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EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
November __, 1999 by and among GENERAL INSTRUMENT CORPORATION, a Delaware
corporation ("General Instrument"), Xxxxxxx Xxxxx Investors LLC, a Delaware
limited liability company ("Xxxxxxx Xxxxx"), and NEXT LEVEL COMMUNICATIONS,
INC., a Delaware corporation ("Next Level").
General Instrument beneficially owns _____ shares of Common Stock,
par value $.01 per share (the "Common Stock"), of Next Level and Xxxxxxx Xxxxx
beneficially owns _____ shares of Common Stock.
On the date hereof, Next Level will issue shares of Common Stock in
an initial public offering (the "Initial Public Offering") registered under the
Securities Act of 1933, as amended.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, General Instrument, Xxxxxxx Xxxxx
and Next Level, for themselves, their successors, and assigns, hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms will
have the following meanings, applicable both to the singular and the plural
forms of the terms described:
"Affiliate" means, with respect to a given Person, any Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the power to vote
securities having a majority of the voting power for the election of directors
(or other Persons acting in similar capacities) of such Person or otherwise to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
"Agreement" has the meaning ascribed thereto in the preamble hereto,
as such agreement may be amended and supplemented from time to time in
accordance with its terms.
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"Common Stock" means the Common Stock and any other class of Next
Level's common stock.
"General Instrument Entities" means General Instrument and
Affiliates of General Instrument (other than Subsidiaries that constitute Next
Level Entities), and "General Instrument Entity" shall mean any of the General
Instrument Entities.
"General Instrument Ownership Reduction" means the reduction of the
percentage of Common Stock beneficially owned by the General Instrument Entities
to less than 30% of the outstanding Common Stock.
"GI Holders" means the General Instrument Entities and any
transferees thereof.
"Holder" means the GI Holders and the ST Holders.
"Next Level Entities" means Next Level and its Subsidiaries, and
"Next Level Entity" shall mean any of the Next Level Entities.
"Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization,
government (and any department or agency thereof) or other entity.
"Registrable Securities" means shares of Common Stock held by the
Holders, including shares of Common Stock issuable upon exercise of warrants or
options. As to any particular Registrable Securities, such Registrable
Securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the sale by the Holder thereof shall have been
declared effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (ii) they shall have
been distributed to the public in accordance with Rule 144, (iii) they shall
have been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by Next Level and
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act or any state securities or blue sky law then in
effect or (iv) they shall have ceased to be outstanding.
"Registration Expenses" means any and all expenses incident to
performance of or compliance with any registration of securities pursuant to
this Agreement, including, without limitation, (i) the fees, disbursements and
expenses of Next Level's counsel and accountants and the reasonable fees and
expenses of counsel selected by the Holders in accordance with
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this Agreement in connection with the registration of the securities to be
disposed of; (ii) all expenses, including filing fees, in connection with the
preparation, printing and filing of the registration statement, any preliminary
prospectus or final prospectus, any other offering document and amendments and
supplements thereto and the mailing and delivering of copies thereof to any
underwriters and dealers; (iii) the cost of printing or producing any
underwriting agreements and blue sky or legal investment memoranda and any other
documents in connection with the offering, sale or delivery of the securities to
be disposed of; (iv) all expenses in connection with the qualification of the
securities to be disposed of for offering and sale under state securities laws,
including the fees and disbursements of counsel for the underwriters or the
Holders of securities in connection with such qualification and in connection
with any blue sky and legal investment surveys; (v) the filing fees incident to
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the securities to be disposed of; (vi) transfer
agents' and registrars, fees and expenses and the fees and expenses of any other
agent or trustee appointed in connection with such offering; (vii) all security
engraving and security printing expenses; (viii) all fees and expenses payable
in connection with the listing of the securities on any securities exchange or
automated interdealer quotation system or the rating of such securities; (ix)
any other fees and disbursements of underwriters customarily paid by the sellers
of securities, but excluding underwriting discounts and commissions and transfer
taxes, if any, and (x) other reasonable out-of-pocket expenses of Holders other
than legal fees and expenses referred to in clause (i) above.
"Rule 144" means Rule 144 (or any successor rule to similar effect)
promulgated under the Securities Act.
"Rule 415 Offering" means an offering on a delayed or continuous
basis pursuant to Rule 415 (or any successor rule to similar effect) promulgated
under the Securities Act.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor statute.
