holders request to be registered within twenty (20) days of the notice by the
Company. Notwithstanding the foregoing, the Company's obligation to effect the
requested registration shall be conditioned upon the anticipated aggregate
offering price of the Registrable Securities equaling or exceeding $20,000,000.
(b) If the Holders initiating the registration request pursuant to
this Agreement ("INITIATING HOLDERS") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they will so
advise the Company as a part of their request made pursuant to this SECTION 2
and the Company will include such information in the written notice referred to
in SUBSECTION 2(a). The underwriter will be selected by the Company with
prior consultation with the Initiating Holders and will be reasonably
acceptable to a majority in interest of the Initiating Holders. In such event,
the right of any Holder to include such Holder's Registrable Securities in such
registration will be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided in this Agreement.
All Holders proposing to distribute their securities through such underwriting
will (together with the Company as provided in SUBSECTION 6(a)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this SECTION 2, if the underwriter advises the Company in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the Company or its representative, as the case may be, will
so advise all Holders of Registrable Securities which would otherwise be
underwritten pursuant to this Agreement, and the number of shares of Registrable
Securities that may be included in the underwriting will be allocated among all
Holders thereof, including the Initiating Holders, in proportion (as nearly as
practicable) to the amount of Registrable Securities of the Company owned by
each Holder; provided, however, that the number of shares of Registrable
Securities to be included in such underwriting will not be reduced unless all
other securities are first entirely excluded from the underwriting.
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(c) The Company is obligated to effect only two such registrations
pursuant to this Section 2; provided, however, that the Company shall be deemed
to fulfill such obligation only when such registration has become effective and
has remained effective for a period of ninety (90) consecutive days, and,
provided, further, that the Company will pay all registration expenses in
connection with any registration initiated at the request of a Holder to the
extent provided below in SECTION 8.
(d) Notwithstanding the foregoing, if the Company furnishes to
Holders requesting a registration statement pursuant to this SECTION 2, a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company will have the right to defer taking action
with respect to such filing for a period of not more than one hundred twenty
(120) days after receipt of the request of the Initiating Holders; provided,
however, that during such period, the Company shall not be entitled to file any
other registration statement relating to the Company's securities pursuant to
any other outstanding registration rights agreement or for any other secondary
offering.
(e) The Company shall have no obligation to any Holder under this
SECTION 2 with respect to whom the Company has obtained an opinion of counsel,
in a form reasonably satisfactory to such Holder, to the effect that the
Registrable Securities involved may be immediately sold to the public without
registration thereof, whether pursuant to Rule 144 or otherwise.
3. Request for S-3 Registration.
(a) If the Company receives at any time after one (1) year after
the effective date of the first registration statement for the Company's IPO, a
written request from a Holder(s) that the Company file a registration statement
under the Act covering the registration of such Holder's or Holders'
Registrable Securities then outstanding, then the Company will, within ten days
of the receipt thereof, give written notice of such request to all Holders and
will, subject to the limitations set forth below, of SUBSECTION 3(b) and of
SECTION 5, effect as soon as practicable, and in any event shall use its best
efforts to effect within sixty (60) days of the receipt of requests
representing at least $2,000,000 in aggregate of anticipated offering price of
Registrable Securities, a registration statement on Form S-3 under the Act of
all Registrable Securities which the Holders request to be registered within
twenty (20) days of the notice by the Company. Notwithstanding the foregoing,
the Company's obligation to effect the requested registration shall be
conditioned upon (i) the anticipated aggregate offering price of the
Registrable Securities equaling or exceeding $2,000,000 and (ii) the Company's
meeting the then-current eligibility requirements for the use of Form S-3.
