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Exhibit 10.6
Execution Copy
REGISTRATION RIGHTS AGREEMENT, dated as of December 14,
1999, among TeleCommunication Systems, Inc., a Maryland
corporation (the "Company") the security holders of the
Company listed on the signature pages hereto and the
other security holders of the Company from time to time
party hereto (the "Holders").
INTRODUCTION
Pursuant to the Share Purchase Agreement, dated as of December 14, 1999
(the "Series A Purchase Agreement"), by and the Company and certain Holders
party thereto, on the date hereof, such Holders are purchasing from the Company
shares of Series A Preferred Stock, $.001 par value, of the Company (the "Series
A Preferred Stock") on the terms and conditions set forth therein. It is a
condition to the consummation of the transactions contemplated by the Series A
Purchase Agreement (from which the Company and the Holders will derive
significant benefits) that the parties hereto enter into this Agreement.
Accordingly, the parties agree as follows:
SECTION 1. Definitions: Rules of Interpretation. (a) When used in this
Agreement:
"Affiliate" means, when used with respect to a specified Person, a
limited or general partner of such Person or another Person that directly, or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with the Person specified, where "control" means
possession, directly or indirectly, of power to direct or cause the direction of
management or policies of the specified Person (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"Class A Common Stock" means the Class A Common Stock, $.001 par value,
of the Company.
"Class A Warrants" means, collectively, (i) the Second Amended and
Restated Stock Purchase Warrant dated December 14, 1999 issued by the Company to
Finova Mezzanine Capital Inc. ("Finova"), pursuant to which Finova is entitled
to purchase up to 885,250 shares of Class A Common Stock (subject to adjustment
as provided for therein), (ii) the Amended and Restated Stock Purchase Warrant
dated December 14, 1999 issued by the Company to Tatonka Capital Corporation
("Tatonka"), pursuant to which Tatonka is entitled to purchase up to 335,700
shares of Class A Common Stock (subject to adjustment as provided for therein),
and (iii) the Stock Purchase Warrant dated December 14, 1999 issued by the
Company to Commerce Funding Corporation ("Commerce"), pursuant to which Commerce
is entitled to purchase up to 37,300 shares of Class A Common Stock (subject to
adjustment as provided for therein).
"Class B Warrant" means the Warrant dated December 14, 1999 issued by
the Company to Xxxxxx X. Xxxx ("Xxxx"), pursuant to which Xxxx is entitled to
purchase up to 102,380 shares of Class B Common Stock (subject to adjustment as
provided for therein).
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Governmental Authority" means any government, court, administrative
agency or commission or other governmental agency, authority or instrumentality,
domestic or foreign, of competent jurisdiction.
"Form S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC.
"Person" means any individual, firm, corporation, partnership, limited
liability company, trust, joint venture, Governmental Authority or other entity,
and shall include any successor (by merger or otherwise) of such entity.
"Public Sale" means any sale of Registrable Securities to the public
pursuant to a public offering registered under the Securities Act or to the
public through a broker or market-maker pursuant to the provisions of Rule 144
(or any successor rule) adopted under the Securities Act.
"register," "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
"Registrable Securities" means (i) any Class A Common Stock or other
securities issuable or issued upon conversion or exercise of the Series A
Preferred Stock or the Warrants or otherwise held by the Series A Holders, and
(ii) any Class A Common Stock or other securities issued as (or issuable upon
the conversion, exercise or exchange of any option, warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, the securities referred to in clause
(i), in each case held at any time by the Holders; provided that Registrable
Securities shall not include shares of Class A Common Stock or other securities
that (A) have been sold in a Public Sale or (B) are held by a Holder whose
entire holdings of Registrable Securities are then eligible for resale without
registration and without regard to volume or time limitations under Rule 144
under the Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC (provided, however, that
this clause (B) shall not apply for purposes of Section 3 hereof).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Series A Holders" means Signal Equity Partners, L.P., GE Capital
Equity Investments, Inc. and their respective direct and indirect transferees of
Registrable Securities.
"Warrants" means, collectively, the Class A Warrants and the Class B
Warrant.