"Subsidiary" means, as to any Person, any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting capital stock or other voting ownership interests is owned or
controlled, directly or indirectly, by such Person or by one or more of the
Subsidiaries
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of such Person or by a combination thereof. "Subsidiary," when used with respect
to General Instrument or Next Level, shall also include any other entity
affiliated with General Instrument or Next Level, as the case may be, that
General Instrument and Next Level may hereafter agree in writing shall be
treated as a "Subsidiary" for the purposes of this Agreement.
"ST Holders" means Xxxxxxx Xxxxx and any transferees thereof.
1.2 Internal References. Unless the context indicates otherwise,
references to Articles, Sections and paragraphs shall refer to the corresponding
articles, sections and paragraphs in this Agreement and references to the
parties shall mean the parties to this Agreement.
ARTICLE II
REGISTRATION RIGHTS
2.1 Demand Registration - Registrable Securities.
(a) Upon written notice provided (i) at any time from General Instrument
requesting that Next Level effect the registration under the Securities Act of
any or all of the Registrable Securities held by the GI Holders or (ii) at any
time from Xxxxxxx Xxxxx requesting that Next Level effect the registration under
the Securities Act of any or all of the Registrable Securities held by the ST
Holders, each of which notices shall specify the intended method or methods of
disposition of such Registrable Securities, Next Level shall use its best
efforts to effect the registration under the Securities Act and applicable state
securities laws of such Registrable Securities for disposition in accordance
with the intended method or methods of disposition stated in such request
(including in a Rule 415 Offering, if Next Level is then eligible to register
such Registrable Securities on Form S-3 (or a successor form) for such
offering); provided that,
(i) with respect to any registration statement filed, or to be
filed, pursuant to this Section 2.1, if Next Level shall furnish to the
Holders that have made such request a certified resolution of the Board of
Directors of Next Level stating that in the Board of Directors' good faith
judgment it would (because of the existence of, or in anticipation of, any
acquisition or financing activity, or the unavailability for reasons
beyond Next Level's reasonable control of any required financial
statements, or any other event or condition of similar significance to
Next Level) be significantly disadvantageous (a "Disadvantageous
Condition") to Next Level for such a registration statement
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to be maintained effective, or to be filed and become effective, and
setting forth the general reasons for such judgment, Next Level shall be
entitled to cause such registration statement to be withdrawn and the
effectiveness of such registration statement terminated, or, in the event
no registration statement has yet been filed, shall be entitled not to
file any such registration statement, until such Disadvantageous Condition
no longer exists (notice of which Next Level shall promptly deliver to
such Holders). Upon receipt of any such notice of a Disadvantageous
Condition, such Holders shall forthwith discontinue use of the prospectus
contained in such registration statement and, if so directed by Next
Level, each such Holder will deliver to Next Level all copies, other than
permanent file copies then in such Holder's possession, of the prospectus
then covering such Registrable Securities current at the time of receipt
of such notice; provided, that the filing of any such registration
statement may not be delayed for a period in excess of 60 days in any
calendar year due to the occurrence of one or more Disadvantageous
Conditions;
(ii) after the General Instrument Ownership Reduction, the GI
Holders may collectively exercise their rights under this Section 2.1
(through notice delivered by the GI Holders owning in the aggregate a
majority in economic interest of the Registrable Securities then held by
the GI Holders) on not more than four occasions (it being acknowledged
that prior to the General Instrument Ownership Reduction, there shall be
no limit to the number of occasions on which the GI Holders may exercise
such rights);
(iii) the ST Holders may collectively exercise their rights under
this Section 2.1 (through notice delivered by Xxxxxxx Xxxxx) on not more
than three occasions;
(iv) except as otherwise provided in Section 2.2 or elsewhere in
this Agreement, the Holders shall not have the right to exercise
registration rights pursuant to this Section 2.1 within the 180-day period
following the date hereof or following the registration and sale of
Registrable Securities effected pursuant to a prior exercise of the
registration rights provided in this Section 2.1.
(b) Notwithstanding any other provision of this Agreement to the
contrary, a registration requested by a Holder pursuant to this Section 2.1
shall not be deemed to have been effected (and, therefore, not requested for
purposes of paragraph (a) above), (i) if it shall not have become effective,
(ii) if after it has become effective such registration is interfered with by
any stop order, injunction or other order or requirement
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of the SEC or other governmental agency or court for any reason other than a
misrepresentation or an omission by a Holder or cease to be maintained effective
due to a Disadvantageous Condition and, as a result thereof, the Registrable
Securities requested to be registered cannot be completely distributed in
accordance with the plan of distribution set forth in the related registration
statement or (iii) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied or waived other than by reason of some act or
omission by a Holder within its control.