(b) If the Holders initiating the registration request pursuant to
this Agreement ("INITIATING S-3 HOLDERS") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they will so
advise the Company as a part of their request made pursuant to this SECTION 3
and the
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Company will include such information in the written notice referred to in
SUBSECTION 3(a). The underwriter will be selected by the Company with prior
consultation with the Initiating S-3 Holders and will be reasonably acceptable
to a majority in interest of the Initiating S-3 Holders. In such event, the
right of any Holder to include such Holder's Registrable Securities in such
registration will be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating S-3 Holders and such Holder) to the extent provided in this
Agreement. All Holders proposing to distribute their securities through such
underwriting will (together with the Company as provided in SUBSECTION 6(e))
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected by the Company. Notwithstanding any other provision of
this SECTION 3, if the underwriter advises the Company in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company will so advise all Holders of Registrable
Securities which would otherwise be underwritten pursuant to this Agreement,
and the number of shares of Registrable Securities that may be included in the
underwriting will be allocated among all Holders thereof, including the
Initiating S-3 Holders, in proportion (as nearly as practicable) to the amount
of Registrable Securities of the Company owned by each Holder; provided,
however, that the number of shares of Registrable Securities to be included in
such underwriting will not be reduced unless all other securities are first
entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, the Company is obligated to effect
only two such registrations pursuant to this SECTION 3 during each twelve month
period after the first registration statement filed hereunder; provided,
however, that the Company shall be deemed to fulfill such obligation only when
such registration has become effective and has remained effective for a period
of ninety (90) consecutive days, and, provided further, that the Company will
pay all registration expenses in connection with any registration initiated at
the request of a Holder to the extent provided below in SECTION 8.
(d) Notwithstanding the foregoing, if the Company furnishes to Holders
requesting a registration statement pursuant to this SECTION 3, a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be seriously detrimental to
the Company and its shareholders for such registration statement to be filed
and it is therefore essential to defer the filing of such registration
statement, the Company will have the right to defer taking action with respect
to such filing for a period of not more than one hundred twenty (120) days
after receipt of the request of the Initiating S-3 Holders; provided, however,
that during such period, the Company shall not be entitled to file any other
registration statement relating to the Company's securities pursuant to any
other outstanding registration rights agreement or for any other secondary
offering.
(e) The Company shall have no obligation to any Holder under this
SECTION 3 with respect to whom the Company has obtained an opinion of counsel,
in a form reasonably satisfactory to such Holder, to the effect that the
Registrable Securities involved may be immediately sold to the public without
registration thereof, whether pursuant to Rule 144 or otherwise.
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4. COMPANY REGISTRATION. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
stock or other securities under the Act in connection with the public offering
of such securities solely for cash (other than a registration relating solely
to the sale of securities to participants in a Company stock plan, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company will, at such
time, promptly give each Holder written notice of such registration no less
than forty-five (45) days prior to the proposed effective date of such
registration. Upon the written request of each Holder given within twenty (20)
days after notice by the Company, the Company will, subject to the provisions
of SECTIONS 5 AND 9, cause to be registered under the Act all of the
Registrable Securities that each such Holder has requested to be registered.
The registration expenses of the Holders of the Registrable Securities incurred
pursuant to this SECTION 4 shall be paid by the Company to the extent provided
in SECTION 8 below.
5. PRIOR REGISTRATION RIGHTS AGREEMENTS. Notwithstanding any other
provision of this Agreement to the contrary, the Company's obligation to
register Registrable Securities hereunder shall be suspended to the extent that
such registration (i) in the case of a request pursuant to Section 4 hereof,
would reduce the amount of registrable securities requested and entitled to be
included in such registration statement by any holder granted registration
rights pursuant to a Prior Registration Rights Agreement or (ii) in the case of
a request pursuant to Section 2, 3 or 4 hereof, could result in such
registration being declared effective within 120 days of the effective date of
any registration effected pursuant to Section 2 of any of the Prior
Registration Rights Agreements. If less than all of the Registrable Securities
requested by the Holders may be included in any registration statement as a
result of the foregoing sentence, the Registrable Securities so included shall
be apportioned pro rata among such Holders. The rights of the Holders arising
pursuant to this Agreement shall be subject in all respects to the rights of
the holders of registration rights granted pursuant to any of the Prior
Registration Rights Agreements.
