EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
December 18, 2003, is made by and among P-Com, Inc., a corporation organized
under the laws of the State of Delaware (the "Company"), and the undersigned
(together with their affiliates, the "Initial Investors").
BACKGROUND
A. In connection with that certain Securities Purchase Agreement dated as
of even date herewith by and among the Company and the Initial Investors (the
"Securities Purchase Agreement"), the Company has agreed, upon the terms and
subject to the conditions contained therein, to issue and sell to the Initial
Investors shares of the Company's Series D Convertible Preferred Stock, par
value $0.0001 per share (the "Preferred Stock"), that are convertible into
shares of the Company's common stock, par value $0.0001 per share (the "Common
Stock"), upon the terms and subject to the limitations and conditions set forth
in the Certificate of Designation, Rights and Preferences with respect to such
Preferred Stock (the "Certificate of Designation"). The shares of Common Stock
issuable upon conversion of or otherwise pursuant to the Preferred Stock are
referred to herein as the "Conversion Shares."
B. To induce the Initial Investors to execute and deliver the Securities
Purchase Agreement, and to consummate the transactions contemplated thereby, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the "Securities Act"), and applicable
state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investors hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investors" means the Initial Investors and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States Securities and
Exchange Commission (the "SEC").
(iii) "Registrable Securities" means (a) the Conversion Shares, and
(b) any shares of capital stock of the Company issued or issuable, from time to
time, as a dividend or distribution on, or in exchange for or replacement of, or
otherwise with respect to any of the foregoing (including the Preferred Stock),
whether as default payments or otherwise.
(iv) "Registration Statement" means a registration statement of the
Company under the Securities Act.
(b) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
(a) Mandatory Registration. The Company shall prepare promptly and file
with the SEC as soon as practicable, but in no event later than the thirtieth
(30th) day following the date hereof (the "Filing Date"), a Registration
Statement on Form S-1 (or, if Form S-1 is not then available, on such form of
Registration Statement as is then available to effect a registration of all of
the Registrable Securities, subject to the consent of the Initial Investors)
covering the resale of at least 16,666,667 Registrable Securities. The
Registration Statement filed hereunder, to the extent allowable under the
Securities Act and the Rules promulgated thereunder (including Rule 416), shall
state that such Registration Statement also covers such indeterminate number of
additional shares of Common Stock as may become issuable upon conversion of the
Preferred Stock to prevent dilution resulting from stock splits, stock dividends
or similar transactions. The Registrable Securities included on the Registration
Statement shall be allocated among the Investors as set forth in Section 11(k)
hereof. The Registration Statement (and each amendment or supplement thereto,
and each request for acceleration of effectiveness thereof) shall be provided to
(and subject to the approval of) the Initial Investors and their counsel prior
to its filing or other submission.
(b) Payments by the Company. The Company shall use its best efforts to
cause the Registration Statement required to be filed pursuant to Section 2(a)
hereof to become effective as soon as practicable, but in no event later than
the ninetieth (90th) day following the Filing Date (the "Registration
Deadline"). At the time of effectiveness, the Company shall ensure that such
Registration Statement covers at least 125% of the Registrable Securities
issuable upon full conversion of the Preferred Stock (without giving effect to
any limitations on conversion contained in the Certificate of Designation),
including, if necessary, by filing an amendment prior to the effective date of
the Registration Statement to increase the number of Registrable Securities
covered thereby. If (i) (A) the Registration Statement required to be filed
pursuant to Section 2(a) hereof is not filed with the SEC prior to the Filing
Date or declared effective by the SEC on or before the Registration Deadline or
(B) any Registration Statement required to be filed pursuant to Section 3(b)
hereof is not declared effective by the SEC on or before the sixtieth (60th) day
following the applicable Registration Trigger Date (as defined in Section 3(b)
below), or (ii) if, after any such Registration Statement has been declared
effective by the SEC, sales of any of the Registrable Securities required to be
covered by such Registration Statement
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(including any Registrable Securities required to be registered pursuant to
Section 3(b) hereof) cannot be made pursuant to such Registration Statement (by
reason of a stop order or the Company's failure to update the Registration
Statement or for any other reason outside the control of the Investors) or (iii)
the Common Stock is not listed or included for quotation on the Nasdaq SmallCap
Market (the "SmallCap Market"), the Nasdaq National Market (the "National
Market"), the New York Stock Exchange (the "NYSE"), the American Stock Exchange
(the "AMEX"), the OTC Electronic Bulletin Board (the "Bulletin Board") at any
time after the Registration Deadline hereunder, then the Company will make
payments to each Investor in such amounts and at such times as shall be
determined pursuant to this Section 2(b) as partial relief for the damages to
the Investors by reason of any such delay in or reduction of their ability to
sell the Registrable Securities (which remedy shall not be exclusive of any
other remedies available at law or in equity). The Company shall pay to each
Investor an amount equal to the product of (i) the number of shares of Preferred
Stock then held by such Investor (including, for this purpose, any shares of
Preferred Stock that have been converted into Conversion Shares then held by
such Investor as if such shares of Preferred Stock had not been so converted)
multiplied by the per share purchase price, multiplied by (ii) three percent
(3.0%) for each 30 day period (or portion thereof) (A) after the Filing Date and
