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EXHIBIT 10.19
▇▇▇▇.▇▇▇, INC.
Convertible Preferred Stock
Registration Rights Agreement
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into this 23rd day of February, 1998 by and between ▇▇▇▇.▇▇▇, INC., a
Kentucky corporation (the "Company"), and BROADBAND SOLUTIONS, LLC, a Kentucky
limited liability company ("Investor"), and COLORADO LIMITED PARTNERSHIP, a
Georgia limited partnership, OPM SERVICES, INC., a Kentucky corporation, and
▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP, a Georgia limited partnership (collectively,
the "Common Shareholders").
Recitals
WHEREAS, the Company and the Investor are parties to a Convertible
Preferred Stock Purchase Agreement dated February 23, 1998 (the "Purchase
Agreement"), under which certain of the Company's and the Investor's obligations
are conditioned upon the execution and delivery by the Investor and the Company
of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below.
1.1 "Preferred Stock" shall mean the Company's Convertible
Preferred Stock, no par value per share.
1.2 "Common Stock" shall mean the Company's Common Stock or
any capital stock exchanged therefor.
1.3 "Commission" shall mean the federal Securities and
Exchange Commission or any other federal agency at the time
administering the Securities Act.
1.4 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar successor federal statute and the
rules and regulations thereunder, all as the same shall be in effect
from time to time.
1.5 "Holder" shall mean Investor and any holder of Registrable
Securities to whom the registration rights conferred by this Agreement
have
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been transferred in compliance with Section 8 hereof.
1.6 "Initiating Holders" shall mean any Holder or Holders of
not less than 50% of the Registrable Securities.
1.7 "Registrable Securities" shall mean [i] any shares of
Common Stock issued or issuable pursuant to the conversion of the
Preferred Stock, [ii] any shares of Common Stock or any other capital
stock exchanged for Common Stock issued as a dividend or other
distribution with respect to or in exchange for or in replacement of
the shares referenced in [i] above, and [iii] all other Common Stock
which Investor shall have acquired at any time; provided, however, that
Registrable Securities shall not include any shares of Common Stock
which have previously been registered or which have been sold to the
public or which have been sold in a private transaction in which the
transferor's rights under this Agreement are not assigned.
1.8 "Registrable Common Securities" shall mean twenty percent
(20%) of all Common Stock which the Common Shareholders hold in the
aggregate; provided, however, that Registrable Common Securities shall
not include any shares of Common Stock which have previously been
registered or which have been sold to the public or which have been
sold in a private transaction in which the transferor's rights under
this Agreement are not assigned.
1.9 The terms "register," "registered" and "registration"
shall refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and
applicable rules and regulations thereunder, and the declaration or
ordering of the effectiveness of such registration statement.
1.10 "Registration Expenses" shall mean all expenses incurred
in effecting any registration pursuant to this Agreement, including,
without limitation, all registration, qualification, and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for
the Company, blue sky fees and expenses, and expenses of any regular or
special audits incident to or required by any such registration, but
shall not include Selling Expenses and fees and disbursements of
counsel for the Holders (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the
Company).
1.11 "Rule 144" shall mean Rule 144 as promulgated by the
Commission under the Securities Act, as such Rule may be amended from
time to time, or any similar successor rule that may be promulgated by
the Commission.
1.12 "Rule 145" shall mean Rule 145 as promulgated by the
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Commission under the Securities Act, as such Rule may be amended from
time to time, or any similar successor rule that may be promulgated by
the Commission.
1.13 "Securities Act" shall mean the Securities Act of 1933,
as amended, or any similar successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect from time to
time.
1.14 "Selling Expenses" shall mean all underwriting discounts,
selling commissions, and stock transfer taxes applicable to the sale of
Registrable Securities and fees and disbursements of counsel for any
Holder (other than the fees and disbursements of counsel included in
Registration Expenses).