6. OBLIGATIONS OF THE COMPANY. Whenever required under this Agreement
to effect the registration of any Registrable Securities, the Company will, as
expeditiously as reasonably possible, but subject in each instance to the
limitations set forth in Section 5 hereof:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, subject to applicable law,
keep such registration statement effective until such time as the Company has
filed and had declared effective an S-3 registration statement, and in the case
of an S-3 registration statement filed pursuant to SECTION 3, to keep such
registration statement effective to the extent permitted by and subject to
applicable law.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the
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provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of the registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement, including a preliminary prospectus, in conformity
with the requirements of the Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as will be reasonably requested by the Holders, and
take all such actions reasonably necessary or advisable to enable the
disposition of the Registrable Securities of the Holder in such jurisdictions
as the Registrable Securities covered by the Registration Statement are intended
to be sold; provided that the Company will not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions; and
use its best efforts to cause such Registrable Securities covered by such
registration statement to be registered with or approved by such other
governmental agencies or authorities (other than the Federal Communications
Commission) as may be necessary to enable the Holders thereof to consummate
the disposition of the Registrable Securities.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting will also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and prepare
and furnish to each Holder copies of an amended or supplemental prospectus as
may be necessary so that, as thereafter delivered to prospective purchasers of
Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading.
(g) Use its best efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Agreement,
on the date that such Registrable Securities are delivered to the underwriters
for sale in connection with a registration pursuant to this Agreement if such
securities are being sold through underwriters, (i) an opinion, dated such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting
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registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities.
(h) Cause all such Registrable Securities to be listed on each
securities exchange or quotation system on which similar securities issued by
the Company are then listed.
(i) Provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement.
(j) Make available for inspection by any Holder participating in such
registration, any underwriter participating in any disposition pursuant to such
registration statement and one counsel, accountant or other agent retained by
such Holders or any such one counsel selected by Xxxxxx on behalf of the
Holders as a group, all financial and other records, pertinent corporate
documents and properties of the Company reasonably requested, and cause the
Company's officers, directors, employees and Independent accountants to supply
information reasonably requested by any Holder or any such underwriter,
attorney, accountant or agent in connection with such registration statement,
provided that the Company shall be under no obligation to disclose proprietary
or privileged information that is not required to be disclosed in such
registration statement or any prospectus in connection therewith.
(k) Advise the Holders participating in such registration after it
shall receive notice or obtain knowledge thereof, of the Issuance of any stop
order by the SEC suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for such purpose and promptly
use all reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued.
(l) Within a reasonable period prior to the filing of any registration
statement or prospectus, or any amendment or supplement to such registration
statement or prospectus, furnish a copy thereof to the Holders participating in
such registration and, except with respect to any registration pursuant to
SECTION 4, refrain from filing any such registration statement, prospectus,
amendment or supplement to which one counsel, selected by Xxxxxx on behalf of
the Holders as a group, shall have reasonably objected to on the grounds that
such document does not comply in all material respects with the requirements of
the Act or the rules and regulations thereunder, unless, in the case of an
amendment or supplement, in the opinion of counsel for the Company the filing
of such amendment or supplement is reasonably necessary to protect the Company
from any liabilities under the applicable federal or state law and such filing
will not violate applicable laws.
(m) Otherwise use its reasonable 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, an earnings statement covering the
period of at least twelve months beginning with the first day of the Company's
first full fiscal quarter after the effective date of the registration
statement, which
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earnings statement shall satisfy the provisions of Section 11(a) of the Act and
Rule 158 thereunder.
7. Furnishing of Information.
(a) It will be a condition precedent to the obligations of the Company
to take any action pursuant to this Agreement with respect to the Registrable
Securities of any selling Holder that such Holder will furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of such securities as will be required to
effect the registration of such Holder's Registrable Securities.
(b) The Company will have no obligation with respect to any
registration requested pursuant to SECTIONS 2 OR 3 if, due to the operation of
SUBSECTION 7(a), the number of shares or the anticipated aggregate offering
price of the Registrable Securities to be included in the registration does not
equal or exceed the number of shares or the anticipated aggregate offering price
required to originally trigger the Company's obligation to initiate such
registration as specified in SUBSECTIONS 2(a) OR 3(a).