(c) In the event that any registration pursuant to this Section 2.1
shall involve, in whole or in part, an underwritten offering, the Holders of a
majority of the Registrable Securities to be registered pursuant to this Section
2.1 shall have the right to designate an underwriter or underwriters reasonably
acceptable to Next Level as the lead or managing underwriters of such
underwritten offering and, in connection with each registration pursuant to this
Section 2.1, such Holders may select one counsel reasonably acceptable to Next
Level to represent all such Holders.
(d) Next Level shall have the right to cause the registration of
additional equity securities for sale for its account or any existing or former
directors, officers or employees of the Next Level Entities in any registration
of Registrable Securities requested for the benefit of the GI Holders or the ST
Holders, as the case may be, pursuant to paragraph (a) above; provided, however,
that, if such Holders are advised in writing (with a copy to Next Level) by a
nationally recognized investment banking firm selected by such Holders
reasonably acceptable to Next Level (which shall be the lead underwriter or a
managing underwriter in the case of an underwritten offering) that, in such
firm's good faith view, the inclusion of such additional equity securities in
such registration would be likely to have an adverse effect on the price, timing
or distribution of the offering and sale of the Registrable Securities then
contemplated by such Holders, the registration of such additional equity
securities or part thereof shall not be permitted. The Holders of the
Registrable Securities to be registered pursuant to this Section 2.1 may require
that any such additional equity securities be included in the offering proposed
by such Holders on the same conditions as the Registrable Securities that are
included therein. In the event that the number of Registrable Securities
requested to be included in such registration by such Holders exceeds the number
which, in the good faith view (delivered in writing) of such investment banking
firm, can be sold without adversely affecting the price, timing, distribution or
sale of securities in the
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offering, the number shall be allocated pro rata among the requesting Holders on
the basis of the relative number of Registrable Securities then held by each
such Holder (provided that any number in excess of a Holder's request may be
reallocated among the remaining requesting Holders in a like manner).
2.2 Piggyback Registration. In the event that Next Level at any time
after the date hereof proposes to register any Common Stock or any securities
convertible into or exchangeable for Common Stock under the Securities Act,
whether or not for sale for its own account and including pursuant to Section
2.1 (such stock or securities, "Other Securities"), in a manner that would
permit registration of Registrable Securities for sale for cash to the public
under the Securities Act, it shall at each such time give prompt written notice
to each of the Holders of its intention to do so and of the rights of such
Holders under this Section 2.2. Subject to the terms and conditions hereof, such
notice shall offer each such Holder the opportunity to include in such
registration statement such number of Registrable Securities as such Holder may
request. Upon the written request of any such Holder made within 15 days after
the receipt of Next Level's notice (which request shall specify the number of
Registrable Securities intended to be disposed of and the intended method of
disposition thereof), Next Level shall use its best efforts to effect, in
connection with the registration of the Other Securities, the registration under
the Securities Act of all Registrable Securities which Next Level has been so
requested to register, to the extent required to permit the disposition (in
accordance with such intended method of disposition thereof) of the Registrable
Securities so requested to be registered; provided, that:
(a) if, at any time after giving such written notice of its
intention to register any Other Securities and prior to the effective date of
the registration statement filed in connection with such registration, Next
Level shall determine for any reason not to register the Other Securities, Next
Level may, at its election, give written notice of such determination to such
Holders and thereupon Next Level shall be relieved of its obligation to register
such Registrable Securities in connection with the registration of such Other
Securities, without prejudice, however, to the rights of the Holders immediately
to request that such registration be effected as a registration under Section
2.1 to the extent permitted thereunder;
(b) if a nationally recognized investment banking firm selected by
Next Level advises Next Level in writing that, in such firm's good faith view,
all or a part of such Registrable Securities cannot be sold and the inclusion of
all or a part of
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such Registrable Securities in such registration would be likely to have an
adverse effect upon the price, timing or distribution of the offering and sale
of the Other Securities then contemplated, Next Level shall include in such
registration: (i) first, the Other Securities being sold for its own account or
the Other Securities which are Registrable Securities included pursuant to
Section 2.1 and/or, if such registration is being effected after the General
Instrument Ownership Reduction, any Other Securities being registered pursuant
to any demand registration rights held by Persons other than Next Level and the
Holders and (ii) second, up to the full number of Registrable Securities
requested to be included pursuant to this Section 2.2 and the remaining Other
Securities that are requested to be included in such registration in excess of
the number of securities referred to in clause (i) which, in the good faith view
of such investment banking firm, can be sold without adversely affecting such
offering, such full number to be allocated pro rata among the holders of the
securities referred to in this clause (ii) based on the relative number of
securities requested to be included by each such holder(provided further that,
in the event that such investment banking firm advises in writing that less than
all of such Registrable Securities may be included in such offering, one or more
of such Holders may withdraw their request for registration of their Registrable
Securities under this Section 2.2 and 90 days subsequent to the effective date
of the registration statement for the registration of such Other Securities
request that such registration be effected as a registration under Section 2.1
to the extent permitted thereunder);
(c) Next Level shall not be required to effect any registration of
Registrable Securities under this Section 2.2 incidental to the registration of
any of its securities in connection with mergers, acquisitions, exchange offers,
subscription offers, dividend reinvestment plans or stock option or other
executive or employee benefit or compensation plans; and
(d) no registration of Registrable Securities effected under this
Section 2.2 shall relieve Next Level of its obligation to effect a registration
of Registrable Securities pursuant to Section 2.1.