prior to the date the Registration Statement is filed with the SEC pursuant to
Section 2(a), (B) after the Registration Deadline and prior to the date the
Registration Statement filed pursuant to Section 2(a) is declared effective by
the SEC, (C) after the sixtieth (60th) day following a Registration Trigger Date
and prior to the date the Registration Statement filed pursuant to Section 3(b)
hereof is declared effective by the SEC, and (D) during which sales of any
Registrable Securities cannot be made pursuant to any such Registration
Statement after the Registration Statement has been declared effective or the
Common Stock is not listed or included for quotation on the SmallCap Market, the
National Market, NYSE, AMEX or the Bulletin Board; provided, however, that, for
purpose of calculating the payment amount owed to any given Investor, there
shall be excluded from each such period any delays that are solely attributable
to changes required by such Investor in the Registration Statement with respect
to information relating to such Investor, including, without limitation, changes
to the plan of distribution (other than any corrections of Company mistakes with
respect to information previously provided by such Investor). All such amounts
required to be paid hereunder shall be paid in cash within five days after the
end of each period that gives rise to such obligation, provided that, if any
such period extends for more than thirty (30) days, interim payments shall be
made for each such 30 day period.
(c) Piggy-Back Registrations. If, at any time prior to the expiration of
the Registration Period (as defined in Section 3(a) below) the Company shall
file with the SEC a Registration Statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company shall
send to each Investor written notice of such filing, and if, within 15 days
after the date of such notice, such Investor shall so request in writing, the
Company shall include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered. Notwithstanding
the foregoing, in the event that, in connection with any underwritten public
offering, the managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock that may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or other
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factors dictate such limitation is necessary to facilitate public distribution,
then the Company shall be obligated to include in such Registration Statement
only such limited portion of the Registrable Securities with respect to which
such Investor has requested inclusion hereunder as the underwriter shall permit;
provided, however, that (i) the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities, the
holders of which are officers, directors or other insiders of the Company or who
are not contractually entitled to inclusion of such securities in such
Registration Statement or are not contractually entitled to pro rata inclusion
with the Registrable Securities, (ii) after giving effect to the immediately
preceding proviso, any such exclusion of Registrable Securities shall be made
pro rata among the Investors seeking to include Registrable Securities and the
holders of other securities having the contractual right to inclusion of their
securities in such Registration Statement by reason of demand registration
rights, in proportion to the number of Registrable Securities or other
securities, as applicable, sought to be included by each such Investor or other
holder, and (iii) no such reduction shall reduce the amount of Registrable
Securities included in the registration below twenty-five (25%) of the total
amount of securities included in such registration. No right to registration of
Registrable Securities under this Section 2(c) shall be construed to limit any
registration required under Section 2(a) hereof. If an offering in connection
with which an Investor is entitled to registration under this Section 2(c) is an
underwritten offering, then each Investor whose Registrable Securities are
included in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten offering
using the same underwriter or underwriters and, subject to the provisions of
this Agreement, on the same terms and conditions as other shares of Common Stock
included in such underwritten offering.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
(a) The Company shall respond promptly to any and all comments made by the
staff of the SEC to any Registration Statement required to be filed hereunder,
and shall submit to the SEC, before the close of business on the business day
immediately following the business day on which the Company learns (either by
telephone or in writing) that no review of such Registration Statement will be
made by the SEC or that the staff of the SEC has no further comments on such
Registration Statement, as the case may be, a request for acceleration of the
effectiveness of such Registration Statement to a time and date as soon as
practicable. The Company shall keep such Registration Statement effective
pursuant to Rule 415 at all times until such date as is the earlier of (i) the
date on which all of the Registrable Securities have been sold and (ii) the date
on which all of the Registrable Securities may be immediately sold to the public
without registration or restriction pursuant to Rule 144(k) under the Securities
Act or any successor provision (the "Registration Period"), which Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein and all documents incorporated by reference therein) (A) shall
comply in all material respects with the requirements of the Securities Act and
the rules and regulations of the SEC promulgated thereunder and (B) shall not
contain any 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. The financial statements of the Company included in any such
Registration Statement or incorporated by
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reference therein (x) shall comply as to form in all material respects with the
applicable accounting requirements and the published rules and regulations of
the SEC applicable with respect thereto, (y) shall be prepared in accordance
with U.S. generally accepted accounting principles, consistently applied during
the periods involved (except as may be otherwise indicated in such financial
statements or the notes thereto or, in the case of unaudited interim statements,
to the extent they may not include footnotes or may be condensed on summary
statements) and (z) fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
immaterial year-end adjustments).