8. Expenses of Registration. The Company shall bear all expenses other
than Selling Holder Expenses (defined below) incurred in any Registration,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the National Association of Securities Dealers,
Inc.), messenger and delivery expenses, fees and expenses of complying with
federal and state securities and blue sky laws, printing expenses and fees and
disbursements of the independent certified public accountants (including for any
special audits), fees for the Company's counsel and fees for one counsel for the
Holders, as a group (to be selected by Xxxxxx). Each Selling Holder shall bear
his or her equitable share of any Selling Holder Expenses. "SELLER HOLDER
EXPENSES" shall consist of (i) Selling Holder's legal costs (except for the one
counsel provided to the Holders as a group by Company) and (ii) any
proportionate share of brokerage or underwriting fees, expenses or commissions.
9. Underwriting Requirements. In connection with any offering involving
an underwriting of shares of the Company's capital stock, the Company will not
be required under SECTION 4 to include any of the Holder's securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters). If the total amount of securities,
including Registrable Securities, requested by shareholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters advise the Company in writing in their sole discretion is
compatible with the success of the offering, then the Company will be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling shareholders according to
the total amount of securities entitled to be included therein owned by each
selling shareholder or in such other proportions as will mutually be agreed to
by such selling shareholders) but, subject to the rights of the holders of
registration rights granted pursuant to the Prior Registration Rights
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Agreements, in no event will (i) the amount of securities of the selling
shareholders included in the offering be reduced below 30% of the total amount
of securities included in such offering, unless such offering is the initial
public offering of the Company's securities in which case the selling
shareholders may be excluded if the underwriters make the determination
described above and no other shareholder's securities are included or (ii)
notwithstanding (i) above, any shares being sold by a shareholder exercising a
demand registration right similar to that granted in SECTIONS 2 OR 3 be
excluded from such offering. For purposes of the preceding parenthetical
concerning apportionment, for any selling shareholder which is a Holder of
Registrable Securities and which is a partnership or corporation, the partners,
retired partners and shareholders of such Holder, or the estates and family
members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons will be deemed to be a single "SELLING
SHAREHOLDER," and any pro-rata reduction with respect to such "SELLING
SHAREHOLDER" will be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"SELLING SHAREHOLDER," as defined in this sentence.
10. Delay of Registration. No Holder will have any right to obtain or
seek an injunction restraining or otherwise delaying any registration pursuant
to SECTION 4 as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement.
11. Indemnification. If any Registrable Securities are included in a
registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, their respective partners, officers, employees,
directors and agents, any underwriter (as defined in the Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Act or the Securities Exchange Act of 1934, as amended (the
"1934 ACT"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Act, or the 1934 Act,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "VIOLATION"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation of the Act, the 1934 Act, state securities laws or any
rule or regulation promulgated under the Act, or the 1934 Act or state
securities laws; and the Company will pay to each such Holder, underwriter or
controlling person, any legal or other expenses reasonably incurred by them (as
incurred) in connection with investigating or defending any such loss, claim,
damage, liability, or action: provided, however, that the indemnity agreement
contained in this SUBSECTION 11(a) will not apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the Company (which consent will not be
unreasonably withheld or delayed), nor will the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation
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(other than alleged violations) as ultimately determined by a final judgment of
a court of competent jurisdiction which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers and
agents who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Act, or the 1934 Act insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation (other than alleged violations), in each
case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration as ultimately
determined by a final judgment of a court of competent jurisdiction; and each
such Holder will pay any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this subsection 11(b) (as
incurred), in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 11(b) will not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent will not be
unreasonably withheld or delayed; provided that in no event will any indemnity
under this subsection 11(b) exceed the net proceeds from the offering received
by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
11 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 11, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party will have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) will have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party is inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, will relieve such
indemnifying party of any liability to the indemnified party under this Section
11, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 11. The payments required by this Section 11
will be made periodically throughout the course of investigation or defense, as
and when bills are
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received or expenses incurred, provided that the indemnified party seeking
reimbursement of expenses hereunder undertakes in a writing reasonably
satisfactory to the indemnifying party, to repay all amounts previously paid
over to the indemnified party if it is ultimately determined (by a final
judgment of a court of competent jurisdiction) that such party is not entitled
to indemnification hereunder.