2.3 Expenses. Next Level shall pay all Registration Expenses with
respect to a particular offering (or proposed offering). Notwithstanding the
foregoing, each of the Holders and Next Level shall be responsible for its own
internal administrative and similar costs, which shall not constitute
Registration Expenses.
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2.4 Registration and Qualification. If and whenever Next Level is
required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 2.1 or 2.2, Next Level shall as promptly
as practicable:
(a) prepare, file and use its best efforts to cause to become
effective a registration statement under the Securities Act relating to the
Registrable Securities to be offered;
(b) prepare and file with the SEC 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 and to comply
with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities until the earlier of (A) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition set forth in such registration statement and (B) the
expiration of three months after such registration statement becomes effective;
provided, that such three-month period shall be extended for such number of days
that equals the number of days elapsing from (x) the date the written notice
contemplated by paragraph (f) below is given by Next Level to (y) the date on
which Next Level delivers to the Holders of Registrable Securities the
supplement or amendment contemplated by paragraph (f) below;
(c) furnish to the Holders of Registrable Securities and to any
underwriter of such Registrable Securities such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such registration
statement or prospectus, and such other documents, as the Holders of Registrable
Securities or such underwriter may reasonably request, and upon request a copy
of any and all transmittal letters or other correspondence to or received from,
the SEC or any other governmental agency or self-regulatory body or other body
having jurisdiction (including any domestic or foreign securities exchange)
relating to such offering;
(d) use its best efforts to register or qualify all Registrable
Securities covered by such registration statement under the securities or blue
sky laws of such U.S. jurisdictions as the Holders of such Registrable
Securities or any underwriter to such Registrable Securities shall reasonably
request, and use its reasonable best efforts to obtain all appropriate
registrations, permits and consents in connection therewith, and
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do any and all other acts and things which may be necessary or advisable to
enable the Holders of Registrable Securities or any such underwriter to
consummate the disposition in such jurisdictions of its Registrable Securities
covered by such registration statement; provided, that Next Level shall not for
any such purpose be required to qualify generally to do business as a foreign
corporation in any such jurisdiction wherein it is not so qualified or to
consent to general service of process in any such jurisdiction;
(e) (i) use its best efforts to furnish to each of the Holders of
Registrable Securities included in such registration (each, a "Selling Holder")
and to any underwriter of such Registrable Securities an opinion of counsel for
Next Level addressed to each Selling Holder and dated the date of the closing
under the underwriting agreement (if any) (or if such offering is not
underwritten, dated the effective date of the registration statement) and (ii)
use its best efforts to furnish to each Selling Holder a "cold comfort" letter
addressed to each Selling Holder and signed by the independent public
accountants who have audited the financial statements of Next Level included in
such registration statement, in each such case covering substantially the same
matters with respect to such registration statement (and the prospectus included
therein) as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in underwritten public offerings
of securities and such other matters as the Selling Holders may reasonably
request and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements;
(f) as promptly as practicable, notify the Selling Holders in
writing (i) at any time when a prospectus relating to a registration pursuant to
Sections 2.1 or 2.2 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, as then in effect, includes 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, in light of the circumstances under
which they were made, not misleading and (ii) of any request by the SEC or any
other regulatory body or other body having jurisdiction for any amendment of or
supplement to any registration statement or other document relating to such
offering, and in either such case, at the request of the Selling Holders prepare
and furnish to the Selling Holders a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to
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be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading;
(g) if requested by the lead or managing underwriters, use its best
efforts to list all such Registrable Securities covered by such registration on
each securities exchange and automated inter-dealer quotation system on which
common equity securities of Next Level are then listed;
(h) to the extent reasonably requested by the lead or managing
underwriters, send appropriate officers of Next Level to attend and participate
in any "road shows" scheduled in connection with any such registration, with all
out-of-pocket costs and expense incurred by Next Level or such officers in
connection with such attendance to be paid by Next Level; and
(i) furnish for delivery in connection with the closing of any
offering of Registrable Securities pursuant to a registration effected pursuant
to Sections 2.1 or 2.2 unlegended certificates representing ownership of the
Registrable Securities being sold in such denominations as shall be requested by
the Selling Holders or the underwriters.