2. Company Registration.
2.1 If the Company shall determine to register any of its
Common Stock or Preferred Stock for its own account or for the account
of any other party, other than a registration relating solely to
employee benefit plans, or a registration relating solely to a Rule 145
transaction, or a registration on any registration form that does not
permit secondary sales, the Company will:
[a] promptly give to each Holder written notice thereof and
of the anticipated effective date of such registration; and
[b] use its best efforts to include in such registration
(and any related qualification under blue sky laws or other
compliance), except as set forth in Section 2.2 below, and in any
underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made by any Holder
and received by the Company within thirty (30) days after the
written notice from the Company described in clause [a] above is
mailed or delivered by the Company. Such written request may
specify all or any part of a Holder's Registrable Securities.
2.2 Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the
written notice given pursuant to Section 2.1[a]. In such event, the
right of any Holder to registration pursuant to this Section 2 shall be
conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such under writing shall (together
with the Company and the other holders of securities of the Company
with registration rights to participate therein distributing their
securities through such underwriting) enter into an underwriting
agreement in customary form with the representatives of the
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underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 2, if the
representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the limitations set
forth below) exclude all Registrable Securities from, or limit the
number of Registrable Securities to be included in, the registration
and underwriting. The Company shall so advise all holders of securities
requesting registration, and the number of shares of securities that
are entitled to be included in the registration and underwriting shall
be allocated first to the Company for securities being sold for its own
account and thereafter as set forth in Section 11. If any person does
not agree to the terms of any such underwriting, he shall be excluded
therefrom by written notice from the Company or the underwriter. Any
Registrable Securities or other securities excluded or withdrawn from
such underwriting shall be with drawn from such registration.
If shares are so withdrawn from the registration or if the
number of shares of Registrable Securities to be included in such
registration was previously reduced as a result of marketing factors,
the Company shall then offer to all persons who have retained the right
to include securities in the registration the right to include
additional securities in the registration in an aggregate amount equal
to the number of shares so withdrawn, with such shares to be allocated
among the persons requesting additional inclusion in accordance with
Section 11 hereof.
3. Demand Registration.
3.1 Demand for Registration. If the Company shall receive from
Initiating Holders at any time or times following the Company's initial
registered public offering of its Common Stock with the Commission a written
request that the Company effect any registration with respect to all or a part
of the Registrable Securities, the Company will:
[a] promptly give written notice of the proposed registration
to all other Holders; and
[b] as soon as practicable, use its best efforts to effect
such registration (including, without limitation, filing post-effective
amendments, appropriate qualifications under applicable blue sky or
other state securities laws, and appropriate compliance with the
Securities Act and any other governmental requirements or regulations)
and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such
request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are
specified in a
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written request received by the Company within thirty (30) business
days after such written notice from the Company is mailed or delivered.
The Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this Section 3.1:
[i] In any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in
effecting such registration, qualification, or compliance, unless the
Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act;
[ii] After the Company has initiated two such registrations
pursuant to this Section 3.1 (counting for these purposes only
registrations which have been declared or ordered effective and
pursuant to which securities have been sold);
[iii] During the period starting with the date sixty (60) days
prior to the Company's good faith estimate of the date of filing of,
and ending on a date one hundred eighty (180) days after the effective
date of, a Company-initiated registration; provided that the Company is
actively employing in good faith all reason able efforts to cause such
registration statement to become effective;
[iv] If the Initiating Holders do not request that such
offering be firmly underwritten by underwriters selected by the
Initiating Holders (subject to the consent of the Company, which
consent will not be unreasonably withheld); or
[v] If the Company and the Initiating Holders are unable to
obtain the commitment of the underwriter described in clause [iv] above
to firmly underwrite the offer.
3.2 Postponed Registration. Subject to the foregoing clauses [i]
through [v], the Company shall file a registration statement covering the
Registrable Securities so requested to be registered as soon as practicable, but
in any event within ninety (90) days, after receipt of the request or requests
of the Initiating Holders; provided, however, that if (i) in the good faith
judgment of the Board of Directors of the Company, such registration would be
seriously detrimental to the Company and the Board of Directors of the Company
concludes, as a result, that it is essential to defer the filing of such
registration statement at such time, and (ii) the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company for such registration statement to be filed
in the near future and that it is, therefore, essential to defer the filing of
such registration statement, then
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the Company shall have the right to defer such filing (except as provided in
Clause [iii] above) for a period of not more than ninety (90) days after receipt
of the request of the Initiating Holders, and, provided further, that the
Company shall not defer its obligation in this matter more than once in any
twenty-four month period.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of this Section 3.2 and 11
hereof, include other securities of the Company, with respect to which
registration rights have been granted, and may include securities of the Company
being sold for the account of the Company.