(d) If the indemnification provided for in this Section 11
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party to this Agreement, will contribute to the
amount paid or payable by such indemnified party as a result of such loss,
liability, claim, damage, or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense as well as any
other relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party will be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement will control.
(f) The obligations of the Company and Holders under this
Section 11 will survive the completion of any offering of Registrable
Securities in a registration statement under this Agreement, and otherwise.
12. Reports Under Securities Exchange Act of 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration
or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety
(90) days after the effective date of the first registration statement filed by
the Company for the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a
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registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company with the SEC, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
13. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Agreement may be assigned
(but only with all related obligations) by a Holder to (i) transferee(s) or
assignee(s) of such securities who, after such assignment or transfer, holds
Registrable Securities (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations) with an aggregate
Market Value of at least $500,000 or (ii) transferee(s) or assignee(s) of such
securities who, after such assignment or transfer, holds all of the Registrable
Securities of the transferring Holder, provided the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee(s) or assignee(s) and the securities with
respect to which such registration rights are being assigned.
14. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS.
(a) From and after the date of this Agreement, the Company will
not, without the prior written consent of the Holders of a majority of the
outstanding Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company which would allow such
holder or prospective holder (i) to include such securities in any registration
filed under SECTION 2, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of his securities will not reduce the amount of
the Registrable Securities of the Holders which is included or (ii) to make a
demand registration which could result in such registration statement being
declared effective within 120 days of the effective date of any registration
effected pursuant to SECTION 2.
(b) From and after the date of this Agreement, if the Company
grants any person rights (i) to demand that the Company register securities of
the Company under the 1933 Act or (ii) to have securities of the Company
included in a Registration Statement, which are more favorable than these
registration rights provisions in any regard (including, without limitation,
those relating to the expenses to be borne by the Company), the rights granted
herein shall be deemed to be amended to include such more favorable rights in
addition to these set forth herein.
15. "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that if an
offering is made by means of a proposed underwriting, during the period of
duration specified by the Company and an underwriter of Series B Common Stock
or other securities of the Company, following the effective date of a
registration statement of the Company filed under the Act, it will not, to the
extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period
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except Series B Common Stock included in such registration, not to exceed 180
days in the case of the Company's IPO and not to exceed 90 days in the case of
all subsequent registration statements for underwritten offerings; provided,
however, that all officers and directors of the Company and all other persons
with registration rights (whether or not pursuant to this Agreement) enter into
similar agreements; provided, however, that notwithstanding the foregoing, the
Holders shall be afforded at least 90 consecutive days in each 12 month period
in which Holders shall not be subject to the restrictions of this SECTION 15.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
16. Termination of Registration Rights. No Holder will be entitled to
exercise any right provided for in this Agreement after the later of (i)
December 31, 2000 or (ii) three years after the date of a Qualified Public
Offering, as defined in the Company's Restated Certificate of Incorporation.
17. 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 to include
Registrable Securities in a registration undertaken pursuant hereto. However,
nothing in this Agreement shall limit the Company's ability to register, offer
and sell securities.
18. Amendments. The approval by Holders of at least 75% in interest of
the Registrable Securities then outstanding hereunder shall be required to
amend, modify or waive the provisions of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company and Xxxxxx have executed this Agreement
on this 29th day of October, 1996.
XXXXXX NETWORK SYSTEMS, INC.
By: /s/ Xxxxxxx Xxxx
----------------------------------
Its: President & COO
Address: HNS-Attn: Xxxxxxx Xxxxxx-DCM
00000 Xxxxxxxxxxx Xx.
Xxxxxxxxxx, XX 00000
NEXTWAVE TELECOM INC.
By: Xxxxx Xxxxxxx
---------------------------------
Its: CEO & President
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