2.5 Conversion of other Securities, Etc. In the event that any
Holder offers any options, rights, warrants or other securities issued by it or
any other Person that are offered with, convertible into or exercisable or
exchangeable for any Registrable Securities, the Registrable Securities
underlying such options, rights, warrants or other securities shall continue to
be eligible for registration pursuant to Sections 2.1 and 2.2.
2.6 Underwriting; Due Diligence. (a) If requested by the
underwriters for any underwritten offering of Registrable Securities pursuant to
a registration requested under this Agreement, Next Level shall enter into an
underwriting agreement with such underwriters for such offering, which agreement
will contain such representations and warranties by Next Level and such other
terms and provisions as are customarily contained in underwriting agreements of
Next Level to the extent relevant and as are customarily contained in
underwriting agreements generally with respect to secondary distributions to the
extent relevant, including, without limitation, indemnification and contribution
provisions substantially to the effect and to the extent provided in Section
2.7, and agreements as to the provision of opinions of counsel and accountants'
letters to the effect and to the extent provided in Section 2.4(e). The Selling
Holders on whose behalf the Registrable Securities are to be distributed by such
underwriters shall be parties to any such underwriting agreement and the
representations and warranties by, and the other
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agreements on the part of, Next Level to and for the benefit of such
underwriters, shall also be made to and for the benefit of such Selling Holders.
Such underwriting agreement shall also contain such representations and
warranties by such Selling Holders and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, when relevant, including, without limitation, indemnification and
contribution provisions substantially to the effect and to the extent provided
in Section 2.7.
(b) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act pursuant to this Agreement, Next Level shall give the Holders of such
Registrable Securities and the underwriters, if any, and their respective
counsel and accountants, such reasonable and customary access to its books and
records and such opportunities to discuss the business of Next Level with its
officers and the independent public accountants who have certified the financial
statements of Next Level as shall be necessary, in the opinion of such Holders
and such underwriters or their respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
2.7 Indemnification and Contribution. (a) In the case of each
offering of Registrable Securities made pursuant to this Agreement, Next Level
agrees to indemnify and hold harmless, to the extent permitted by law, each of
the Selling Holders, each underwriter of Registrable Securities so offered and
each Person, if any, who controls any of the foregoing Persons within the
meaning of the Securities Act and the officers, directors, affiliates, employees
and agents of each of the foregoing, against any and all losses, liabilities,
costs (including reasonable attorney's fees and disbursements and reasonable
costs of investigation and preparation), claims and damages, joint or several,
to which they or any of them may become subject, under the Securities Act or
otherwise, including any amount paid in settlement of any litigation commenced
or threatened, insofar as such losses, liabilities, costs, claims and damages
(or actions or proceedings in respect thereof, whether or not such indemnified
Person is a party thereto) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement (or in any preliminary or final prospectus included therein) or in any
offering memorandum or other offering document relating to the offering and sale
of such Registrable Securities, or any amendment thereof or supplement thereto,
or in any document incorporated by reference therein, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not
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misleading; provided, however that Next Level shall not be liable to any Person
in any such case to the extent that any such loss, liability, cost, claim or
damage arises out of or relates to any untrue statement or alleged untrue
statement, or any omission, if such statement or omission shall have been made
in reliance upon and in conformity with information relating to a Selling
Holder, another holder of securities included in such registration statement or
underwriter furnished in writing to Next Level by or on behalf of such Selling
Holder, other holder or underwriter specifically for use in the registration
statement (or in any preliminary or final prospectus included therein), offering
memorandum or other offering document, or any amendment thereof or supplement
thereto. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Selling Holder, any other holder or
any underwriter and shall survive the transfer of such securities. The foregoing
indemnity agreement is in addition to any liability that Next Level may
otherwise have to each Selling Holder, other holder or underwriter of the
Registrable Securities or any controlling person of the foregoing and the
officers, directors, affiliates, employees and agents of each of the foregoing;
provided, further, that, in the case of an offering with respect to which a
Selling Holder has designated the lead or managing underwriters (or a Selling
Holder is offering Registrable Securities directly, without an underwriter),
this indemnity does not apply to any loss, liability, cost, claim or damage
arising out of or relating to any untrue statement or alleged untrue statement
or omission or alleged omission in any preliminary prospectus or offering
memorandum if a copy of a final prospectus or offering memorandum was available
on a timely basis and not sent or given by or on behalf of any underwriter (or
such Selling Holder or other holder, as the case may be) to such Person
asserting such loss, liability, cost, claim or damage at or prior to the written
confirmation of the sale of the Registrable Securities as required by the
Securities Act and such untrue statement or omission had been corrected in such
final prospectus or offering memorandum.