3.3 Underwriting. The right of any Holder to registration pursuant to
Section 3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder with respect to such participation and
inclusion) to the extent provided herein. A Holder may elect to include in such
underwriting all or a part of the Registrable Securities he holds.
3.4 Procedures. If the Company shall request inclusion in any
registration pursuant to Section 3 of securities being sold for its own account,
or if other persons shall request inclusion in any registration pursuant to
Section 3, the Initiating Holders shall, on behalf of all Holders, offer to
include such securities in the underwriting and may condition such offer on
their acceptance of the further applicable provisions of this Agreement. The
Company shall (together with all Holders and other persons proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders, which underwriters are reasonably acceptable
to the Company. Notwithstanding any other provision of this Section 3, if the
representative of the underwriters advises the Initiating Holders in writing
that marketing factors require a limitation on the number of shares to be
underwritten, the number of shares to be included in the underwriting or
registration shall be allocated as set forth in Section 11 hereof. If a person
who has requested inclusion in such registration as provided above does not
agree to the terms of any such underwriting, such person shall be excluded
therefrom by written notice from the Company, the underwriter or the Initiating
Holders. The securities so excluded shall also be withdrawn from registration.
Any Registrable Securities or other securities excluded or withdrawn from such
underwriting shall also be withdrawn from such registration. If shares are so
withdrawn from the registration and if the number of shares to be included in
such registration was previously reduced as a result of marketing factors
pursuant to this Section 3.4, then the Company shall offer to all holders who
have retained rights to include securities in the registration the right to
include additional securities in the registration in an aggregate amount equal
to the number of shares so withdrawn, with such shares to be allocated among
such Holders requesting additional inclusion in accordance with Section 1.
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3.5 Common Shareholders. If the Company registers any of its Common
Stock or Preferred Stock pursuant to this Section 3, the Company will promptly
give to each Common Shareholder written notice thereof and of the anticipated
effective date of such registration and use its best efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the shares of Company
common stock of such Common Shareholder specified in a written request or
requests, made by any Common Shareholder and received by the Company within
thirty (30) days after the written notice from the Company is mailed or
delivered by the Company. Such written request may specify all or any part of a
Common Shareholders' shares of Company common stock; provided, however, that [i]
the right of any Common Shareholder to registration pursuant to this Section 3.5
shall be subject to all of the terms and conditions of this Agreement as if such
Common Shareholder were a Holder of Registrable Securities, including without
limitation the provisions of Section 6, [ii] no Common Shareholder may assign
its rights under this Section 3.5, [iii] the Company shall not limit the number
of Registrable Securities to be included in a registration pursuant to this
Agreement in order to include shares held by the Common Shareholders, and [iv]
no registration of the shares of a Common Shareholder shall be effected if it
shall interfere in any manner with the rights afforded the Holders of
Registrable Securities under this Agreement.
4. Demand Registration By Common Shareholders.
4.1 Demand for Registration. If the Company shall receive from the
Common Shareholders, acting together, at any time or times following the
Company's initial registered public offering of its Common Stock with the
Commission a written request that the Company effect any registration with
respect to all or a part of the Registrable Common Securities, the Company will
as soon as practicable, use its best efforts to effect such registration
(including, without limitation, filing post-effective amendments, appropriate
qualifications under applicable blue sky or other state securities laws, and
appropriate compliance with the Securities Act and any other governmental
requirements or regulations) and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Common Securities as are
specified in such request.