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(b) Headings etc. Descriptive headings are for convenience only and
shall not control or affect the meaning or construction of any provision of this
Agreement. Except as otherwise expressly provided in this Agreement, the
following rules of interpretation apply to this Agreement: (i) the singular
includes the plural and the plural includes the singular; (ii) "or" and "any"
are not exclusive and "include" and "including" are not limiting; (iii) a
reference to any agreement or other contract includes permitted supplements and
amendments; (iv) a reference to a law includes any amendment or modification to
such law and any rules or regulations issued thereunder; (v) a reference to a
person includes its permitted successors and assigns; and (vi) a reference in
this Agreement to an Article, Section, Annex, Exhibit or Schedule is to the
Article, Section, Annex, Exhibit or Schedule of this Agreement.
SECTION 2. Demand Registrations. (a) Exercise of Rights. The Company
shall, upon the written demand of the Series A Holders holding a majority of
Registrable Securities held by Series A Holders at any time after the date
hereof, effect as expeditiously as possible, and in any event within 60 days (or
120 days, if the proposed registration is to be an initial public offering of
capital stock of the Company) after receipt of such written demand, the
registration (a "Demand Registration") under the Securities Act of (i) all
Registrable Securities held by the Series A Holders initiating such Demand
Registration which are requested to be registered in the initial written demand
and (ii) any additional Registrable Securities requested to be registered by
other Series A Holders who elect to include Registrable Securities in such
Demand Registration in a written notice or notices given within 5 business days
of the date the Demand Registration Notice (as defined below) is given by the
Company (together with the Registrable Securities described in clause (i), the
"Included Securities"). Promptly (but in no event later than 2 business days
after) the receipt by the Company of any written demand pursuant to clause (i)
of the immediately preceding sentence, the Company will give written notice of
such demand to all Series A Holders (the "Demand Registration Notice"). The
Company shall effect the registration under the Securities Act of the Included
Securities as expeditiously as possible and use its best efforts to have such
registration become and remain effective as provided in Section 4 hereof. The
Company have the right to select the underwriters for a Demand Registration that
is to be an underwritten offering, subject to the reasonable approval of the
Series A Holders initiating such Demand Registration. Each holder of Included
Securities shall be permitted to withdraw all or any part of the Included
Securities of such holder from any Demand Registration at any time prior to the
effective date of such Demand Registration; provided, in the case of an
underwritten offering, that such holder is permitted to do so by the managing
underwriters or pursuant to any agreement with such managing underwriters; and
provided, further, however, that such Demand Registration shall count as a
Demand Registration unless the holders of the Included Securities pay all
expenses referred to in Section 8(a) in connection with the withdrawn
registration.
(b) Limitations. Notwithstanding Section 2(a), the Company shall be
required to effect no more than two Demand Registrations; provided, that the
Series A Holders shall be entitled to unlimited additional Demand Registrations
if such additional Demand Registrations would be eligible for registration on
Form S-3 after the Company qualifies for Form S-3; and provided, however, that
the Company shall not be required to effect more than two such Demand
Registrations on Form S-3 in any twelve month period.
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(c) Additional Requirements. Any registration initiated pursuant to
Section 2(a) shall not count as a Demand Registration (i) unless and until a
registration statement with respect to all Registrable Securities to be sold in
connection therewith shall have become effective and remained effective and at
least 75% of the number of Included Securities not withdrawn by Series A Holders
from the registration shall have been sold (unless all Included Securities are
withdrawn by the holders thereof and the Company has performed its obligations
under this Agreement in all material respects, in which case such registration
will count as a Demand Registration unless the holders of the Included
Securities pay all expenses referred to in Section 8(a) in connection with the
withdrawn registration), (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 any other Governmental Authority for any reason not attributable
to the holders of Included Securities, such that no sales are possible
thereunder for a period of 10 days or more, or (iii) if the conditions to
closing specified in the underwriting agreement, if any, entered into in
connection with such registration are not satisfied or waived, other than by
reason of a failure on the part of all holders of Included Securities.
(d) Inclusion of Other Securities. Neither the Company nor any of its
securityholders shall be entitled to include any securities in any underwritten
Demand Registration unless the Company or such securityholders (as the case may
be) shall have agreed to such inclusion and unless the Company and such other
securityholders shall have agreed in writing to sell such securities on the same
terms and conditions as shall apply to the Registrable Securities to be included
in such Demand Registration.