(b) In the case of each offering made pursuant to this Agreement,
each Selling Holder, by exercising its registration rights hereunder, agrees to
indemnify and hold harmless, and to use reasonable best efforts to cause each
underwriter of Registrable Securities included in such offering (in the same
manner and to the same extent as set forth in Section 2.7(a)) to agree to
indemnify and hold harmless, Next Level, each other underwriter who participates
in such offering, each other Selling Holder or other holder with securities
included in such offering and in the case of an underwriter, such Selling Holder
or other holder, and each Person, if any, who controls any of the foregoing
within the meaning of the Securities Act and the
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officers, directors, affiliates, employees and agents of each of the foregoing,
against any and all losses, liabilities, costs (including reasonable attorney's
fees and disbursements and reasonable costs of investigation and preparation),
claims and damages to which they or any of them may become subject, under the
Securities Act or otherwise, including any amount paid in settlement of any
litigation commenced or threatened, insofar as such losses, liabilities, costs,
claims and damages (or actions or proceedings in respect thereof, whether or not
such indemnified Person is a party thereto) arise out of or are based upon any
untrue statement or alleged untrue statement by such Selling Holder or
underwriter, as the case may be, of a material fact contained in the
registration statement (or in any preliminary or final prospectus included
therein) or in any offering memorandum or other offering document relating to
the offering and sale of such Registrable Securities prepared by Next Level or
at its direction, or any amendment thereof or supplement thereto, or any
omission by such Selling Holder or underwriter, as the case may be, or alleged
omission by such Selling Holder or underwriter, as the case may be, of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement of a material fact is contained in, or such material fact is omitted
from information relating to such Selling Holder or underwriter, as the case may
be, furnished in writing to Next Level by or on behalf of such Selling Holder or
underwriter, as the case may be, specifically for use in such registration
statement (or in any preliminary or final prospectus included therein), offering
memorandum or other offering document, or any amendment thereof or supplement
thereto. The foregoing indemnity is in addition to any liability which such
Selling Holder or underwriter, as the case may be, may otherwise have to Next
Level, or controlling persons and the officers, directors, affiliates,
employees, and agents of each of the foregoing; provided, however, that, in the
case of an offering made pursuant to this Agreement with respect to which Next
Level has designated the lead or managing underwriters (or Next Level is
offering securities directly, without an underwriter), this indemnity does not
apply to any loss, liability, cost, claim, or damage arising out of or based
upon any untrue statement or alleged untrue statement or omission or alleged
omission in any preliminary prospectus or offering memorandum if a copy of a
final prospectus or offering memorandum was not sent or given by or on behalf of
any underwriter (or Next Level, as the case may be) to such Person asserting
such loss, liability, cost, claim or damage at or prior to the written
confirmation of the sale of the Registrable Securities as required by the
Securities Act and such untrue statement or omission had been corrected in such
final prospectus or offering memorandum.
