REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of February
20, 2002, is entered into by and between MOTOROLA, INC., a Delaware corporation
("Motorola"), and NEXT LEVEL COMMUNICATIONS, INC., a Delaware corporation ("Next
Level").
WHEREAS, in connection with the Securities Purchase Agreement dated as of
February 20, 2002, by and between Next Level and Motorola (the "Purchase
Agreement"), (i) Next Level has granted to Motorola warrants (the "Warrants") to
purchase Six Million Nine Hundred Twelve Thousand Four Hundred Forty Two
(6,912,442) shares of Common Stock, par value $0.01 per share, of Next Level,
subject to the terms and conditions set forth therein and (ii) Next Level has
issued to Motorola 6,912,442 shares of Next Level's Series A Preferred Stock,
each of which shares is convertible into two shares of Common Stock, par value
$0.01 per share, of Next Level, for a total of 13,824,884 such common shares,
subject to the terms and conditions set forth therein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Motorola 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:
"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.
"COMMON STOCK" means the Common Stock of Next Level or any other class of
Next Level stock for which the Warrants become exercisable or convertible or for
which the Series A Preferred Shares become convertible.
"HOLDER" means the holder of any Registrable Security or of a Warrant.
"NEXT LEVEL ENTITIES" means Next Level and any subsidiaries of Next Level.
"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" shall mean, collectively, any shares or other
securities issued or issuable upon exercise of the Warrants or upon conversion
of Series A Preferred Shares or in exchange for or in respect of any such
securities. 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 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(s) (i) and/or (iv) 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.
"SERIES A PREFERRED SHARES" means the Series A Preferred shares issued by
Next Level to Motorola pursuant to the Purchase Agreement and any shares issued
in substitution for, or replacement or, such shares.
"WARRANT" means any of those certain warrants granted by Next Level to
Motorola pursuant to the Purchase Agreement and any warrants issued in
substitution for, or replacement or, such warrants.
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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 at any time from a majority in
interest of the Holders, requesting that Next Level effect the registration
under the Securities Act of any or all of the Registrable Securities held by
such Holders, 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 seriously disadvantageous (a
"Disadvantageous Condition") to Next Level for such a registration statement 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) the Holders may collectively exercise their rights under
this Section 2.1 and under Section 2.1 of the Registration Rights Agreement by
and between Motorola and Next Level dated as of May 16, 2001, as amended (the
"Existing Registration Rights Agreement"), on not more than four (4) occasions;
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(iii) 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 of the SEC or other
governmental agency or court for any reason other than a misrepresentation or an
omission by a Holder or ceases 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 Holders 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 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
(including Registrable Securities such Holder may acquire on exercise of such
Holder's Warrant(s)), PROVIDED THAT any number in
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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 the Registrable Securities of such Holder
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 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 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 ninety (90) days subsequent
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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.
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-
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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 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) use commercially reasonable efforts (i) 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) 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 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
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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 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 2.6, 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 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 2.6.
(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.
2.6 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
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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 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 2.6(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 officers, directors,
affiliates, employees and agents of each of the foregoing, against any and
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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 such registration statement
or prospectus in reliance on and in conformity with 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.
(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 except to the extent that the indemnifying party
is prejudiced thereby. 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 reasonably
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
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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 2.6 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 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 2.6 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 2.6 (with appropriate modifications) shall
be given by Next
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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 2.6 shall be in
addition to any liability that any party may otherwise have to any other party.
2.7 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 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.
2.8 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. Any transfer of registration rights pursuant to
this Section 2.8 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.
2.9 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 2.5(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.
ARTICLE III
MISCELLANEOUS
3.1 ASSISTANCE IN DISPOSITION OF SHARES. Regardless of whether one or more
Holders or other parties shall have requested registration of Common Stock
hereunder, but subject to any market stand-off, hold-back, or similar provisions
that may apply, one or more Holders of Registrable Securities may at any time
request that Next Level assist such Holder(s) in the sale of such securities on
favorable terms. In such an event, Next Level shall use its
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commercially reasonable best efforts to assist such Holder (or such Holders, on
an equitable basis) in identifying opportunities and making arrangements for a
private placement, block trade, or other sale, transfer, or exchange of such
securities on reasonable and favorable terms consistent with all applicable
securities laws and regulations.
3.2 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.
3.3 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,
or their respective permitted transferees or assignees. 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 no Registrable
Securities remain outstanding; provided, that the provisions of Sections 2.6,
2.7 and 3.2 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 or 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 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 (including by commercial courier service),
(b) by registered or certified mail, postage prepaid, 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 Motorola, to:
Motorola, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Treasurer
Telecopy No. (000) 000-0000.
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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; EXECUTION. This Agreement may be executed and delivered
in counterparts, each of which shall be deemed an original instrument, but all
of which together shall constitute but one and the same agreement. This
Agreement may be executed and delivered by facsimile.
3.9 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement and the
transactions contemplated hereby shall be construed in accordance with, and
governed by, the laws of the State of New York. Each of Next Level and Motorola
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New York state court
sitting in New York City for the purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated hereby. Each
of Next Level and Motorola irrevocably waives, to the fullest extent permitted
by applicable law, any objection that each may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum.
3.10 ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
of the parties hereto with respect to the subject matter hereof.
3.11 TRANSFERS AND ASSIGNMENTS. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and permitted 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.
3.12 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.
NEXT LEVEL COMMUNICATIONS, INC.
By: ____________________________
Name: __________________________
Title: _________________________
MOTOROLA, INC.
By: ____________________________
Name: __________________________
Title: _________________________