The Company shall not be obligated to effect, or to take any action to
effect, any such registration pursuant to this Section 4.1:
[i] In any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in
effecting such registration, qualification, or compliance, unless the
Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act;
[ii] After the Company has initiated one such registration
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pursuant to this Section 4.1, whether or not each Common Shareholder
elected to participate in such registration (counting for these
purposes only registrations which have been declared or ordered
effective and pursuant to which securities have been sold);
[iii] During the period starting with the date sixty (60) days
prior to the Company's good faith estimate of the date of filing of,
and ending on a date one hundred eighty (180) days after the effective
date of, a Company-initiated registration or a registration initiated
by Initiating Holders; provided that the Company or the Initiating
Holders, as applicable, are actively employing in good faith all
reasonable efforts to cause such registration statement to become
effective;
[iv] If the Common Shareholders do not request that such
offering be firmly underwritten by underwriters selected by the
Company;
[v] If the Company and the Common Shareholders are unable to
obtain the commitment of the underwriters described in clause [iv]
above to firmly underwrite the offer; or
[vi] If the Common Shareholders shall not have obtained the
prior written consent of a majority of the Holders, which consent shall
not be unreasonably with held; for purposes of this Section 4.1 [vi],
the failure of a majority of the Holders to grant such consent shall
not be considered unreasonable if the Holders reasonably believe that
the registration of the Registrable Common Securities will materially
affect the market price of the Company's Common Stock.
4.2 Postponed Registration. Subject to the foregoing clauses [i]
through [vi], the Company shall file a registration statement covering the
Registrable Common Securities so requested to be registered as soon as
practicable, but in any event within ninety (90) days, after receipt of the
request or requests of the Common Shareholders; provided, however, that if (i)
in the good faith judgment of the Board of Directors of the Company, such
registration would be seriously detrimental to the Company and the Board of
Directors of the Company concludes, as a result, that it is essential to defer
the filing of such registration statement at such time, and (ii) the Company
shall furnish to such Common Shareholders a certificate signed by the President
of the Company stating that in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company for such
registration statement to be filed in the near future and that it is, therefore,
essential to defer the filing of such registration statement, then the Company
shall have the right to defer such filing (except as provided in Clause [iii]
above) for a period of not more than ninety (90) days after receipt of the
request of the Common Shareholders, and, provided further, that the Company
shall not defer its obligation in this matter more than once in any twenty-four
month period.
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The registration statement filed pursuant to the request of the Common
Shareholders may, subject to the provisions of this Section 4.2 and 11 hereof,
include other securities of the Company, with respect to which registration
rights have been granted, and may include securities of the Company being sold
for the account of the Company.
4.3 Underwriting. The right of the Common Shareholders to registration
pursuant to Section 4 shall be conditioned upon such Common Shareholders'
participation in such underwriting and the inclusion of such Common
Shareholders' Registrable Common Securities in the underwriting to the extent
provided herein. A Common Shareholder may elect to include in such underwriting
all or a part of the Registrable Common Securities it holds, provided that no
more than twenty percent (20%) of all the Common Stock held by the Common
Shareholders in the aggregate shall be included.
4.4 Procedures. If the Company shall request inclusion in any
registration pursuant to Section 4 of securities being sold for its own account,
or if other persons shall request inclusion in any registration pursuant to
Section 4, the Common Shareholders shall offer to include such securities in the
underwriting and may condition such offer on their acceptance of the further
applicable provisions of this Agreement. The Company shall (together with all
Common Shareholders and other persons proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected for
such underwriting by the Common Shareholders, which underwriters are reasonably
acceptable to the Company. Notwithstanding any other provision of this Section
4, if the representative of the underwriters advises the Common Shareholders in
writing that marketing factors require a limitation on the number of shares to
be underwritten, the number of shares to be included in the underwriting or
registration shall be allocated as set forth in Section 11 hereof. If a person
who has requested inclusion in such registration as provided above does not
agree to the terms of any such underwriting, such person shall be excluded
therefrom by written notice from the Company, the underwriter or the Common
Shareholders. The securities so excluded shall also be withdrawn from
registration. Any Registrable Common Securities or other securities excluded or
withdrawn from such underwriting shall also be withdrawn from such registration.
If shares are so withdrawn from the registration and if the number of shares to
be included in such registration was previously reduced as a result of marketing
factors pursuant to this Section 4.4, then the Company shall offer to all
holders who have retained rights to include securities in the registration the
right to include additional securities in the registration in an aggregate
amount equal to the number of shares so withdrawn, with such shares to be
allocated among such Holders requesting additional inclusion in accordance with
Section 11.
5. Registration Expenses. All Registration Expenses incurred in connection
with any registration, qualification or compliance pursuant to Sections 2, 3.1
and 4.1
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hereof shall be borne by the Company. All Selling Expenses relating to
securities so registered shall also be borne by the Company.