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(c) Each party indemnified under paragraph (a) or (b) above shall,
promptly after receipt of notice of a claim or action against such indemnified
party in respect of which indemnity may be sought hereunder, notify the
indemnifying party in writing of the claim or action; provided, that the failure
to notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party on account of the indemnity agreement contained
in paragraph (a) or (b) above. If any such claim or action shall be brought
against an indemnified party, and it shall have notified the indemnifying party
thereof, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified party and indemnifying parties may exist in
respect of such claim, the indemnifying party shall be entitled to participate
therein, and, to the extent that it wishes, jointly with any other similarly
notified indemnifying party, to assume the defense thereof with counsel
satisfactory to the indemnified party (who shall not, except with the consent of
the indemnified party, be counsel to the indemnifying party); provided that, if
an indemnified party and an indemnifying party shall have conflicting claims or
defenses, the indemnifying party shall not have control of such conflicting
claims or defenses and the indemnified party shall be entitled to appoint
separate counsel for such claims and defenses at the cost and expense of the
indemnifying party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 2.7 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. If the indemnifying party does not assume the defense of
such claim or action, it is understood that the indemnifying party shall not, in
connection with any one such claim or action or separate but substantially
similar or related claims or actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the fees and expenses
of more than one separate firm of attorneys (in addition to one separate firm of
local attorneys in each such jurisdiction) at any time for all such indemnified
parties. No indemnifying party shall (i) without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent, but if
settled with its written
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consent or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss of liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 2.7 shall
for any reason be unavailable (other than in accordance with its terms) to an
indemnified party in respect of any loss, liability, cost, claim or damage
referred to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, cost, claim or damage in
such proportion as shall be appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other with
respect to the statements or omissions which resulted in such loss, liability,
cost, claim or damage as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the indemnifying party
on the one hand or the indemnified party on the other, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such statement or omission, but not by reference to any indemnified
party's stock ownership in Next Level. The amount paid or payable by an
indemnified party as a result of the loss, cost, claim, damage or liability, or
action in respect thereof, referred to above in this paragraph (d) shall be
deemed to include, for purposes of this paragraph (d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) Indemnification and contribution similar to that specified in
the preceding paragraphs of this Section 2.7 (with appropriate modifications)
shall be given by Next Level, the Selling Holders and underwriters with respect
to any required registration or other qualification of securities under any
state law or regulation or governmental authority.
(f) The obligations of the parties under this Section 2.7 shall be
in addition to any liability which any party may otherwise have to any other
party.
2.8 Rule 144 and Form S-3. Commencing 90 days after the date hereof,
Next Level shall use its best efforts to ensure that the conditions to the
availability of Rule 144 set forth in
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paragraph (c) thereof shall be satisfied. Upon the request of any Holder of
Registrable Securities, Next Level will deliver to such Holder a written
statement as to whether it has complied with such requirements. Next Level
further agrees to use its reasonable efforts to cause all conditions to the
availability of Form S-3 (or any successor form) under the Securities Act of the
filing of registration statements under this Agreement to be met as soon as
practicable after the date hereof.
2.9 Transfer of Registration Rights. Any Holder may transfer all or
any portion of its rights under this Agreement to any transferee of Registrable
Securities owned by such Holder; provided that all or any portion of the rights
under Section 2.1 may only be transferred to a transferee of at least three
percent (3%) of the outstanding shares of Common Stock at the time of transfer
(other than shares held by the General Instrument Entities and Xxxxxxx Xxxxx).
Any transfer of registration rights pursuant to this Section 2.9 shall be
effective upon receipt by Next Level of (i) written notice from such Holder
stating the name and address of any transferee and identifying the number of
Registrable Securities with respect to which the rights under this Agreement are
being transferred and the nature of the rights so transferred and (ii) a written
agreement from such transferee to be bound by the terms of this Agreement. The
Holders may exercise their rights hereunder in such priority as they shall agree
upon among themselves.
2.10 Holdback Agreement. If Next Level effects any registration of
equity securities of Next Level or any securities convertible into or
exchangeable or exercisable for any equity securities of Next Level pursuant to
this Agreement or otherwise in which 20% or more of the securities registered
thereby are Registrable Securities, each Holder agrees not to effect any public
sale or distribution, including any sale under Rule 144, of any equity security
of Next Level or any security convertible into or exchangeable or exercisable
for any equity security of Next Level (otherwise than through the registered
public offering then being made) within 7 days prior to or 90 days (or such
lesser period as the lead or managing underwriters may permit) after the
effective date of the registration statement (or the commencement of the
offering to the public of such Registrable Securities in the case of Rule 415
offerings). Next Level hereby also so agrees; provided, that, subject to Section
2.6(a) hereof, Next Level shall not be so restricted from effecting any public
sale or distribution of any security in connection with any merger, acquisition,
exchange offer, subscription offer, dividend reinvestment plan or stock option
or other executive or employee benefit or compensation plan.