(e) Cutbacks. If the managing underwriters of any Demand Registration
advise the Company in writing that in their good faith judgment that the number
of securities to be included in the Demand Registration exceeds the number that
can be sold in the offering in light of marketing factors or because the sale of
a greater number would adversely affect the price of the Registrable Securities
to be sold in such Demand Registration, then the total number of securities the
underwriters advise can be included in such Demand Registration shall be
allocated (i) first, to each holder of Included Securities in proportion to such
holder's ownership of the total number of Included Securities; and (ii) second,
among any securities of the Company the Company proposes to issue and sell for
its own account or register for sale by any Person (other than a holder of
Included Securities) in such Demand Registration in accordance with any
contractual provisions binding on the Company and/or the holders of such
securities or, if no contractual provisions apply, as the Company may determine.
(f) Termination. This Section 2 shall terminate with respect to any
shares of Class A Common Stock or other securities that have been sold in a
Public Sale or are held by a Holder whose entire holdings of Registrable
Securities are then eligible for resale without registration and without regard
to volume or time limitations under Rule 144 under the Securities Act, as such
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SECTION 3. Piggyback Registrations. (a) Exercise of Rights. If the
Company proposes to register any of its securities under the Securities Act for
sale (other than in connection with a Demand Registration or the registration of
securities issuable pursuant to an employee stock option, stock purchase or
similar plan or pursuant to a merger, exchange offer or
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a transaction of the type specified in Rule 145 under the Securities Act), the
Company shall give the Holders notice of such proposed registration (a
"Piggyback Registration") at least 30 days prior to the filing of a registration
statement in connection therewith. At the written request of any Holder
delivered to the Company within 15 days after the receipt of the notice from the
Company, which request shall state the number of Registrable Securities that
such Holder wishes to sell or distribute publicly in the Piggyback Registration,
the Company shall effect the registration under the Securities Act of the
Registrable Securities requested to be included in the Piggyback Registration
(the "Piggyback Securities") as expeditiously as possible and use its best
efforts to have such registration become and remain effective as provided in
Section 4 hereof. Each holder of Piggyback Securities shall be permitted to
withdraw all or any part of the Piggyback Securities of such holder from any
Piggyback Registration at any time prior to the effective date of such Piggyback
Registration; provided, in the case of an underwritten offering, that such
holder is permitted to do so by the managing underwriters or pursuant to any
agreement with such managing underwriters.
(b) Additional Requirements. No Holder shall be entitled to include any
securities in any underwritten Piggyback Registration unless such Holder shall
have agreed in writing to sell such securities on the same terms and conditions
as shall apply to the securities (other than Piggyback Securities) to be
included in such Piggyback Registration. If a Piggyback Registration is to
cover, in whole or in part, any underwritten distribution, then the Company
shall use its reasonable best efforts to cause all Piggyback Securities to be
included in the underwriting on the same terms and conditions as the securities
(other than Piggyback Securities) being sold through the underwriters.
(c) Cutbacks. If the managing underwriters of any Piggyback
Registration advise the Company in writing that in their good faith judgment
that the number of securities to be included in the Piggyback Registration
exceeds the number that can be sold in the offering in light of marketing
factors or because the sale of a greater number would adversely affect the price
of the Registrable Securities to be sold in such Piggyback Registration, then
the total number of securities the underwriters advise can be included in such
Piggyback Registration shall be allocated (i) first, to the securities of the
Company the Company proposes to issue and sell for its own account; (ii) second,
to each Series A Holder holding Piggyback Securities in proportion to such
Series A Holder's ownership of the total number of Piggyback Securities; (iii)
third, to each holder of Piggyback Securities (other than a Series A Holder) in
proportion to such holder's ownership of the total number of Piggyback
Securities; and (iv) fourth, among any securities of the Company the Company
proposes to register for sale by any Person (other than a holder of Piggyback
Securities) in such Piggyback Registration in accordance with any contractual
provisions binding on the Company and/or the holders of such securities or, if
no contractual provisions apply, as the Company may determine.