6. Registration Procedures. In the case of each registration effected by
the Company pursuant to this Agreement, the Company will keep each Holder
advised in writing as to the initiation of each registration and as to the
material progress and completion thereof. At its expense, the Company will use
its best efforts to:
6.1 Keep such registration effective for a period of one hundred
eighty (180) days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto,
whichever first occurs; provided, however, that such 180-day period shall
be extended for a period of time equal to the period the Holder refrains
from selling any securities included in such registration at the request of
an underwriter of Common Stock (or other securities) of the Company;
6.2 Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement;
6.3 Furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as a
Holder from time to time may reasonably request;
6.4 Cause all such Registrable Securities registered pursuant hereunto
to be listed on each securities exchange, if any, on which similar
securities issued by the Company are then listed and comply with all
applicable blue sky laws to enable the Registrable Securities to be
publicly offered and sold in the states in which such Registrable
Securities will be offered;
6.5 Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP
number for all such Registrable Securities, in each case not later than the
effective date of such registration; and
6.6 In connection with any underwritten offering pursuant to a
registration statement filed pursuant to section 2 hereof, the Company will
enter into an underwriting agreement in form reasonably necessary to effect
the offer and sale of the Common Stock provided such underwriting agreement
contains customary underwriting provisions and provided further that, if
the underwriter so requests, the underwriting agreement will contain
customary contribution provisions.
7. Indemnification.
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7.1 The Company will indemnify each Holder, each Common Shareholder
and each of their officers, directors and partners, legal counsel, and
accountants and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification, or compliance has been effected pursuant to this Agreement,
and each underwriter, if any, and each person who controls within the
meaning of Section 15 of the Securities Act any underwriter, against all
expenses, claims, losses, damages, and liabilities (or actions,
proceedings, or settlements in respect thereof), arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular, or other document
(including any related registration statement, notification, or the like)
incident to any such registration, qualification, or compliance, or based
on 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, or any violation by the Company of the Securities Act or
any rule or regulation thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification, or compliance, and will reimburse each such
Holder and Common Shareholder, each of their officers, directors, partners,
legal counsel, and accountants and each person controlling such Holder or
Common Shareholder, each such underwriter, and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating and defending or settling any such claim,
loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability, or expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by such
Holder or Common Shareholder or underwriter and stated to be specifically
for use therein. It is agreed that the indemnity agreement contained in
this Section 7.1 shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent has not been unreasonably
withheld).
7.2 Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration,
qualification, or compliance is being effected, indemnify the Company, each
of its directors, officers, partners, legal counsel, and accountants and
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, each
other such Holder, and each of their officers, directors, and partners, and
each person controlling such Holder, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering
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circular, or other document, 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, and will reimburse the Company and
such Holders, directors, officers, partners, legal counsel, and
accountants, persons, underwriters, or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability, or action, in each case
to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular, or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use therein
provided, however, that the obligations of such Holder hereunder shall not
apply to amounts paid in settlement of any such claims, losses, damages, or
liabilities (or actions in respect thereof) if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably
withheld); and provided that in no event shall any indemnity under this
Section 7.2 exceed the gross proceeds from the offering received by such
Holder.
7.3 Each Common Shareholder will, if Registrable Common Securities
held by such Common Shareholder are included in the securities as to which
such registration, qualification, or compliance is being effected,
indemnify the Company, each of its directors, officers, partners, legal
counsel, and accountants and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15
of the Securities Act, each other such Common Shareholder, and each of
their officers, directors, and partners, and each person controlling such
Common Shareholder, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular, or other document,
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, and will reimburse the Company and such Common
Shareholders, directors, officers, partners, legal counsel, and
accountants, persons, underwriters, or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability, or action, in each case
to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular, or other document in
reliance upon and in conformity with written information furnished to the
Company by such Common Shareholder and stated to be specifically for use
therein provided, however, that the obligations of such Common Shareholder
hereunder shall not apply to amounts paid in settlement of any such claims,
losses, damages, or liabilities (or actions in respect thereof) if such
settlement is effected without the consent of
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such Common Shareholder (which consent shall not be unreasonably withheld);
and provided that in no event shall any indemnity under this Section 7.3
exceed the gross proceeds from the offering received by such Common
Shareholder.