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2.11 Registration of Other Stock. Next Level agrees that it shall
from time to time enter into one or more agreements with General Instrument
and/or the Majority Transferee (as defined in Next Level's certificate of
incorporation), if any, in form and substance reasonably satisfactory to the
parties thereto, granting to General Instrument or the Majority Transferee, as
the case may be, registration rights for the registration of any shares of any
class of capital stock of Next Level other than Common Stock that may hereafter
be owned, directly or indirectly, by General Instrument or the Majority
Transferee, as the case may be, substantially upon the same terms and conditions
as those contained in this Agreement for the benefit of General Instrument.
ARTICLE III
MISCELLANEOUS
3.1 Limitation of Liability. No party hereto shall be liable
hereunder for any special, indirect, incidental or consequential damages of the
other arising in connection with this Agreement.
3.2 Affiliates. General Instrument agrees and acknowledges that
General Instrument shall be responsible for the performance by each General
Instrument Entity of the obligations hereunder applicable to such General
Instrument Entity.
3.3 Amendments. This Agreement may not be amended or terminated
orally, but only by a writing duly executed by or on behalf of each of the
parties hereto. Any such amendment shall be validly and sufficiently authorized
for purposes of this Agreement if it is signed on behalf of the parties hereto
by any of their respective presidents or vice presidents.
3.4 Term. This Agreement shall remain in effect until all
Registrable Securities held by the Holders have been transferred by them to
Persons other than Transferees; provided, that the provisions of Section 2.7,
2.8 and 3.1 shall survive any such expiration.
3.5 Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement or such provision
of the application of such provision to such party or circumstances, other than
those to which it is so determined to be invalid, illegal or unenforceable,
shall remain in full force and effect
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to the fullest extent permitted by law and shall not be affected thereby, unless
such a construction would be unreasonable.
3.6 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed duly given upon actual
receipt, and shall be delivered (a) in person, (b) by registered or certified
mail, postage prepaid, return receipt requested or (c) by facsimile or other
generally accepted means of electronic transmission (provided that a copy of any
notice delivered pursuant to this clause (c) shall also be sent pursuant to
clause (b)), addressed as follows:
(a) if to Next Level, to:
Next Level Communications, Inc.
0000 Xxxxx Xxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Attention: Chief Financial Officer
Telecopy No.: (000) 000-0000
(b) If to General Instrument, to:
General Instrument Corporation
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
(c) If to Xxxxxxx Xxxxx, to:
Xxxxxxx Xxxxx Investors LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
Telecopy No.: (000) 000-0000
or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties.
3.7 Further Assurances. The parties hereto shall execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments and take such other action as may be necessary or advisable to
carry out their obligations under this Agreement and under any exhibit, document
or other instrument delivered pursuant hereto.
3.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same agreement.
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3.9 Governing Law. This Agreement and the transactions contemplated
hereby shall be construed in accordance with, and governed by, the laws of the
State of Delaware.
3.10 Entire Agreement. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
3.11 Majority Transferee. Upon General Instrument's request, Next
Level agrees that it shall enter into an agreement with the Majority Transferee
(in substitution of this Agreement), if any, in form and substance reasonably
satisfactory to the Majority Transferee and Next Level (i) granting to the
Majority Transferee registration rights for the registration of Registrable
Securities substantially upon the same terms and conditions as those contained
in this Agreement for the benefit of General Instrument and (ii) containing
other covenants and agreements for the benefit of the Majority Transferee that
are substantially similar to the other covenants and agreements contained in
this Agreement for the benefit of General Instrument; provided, that such
agreement shall contain terms (including covenants and agreements of the
Majority Transferee) for the benefit of Next Level that are substantially
similar to the terms (including the covenants and agreements of General
Instrument) for the benefit of Next Level contained herein.
3.12 Successors. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns (including transferees). Nothing contained in this Agreement, express or
implied, is intended to confer upon any other person or entity any benefits,
rights or remedies.
3.13 Specific Performance. The parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, it is agreed that they shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction in the United States or any state thereof, in
addition to any other remedy to which they may be entitled at law or equity.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
GENERAL INSTRUMENT CORPORATION
By: __________________________
Name:
Title
XXXXXXX XXXXX INVESTORS LLC
By: __________________________
Name:
Title
NEXT LEVEL COMMUNICATIONS, INC.
By: __________________________
Name:
Title