SECTION 4. Registration Covenants of the Company. If any Registrable
Securities of any Holder are to be registered pursuant to Section 2 or Section
3, the Company covenants and agrees that it shall use its best efforts to effect
the registration and cooperate in the sale of the Registrable Securities to be
registered and shall as expeditiously as possible:
(a) (i) prepare and file with the SEC a registration statement with
respect to the Registrable Securities (including all amendments and supplements
thereto, a "Registration
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Statement") and (ii) use its reasonable best efforts to cause the Registration
Statement to become effective;
(b) prior to the filing described above in paragraph (a), furnish to
each Holder participating in such offering copies of the Registration Statement
and any amendments or supplements thereto and any prospectus forming a part
thereof, which documents shall be subject to the review of counsel one counsel
representing the Holders (but not approval of such counsel except with respect
to any statement in the Registration Statement which relates to any Holder);
(c) notify each such Holder, promptly after receiving notice thereof,
of the time when the Registration Statement becomes effective or when any
amendment or supplement or any prospectus forming a part of the Registration
Statement has been filed;
(d) notify each Holder participating in such offering promptly of any
request by the SEC for the amending or supplementing of the Registration
Statement or prospectus or for additional information;
(e) (i) advise, each Holder participating in such offering after the
Company shall receive notice or otherwise obtain knowledge of the issuance of
any order by the SEC suspending the effectiveness of the Registration Statement
or any amendment thereto or of the initiation or threatening of any proceeding
for that purpose and (ii) promptly use its reasonable best efforts to prevent
the issuance of any stop order or to obtain its withdrawal promptly if a stop
order should be issued;
(f) (i) prepare and file with the SEC such amendments and supplements
to the Registration Statement and the prospectus forming a part thereof as may
be necessary to keep the Registration Statement effective for a period of time
necessary to permit each Holder participating in such offering to dispose of all
its Registrable Securities and (ii) comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered by the
Registration Statement during such period in accordance with the intended
methods of disposition by each such Holder set forth in the Registration
Statement;
(g) furnish to each Holder participating in such offering such number
of copies of the Registration Statement, each amendment and supplement thereto,
the prospectus included in the Registration Statement (including such
preliminary prospectus) and such other documents such Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Holder;
(h) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as determined by the underwriters after consultation with the
Company and the Holders participating in the offering and do any and all other
acts and things which may be reasonably necessary or advisable to enable each
Holder to consummate the disposition in such jurisdictions of the Registrable
Securities (provided that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction in which it would not otherwise be
required to qualify but for this paragraph (h), (ii) subject itself to taxation
in any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction);
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(i) notify the Holders participating in the offering, at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the Registration
Statement would contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and, at the request of any such Holder,
prepare a supplement or amendment to the Registration Statement so that the
Registration Statement shall not contain an untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(j) if the Common Stock is not then listed on a securities exchange and
if the NASD is reasonably likely to permit the reporting of the Common Stock on
Nasdaq, use its best efforts, consistent with the then current corporate
structure of the Company, to facilitate the reporting of transactions in the
Common Stock on Nasdaq;
(k) provide a transfer agent and registrar, which may be a single
entity, for all the Registrable Securities not later than the effective date of
the Registration Statement;
(1) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other action, if any, as the
Holders participating in such offering or the underwriters shall reasonably
request in order to expedite or facilitate the disposition of the Registrable
Securities pursuant to this Agreement;
(m) (i) make available for inspection by the Holders participating in
such offering, any underwriter participating in any distribution pursuant to the
Registration Statement and any attorney, accountant or other agent retained by
such Holders or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and (ii) cause the
Company's officers, directors and employees to supply all relevant information
reasonably requested by such Holders or any such underwriter, attorney,
accountant or agent in connection with the Registration Statement;
(n) furnish to each Holder participating in the offering a signed
counterpart, addressed to the Holders, (or to the underwriters, in the case of
any underwritten offering) of (i) an opinion of counsel for the Company, dated
the effective date of the registration statement, and (ii) a "comfort" letter
signed by the independent public accountants who have certified the Company's
financial statements included in the registration statement, covering
substantially the same matters with respect to the registration statement (and
the prospectus included therein) and (in the case of the "comfort" letter) with
respect to events subsequent to the date of the financial statements, as are
customarily covered (at the time of such registration) in opinions of issuer's
counsel and in "comfort" letters, respectively, delivered to the underwriters in
underwritten public offerings of securities;
(o) cause senior representatives of the Company to participate in any
"road show" or "road shows" reasonably requested by any underwriter of an
underwritten or "best efforts" offering of any Registrable Securities; and
(p) notify each Holder of any Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered
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under the Securities Act, promptly upon the Company's becoming aware that the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and at the request
of any such Holder, prepare and furnish to such Holder a reasonable number of
copies of an amended or supplemental prospectus as may be necessary so that, as
thereafter delivered to the sellers 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 not misleading in the light of the circumstances then
existing.