7.4 Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of
such claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party who shall conduct the defense of such claim or any
litigation resulting therefrom shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at such party's expense, and provided
further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 7, to the extent such failure is not prejudicial. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that 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. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
7.5 If the indemnification provided for in this Section 7 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage, or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, liability, claim,
damage, or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or
omissions of the Indemnifying Party and of the Indemnified Party. Such
relative fault 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 supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission; provided that in no event shall
contribution by a Holder or Common Shareholder under this Section 7.5
exceed the gross proceeds from the offering received by the Holder or
Common Shareholder.
7.6 Notwithstanding the foregoing, to the extent that the
14
provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten
public offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall control.
8. Information by Holder. Each Holder of Registrable Securities and each
Common Shareholder shall furnish to the Company such information regarding such
Holder or Common Shareholder and the distribution proposed by such Holder or
Common Shareholder as the Company may reasonably request in writing and as shall
be reasonably required in connection with any registration, qualification, or
compliance referred to in this Agreement.
9. Transfer or Assignment of Registration Rights. The rights to cause the
Company to register securities granted to a Holder by the Company under Section
2 or the right to demand that the Company register securities granted under
Section 3 may be transferred or assigned by a Holder only to a transferee or
assignee of not less than 1,000 shares of Registrable Securities (as presently
constituted and subject to subsequent adjustments for stock splits, stock
dividends, reverse stock splits, and the like), provided that the Company is
given written notice at the time of or within a reasonable time after said
transfer or assignment, stating the name and address of the transferee or
assignee and identifying the securities with respect to which such registration
rights are being transferred or assigned, and, provided further, that the
transferee or assignee of such rights assumes in writing the obligations of such
Holder under this Agreement. The rights to cause the Company to register
securities granted to a Common Shareholder by the Company under Section 3 or the
right to demand that the Company register securities granted under Section 4 may
not be transferred or assigned by a Common Shareholder.
10. "Market Stand-Off" Agreement. If requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, a Holder or
Common Shareholder shall not sell or otherwise transfer or dispose of any Common
Stock (or other securities) of the Company held by such Holder or Common
Shareholder (other than those included in the registration) during the one
hundred eighty (180) day period following the effective date of a registration
statement of the Company filed under the Securities Act, provided that:
[i] such agreement shall only apply to the first such registration
statement of the Company that includes securities to be sold on its behalf
to the public in an underwritten offering; and
[ii] all Holders, Common Shareholders and other share holders of the
Company owning at least as much of the Company's capital stock as the
Holders, and officers and directors of the Company are bound by and have
entered into similar agreements.
15
The obligations described in this Section 10 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a Rule 145 transaction on Form S-4 or similar forms that may
be promulgated in the future. The Company may impose stop-transfer instructions
with respect to the shares (or securities) subject to the foregoing restriction
until the end of said one hundred eighty (180) day period.
11. Allocation of Registration Opportunities. In any circumstance in which
all of the Registrable Securities and other shares of Common Stock of the
Company with registration rights (the "Other Shares") requested to be included
in a registration on behalf of the Holders or other selling stockholders cannot
be so included as a result of limitations of the aggregate number of shares of
Registrable Securities and Other Shares that may be so included, the number of
shares of Registrable Securities and Other Shares that may be so included shall
be allocated among the Holders and other selling stockholders requesting
inclusion of shares pro rata on the basis of the number of shares of Registrable
Securities and Other Shares that would be held by such Holders and other selling
stockholders; provided, however, that such allocation shall not operate to
reduce the aggregate number of Registrable Securities and Other Shares to be
included in such registration, if any Holder or other selling stockholder does
not request inclusion of the maximum number of shares of Registrable Securities
and Other Shares allocated to him pursuant to the above-described procedure, the
remaining portion of this allocation shall be reallocated among those requesting
Holders and other selling stockholders whose allocations did not satisfy their
requests pro rata on the basis of the number of shares of Registrable Securities
and Other Shares that would be held by such Holders and other selling
stockholders, assuming such conversion, and this procedure shall be repeated
until all of the shares of Registrable Securities and Other Shares which may be
included in the registration on behalf of the Holders and other selling
stockholders have been so allocated. The Company shall not limit the number of
Registrable Securities to be included in a registration pursuant to this
Agreement in order to include shares held by stockholders with no registration
rights.