SECTION 5. Cooperation by the Holders. (a) Lock-Up Agreements. Each
Holder, if and for the period of time the managing underwriters so request in
connection with any underwritten registration of Registrable Securities, will
not, to the extent requested by such underwriters during the time period
specified, effect any public sale or other distribution of any equity securities
of the Company without the prior written consent of such underwriters; provided,
however, that (i) all executive officers and directors of the Company, all
beneficial owners of 5% or more of the outstanding capital stock of the Company
and all other persons with registration rights (whether or not pursuant to this
Agreement) enter into similar agreements, (ii) such market stand-off time period
shall not extend beyond 180 days following the date of the final prospectus and
30 days prior to the date of the final prospectus and (iii) any such market
stand-off or lock-up agreements contains reasonable and customary exceptions
(including without limitation permitting transfers to Affiliates and transfers
of shares owned as the result of open market purchases without restriction).
(b) Cooperation. Each prospective seller of Registrable Securities will
furnish to the Company in writing such information as the Company may reasonably
require and which is customary in such transactions from such seller, and
otherwise reasonably cooperate with the Company in connection with any
registration statement with respect to such Registrable Securities. The failure
of any prospective seller of Registrable Securities to furnish any information
or documents in accordance with any provision contained in this Agreement shall
not affect the obligations of the Company under this Agreement to any remaining
sellers who furnish such information and documents unless in the reasonable
opinion of counsel to the Company or the underwriters such failure impairs or
may impair the viability of the offering or the legality of the registration
statement or the underlying offering.
(c) Suspension by Company. Holders of Registrable Securities included
in any registration statement will not (until further notice) effect sales of
Registrable Securities included in any registration statement after receipt of
written notice from the Company to suspend sales to permit the Company to
correct or update such registration statement or prospectus (which obligation to
correct or update the Company will satisfy promptly); but the obligations of the
Company with respect to maintaining any registration statement current and
effective shall be extended by a period of days equal to the period such
suspension is in effect.
SECTION 6. Additional Covenants of the Company. (a) Other Registration
Rights. From and after the date of this Agreement, the Company shall not,
without the prior written consent of the holders of at least a majority of the
outstanding Registrable Securities held by the Series A Holders, enter into any
agreement with any holder or prospective
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holder of any securities of the Company which give such holder or prospective
holder rights that are superior to, or which adversely affect, the rights
granted under this Agreement.
(b) Rule 144 Information. After the Company becomes subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, but only for
so long as the Company is so subject, the Company shall take all actions
necessary to enable the Holders to sell the Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the SEC,
including filing on a timely basis all reports required to be filed by the
Exchange Act. Upon the request of any Holder, the Company shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
(c) Restrictions on Public Sale by the Company. The Company agrees,
unless it obtains the consent of the managing underwriter(s) of any underwritten
offering of Registrable Securities pursuant to this Agreement, not to effect any
public sale or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such equity securities,
during the period commencing on the 30th day prior to, and ending on the 180th
day (or such longer period as shall be reasonably required by the managing
underwriters) following, the effective date of any underwritten Demand
Registration or Piggyback Registration, except in connection with any such
underwritten registration, or pursuant to any registration statements on Form
S-8 or the then equivalent form.
SECTION 7. Indemnification. (a) Indemnification by the Company. To the
fullest extent permitted by law, in the event of any registration of any
Registrable Securities pursuant to the provisions of this Agreement, the Company
shall indemnify, defend and hold harmless each selling Holder, each other Person
who participates as an underwriter in the offering or sale of such Registrable
Securities, each other Person, if any, who controls such Holder or any such
underwriter within meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act and their respective directors, officers, agents, employees,
stockholders and representatives (collectively, "Indemnitees") from and against
any losses, claims, damages or liabilities, joint or several, to which such
Indemnitee may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which the Registrable Securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and the Company shall reimburse each such Indemnitee for any legal or any other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, liability, action or proceeding; provided, however, that
the Company shall not be liable in any such case to any Indemnitee to the extent
that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in strict conformity
with
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written information about such Indemnitee furnished to the Company in a writing
duly executed by or on behalf of such Indemnitee specifically stating that it is
for use in the preparation thereof; and provided further, however, that the
Company shall not be liable to any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereon) or expense arises out of such Person's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting a claim based upon an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or, omission was corrected in such final prospectus.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Indemnitee and shall survive the
transfer of the Registrable Securities of each Indemnitee.