12. Limitations on Registration of Other Securities; Representation. From
and after the date of this Agreement, the Company shall not, without the prior
written consent of a majority in interest of the Holders, enter into any
agreement with any holder or prospective holder of any securities of the Company
giving such holder or prospective holder any registration rights the terms of
which are as or more favorable than registration rights granted to the Holders
hereunder unless the Company shall also give such rights to the Holders
hereunder. The Company represents and warrants as of the date hereof that there
is no other agreement existing giving any other person or entity any
registration rights with respect to any securities of the Company.
13. Reporting. The Company agrees when required by law to:
16
13.1 Make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after ninety (90) days
after the effective date of the first registration filed by the Company for
an offering of its securities to the general public.
13.2 Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act.
14. Miscellaneous.
14.1 Governing Law. This Agreement shall be governed in all respects
by the laws of the Commonwealth of Kentucky, as applied to agreements among
Kentucky residents entered into and to be performed entirely within
Kentucky.
14.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
14.3 Entire Agreement; Amendment; Waiver. This Agreement constitutes
the full and entire understanding and agreement between the parties with
regard to the subjects hereof. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated, except by a written
instrument signed by the Company, the Common Shareholders and the holders
of at least fifty percent (50%) of the Registrable Securities and any such
amendment, waiver, discharge or termination shall be binding on all the
Holders, but in no event shall the obligation of any Holder hereunder be
materially increased, except upon the written consent of such Holder.
14.4 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be mailed
by first class, registered, or certified mail, postage prepaid, or sent via
overnight reputable courier service, or delivered personally or via
facsimile with copy sent by mail as provided above:
If to Investor, to: Broadband Solutions, LLC
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
1850 National City Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
17
If to Company, to: ▇▇▇▇.▇▇▇, Inc.
Attn: W. ▇▇▇▇ ▇▇▇▇▇, III
Suite 210, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ Vice
▇▇▇▇, Weitkamp, Schell, ▇▇▇ & Vice
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Common
Shareholders, to: W. ▇▇▇▇ ▇▇▇▇▇, III
Suite 210, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address of which the addressee shall have notified the
sender in writing. Notices mailed in accordance with this section shall be
deemed given three days after being mailed, notices sent by overnight
courier service shall be deemed given one day after placed in the hands of
a representative of such service and notice given by facsimile shall be
deemed given on the date of transmission subject to sender's receipt of a
confirmation copy.
14.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any Holder, upon any breach or default of the
Company under this Agreement shall impair any such right, power or remedy
of such Holder nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default thereto fore or
thereafter occurring. Any waiver, permit, consent or approval of any kind
or character on the part of any Holder of any breach or default under this
Agreement or any waiver on the part of any Holder of any provisions or
conditions of this Agreement must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies,
either under this Agreement or by law or otherwise afforded to any Holder,
shall be cumulative and not alternative.
14.6 Rights; Separability. Unless otherwise expressly provided herein,
a Holder's rights hereunder are several rights, not rights jointly held
with any of the other Holders. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
14.7 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and
are not to be considered in construing or interpreting this Agreement.
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14.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
14.9 Prevailing Party. In the event any legal action or other
proceeding is brought by a party hereto to enforce the terms of this
Agreement, the prevailing party in such action or proceeding will be
entitled to reasonable attorneys', paralegals' and accountants' fees and
costs incurred before and at trial and at all appellate levels, in addition
to all awards, judgments and recoveries of damages obtained.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first written above.
▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Title: CEO
-----------------------------------
Address: ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
"INVESTOR"
BROADBAND SOLUTIONS, LLC
By: /s/ BROADBAND SOLUTIONS, LLC
--------------------------------------
Title:
-----------------------------------
Address: 1850 National City Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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"COMMON SHAREHOLDERS"
COLORADO LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Title: G.P.
-----------------------------------
Address: ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
OPM SERVICES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Title: PRESIDENT
-----------------------------------
Address: ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Title: G.P.
-----------------------------------
Address: ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