(b) Indemnification by Holders. The Company may require, as a condition
to including any Registrable Securities in any registration statement filed
pursuant to this Agreement, that the Company shall have received an undertaking
reasonably satisfactory to it from each Holder offering Registrable Securities
under such registration statement, severally and not jointly, to indemnify and
hold harmless (in the same manner and to the same extent as set forth in Section
7(a)) the Company, each director of the Company, each officer of the Company
signing such registration statement and each other Person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act with respect
to (i) any untrue statement or alleged untrue statement in or (ii) omission or
alleged omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein or any amendment or
supplement thereto, if such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in strict conformity
with written information about such Holder as a stockholder of the Company
furnished to the Company in a writing duly executed by such Holder specifically
stating that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such director,
officer or controlling Person and shall survive the transfer by the seller of
the securities of the Company being registered. Notwithstanding the foregoing,
each Holder's liability under this Section 7(b) with respect to any particular
registration shall be limited to an amount equal to the net proceeds received by
such Holder from the Registrable Securities sold by such Holder in such
registration.
(c) Contribution. If the indemnification provided for in Section 7(a)
or Section 7(b) above is unavailable to an indemnified party in respect of any
losses, claims, damages or liabilities referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified parties on the other in connection with the
statements or omissions or violations which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information
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11
supplied by the indemnifying party or by the indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7(c) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities or actions in respect thereof referred
to in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, 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 misrepresentations (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. The obligation of any Holder obliged to make contribution
pursuant to this Section 7(c) shall be several and not joint, and no such Holder
shall be obliged to make contribution in excess of an amount equal to the net
proceeds received by such Holder from the Registrable Securities sold by such
Holder in such registration.
(d) Indemnification Procedures. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 7(a) or 7(b), such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
give notice to the latter of the commencement of such action; provided, however,
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under Section 7(a)
or 7(b), except to the extent that the indemnifying party is actually and
materially prejudiced by such failure to give notice. In case any such action is
brought against any indemnified party, unless in the opinion of such indemnified
party's counsel a conflict of interest between such indemnified and indemnifying
parties or other indemnified party may exist or the indemnified party may have
defenses not available to the indemnifying party or any other indemnified party
in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable for any settlement of any
action or proceeding affected without its written consent. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation or which
involves relief other than the payment of money damages.
(e) Payments. The indemnification required by this Section 7 shall be
made by periodic payments of the amount thereof during the course of
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
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12
SECTION 8. Miscellaneous. (a) Expenses. The Company shall pay all
expenses of the Holders in connection with any Demand Registration or Piggyback
Registration, including without limitation all registration, filing and NASD
fees, all fees and expenses of complying with securities or blue sky laws, all
word processing, duplicating and printing expenses, all messenger and delivery
expenses, all fees and disbursements of one counsel for the Holders and the
Company and of its independent public accountants (including the expenses of
comfort letters required by or incident to such performance and compliance) and
any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding any underwriting discounts and commissions,
if any, relating to the Registrable Securities being sold by a Holder, which
shall be paid by such Holder.
(b) Specific Performance. The parties acknowledge that the Holders'
damages at law would be an inadequate remedy for the breach or non-performance
of any provision of this Agreement by the Company, and agree in the event of
such breach that the aggrieved party may obtain temporary and permanent
injunctive relief restraining the Company from such breach or compelling
specific performance of such provision, and, to the extent permissible under
applicable statutes and rules of procedure, a temporary injunction may be
granted immediately upon the commencement of any such suit without proof of
actual harm. Nothing contained in this Agreement shall be construed as
prohibiting any party from pursuing other remedies available at law or equity
for such breach or non-performance.
(c) Notices. Notices and other communications provided for herein shall
be in writing and shall be delivered by hand or overnight courier service or
sent by facsimile as follows:
if to the Holders,
Signal Equity Partners, L.P.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
and
GE Capital Equity Investments, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
if to the Company:
TeleCommunication Systems, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
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13
if to any other Holder, to the address or facsimile number given on the
signature pages to this Agreement, or in any case to such other address as any
party hereto shall have communicated to the other parties hereto by notice in
accordance with this provision. All notices and other communications given to
any party in accordance with the provisions of this Agreement shall be deemed to
have been given on the date of receipt if delivered by hand or overnight courier
service or sent by facsimile in each case delivered or sent (properly addressed)
to such party as provided in this Section 8(c) or in accordance with the latest
unrevised direction from such party given in accordance with this Section 8(c).
(d) Assignment. This Agreement and the rights, interests and
obligations hereunder shall not be assignable or transferable by the Company
without the prior written consent of Series A Holders holding at least a
majority of the Registrable Securities held by Series A Holders. Any Holder may
assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any of its Affiliates or to any direct or
transferee of Registrable Securities who agrees to become bound by the
provisions of this Agreement and the Stockholders' Agreement, dated as of the
date hereof, between the Company and the security holders of the Company party
thereto (as the same may be amended and/or restated and in effect from time to
time) other than a transferee who shall acquire such Registrable Securities in a
Public Sale. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns.
(e) No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their respective successors and permitted
assigns and nothing herein expressed or implied shall give or be construed to
give to any Person, other than the parties hereto and such successors and
assigns, any legal or equitable rights hereunder, except to the extent otherwise
provided in Section 7.
(f) Waivers. No failure or delay of the Holders or the Company in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holders and the Company hereunder
are cumulative and are not exclusive of any rights or remedies which the Holders
or the Company would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Company therefrom shall in any
event be effective unless the same shall be effected in accordance with this
Section 8(g), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
the Company in any case shall entitle the Company to any other or further notice
or demand in similar or other circumstances. Neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Company and all of the
Holders.
(g) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof. Any previous
agreement among the parties (including without limitation the term sheet, dated
October 12, 1999) with respect to the subject matter hereof is superseded by
this Agreement.
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(h) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to the other party.
(k) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE CONFLICTS
OF LAW PRINCIPLES OF SUCH STATE.
(l) CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF NEW YORK STATE SITTING IN THE COUNTY OF NEW YORK
OR ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN THE SOUTHERN
DISTRICT OF NEW YORK IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE
DISPOSITION OF REGISTRABLE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
THE COMPANY MAY NOT MOVE TO (I) TRANSFER ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH NEW YORK COURT OR FEDERAL COURT TO ANOTHER JURISDICTION, (II)
CONSOLIDATE ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH NEW YORK COURT
OR FEDERAL COURT WITH A SUIT, ACTION OR PROCEEDING IN ANOTHER JURISDICTION OR
(III) DISMISS ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH NEW YORK COURT
OR FEDERAL COURT FOR THE PURPOSE OF BRINGING THE SAME IN ANOTHER JURISDICTION.
THE COMPANY AGREES THAT A FINAL JUDGMENT IN ANY SUCH SUIT, ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. THE COMPANY HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY
DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE DISPOSITION OF REGISTRABLE SECURITIES OR THE TRANSACTIONS CONTEMPLATED
HEREBY IN ANY NEW YORK COURT SITTING IN THE COUNTY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE SOUTHERN DISTRICT OF NEW YORK. THE COMPANY HEREBY CONSENTS
TO THE SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY NOTICE IN
THE MANNER SPECIFIED IN SECTION 8(c).
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15
IN WITNESS WHEREOF, the parties have duly executed this Registration
Rights Agreement as of the day and year first above written.
TELECOMMUNICATION SYSTEMS, INC.
By: /s/ Xxxxxxx Xxxx
------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
SIGNAL EQUITY PARTNERS, L.P.
BY: SIGNAL EQUITY ADVISORS, L.P.
BY: SIGNAL EQUITY ADVISORS, INC.
By: /s/ Xxxxxxx X Xxxx XX
------------------------------
Name: Xxxxxxx X Xxxx XX
Title: Vice President
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
FINOVA MEZZANINE CAPITAL INC.
By:
------------------------------
Name:
Title:
15
16
Warrantholders:
FINOVA MEZZANINE CAPITAL
By: /s/ Xxxxx X. Xxxxx
------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
TATONKA CAPITAL CORPORATION
By: /s/ X. Xxxxxx
------------------------------
Name: Xxxxxxx Xxxxxx
Title: CFO
COMMERCE FUNDING CORPORATION
By: /s/ Xxx X. Xxxxxx
------------------------------
Name: Xxx X. Xxxxxx
Title: President
/s/ Xxxxxx X. Xxxx
---------------------------------
Xxxxxx X. Xxxx
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