(b) The Company shall (i) prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to any Registration
Statement required to be filed hereunder and the prospectus used in connection
with any such Registration Statement as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and (ii) during the Registration Period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by any such Registration Statement until such time as all of
such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the event the number of shares available under a
Registration Statement filed pursuant to this Agreement is, for any three (3)
consecutive trading days (the last of such three (3) trading days being the
"Registration Trigger Date"), insufficient to cover one hundred percent (100%)
of the Registrable Securities issued or issuable upon conversion of the
Preferred Stock (without giving effect to any limitations on conversion
contained in the Certificate of Designation), the Company shall provide each
Investor written notice of such Registration Trigger Date within three business
days thereafter and shall amend the Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover one hundred twenty-five percent (125%) of the Registrable
Securities issued or issuable upon conversion of the Preferred Stock (without
giving effect to any limitations on conversion contained in the Certificate of
Designation) as of the Registration Trigger Date, in each case, as soon as
practicable, but in any event within fifteen (15) days after the Registration
Trigger Date. The Company shall cause such amendment(s) and/or new Registration
Statement(s) to become effective as soon as practicable following the filing
thereof. In the event the Company fails to obtain the effectiveness of any such
Registration Statement within sixty (60) days after a Registration Trigger Date,
each Investor shall thereafter have the option, exercisable in whole or in part
at any time and from time to time by delivery of a written notice to the Company
(a "Mandatory Redemption Notice"), to require the Company to redeem for cash
such number of the Investor's shares of the Preferred Stock at a price per share
of Preferred Stock equal to $1,200, such that, following such redemption, the
total number of Registrable Securities included on the Registration Statement
for resale by such Investor is at least equal to one hundred twenty-five percent
(125%) of the Registrable Securities issued or issuable upon conversion of such
Investor's Preferred Stock (without giving effect to any limitations on
conversion contained in the Certificate of Designation). If the Company fails to
redeem any of such Preferred Stock within five business days after its receipt
of a Mandatory Redemption Notice, then such Investor shall be entitled to the
remedies provided in Article VII of the Certificate of Designation.
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(c) The Company shall furnish to each Investor whose Registrable
Securities are included in a Registration Statement and such Investor's legal
counsel (i) promptly after the same is prepared and publicly distributed, filed
with the SEC or received by the Company, as applicable, one copy of the
Registration Statement and any amendment thereto, each preliminary prospectus
and prospectus and each amendment or supplement thereto, and, in the case of the
Registration Statement required to be filed pursuant to Section 2(a), each
letter written by or on behalf of the Company to the SEC or the staff of the SEC
(including, without limitation, any request to accelerate the effectiveness of
the Registration Statement or amendment thereto), and each item of
correspondence from the SEC or the staff of the SEC, in each case relating to
the Registration Statement (other than any portion thereof that contains
information for which the Company has sought confidential treatment), (ii) on
the date of effectiveness of the Registration Statement or any amendment
thereto, a notice stating that the Registration Statement or amendment has been
declared effective, and (iii) such number of copies of a prospectus, including a
preliminary prospectus, all amendments and supplements thereto and all such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor.
(d) The Company shall use its best efforts to (i) register and qualify the
Registrable Securities covered by any Registration Statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as each
Investor who holds Registrable Securities being offered reasonably requests,
(ii) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (B) subject itself to general taxation in any such jurisdiction,
(C) file a general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause the Company undue expense or burden, or (E)
make any change in its Certificate of Incorporation or Bylaws, which in each
case the Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders.
(e) As promptly as practicable after becoming aware of such event, the
Company shall (i) notify each Investor by telephone and facsimile of the
happening of any event, as a result of which the prospectus included in any
Registration Statement that includes Registrable Securities, 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, and (ii) promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
such number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request.
(f) The Company shall use its best efforts (i) to prevent the issuance of
any stop order or other suspension of effectiveness of any Registration
Statement that includes Registrable Securities, and, if such an order is issued,
to obtain the withdrawal of such order at the earliest practicable moment
(including in each case by amending or supplementing such
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Registration Statement), and (ii) to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof
(and if such Registration Statement is supplemented or amended, deliver such
number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request).
(g) The Company shall permit a single firm of counsel designated by the
Initial Investors to review any Registration Statement required to be filed
hereunder and all amendments and supplements thereto a reasonable period of time
prior to its filing with the SEC, and not file any document in a form to which
such counsel reasonably objects.
(h) The Company shall make generally available to its security holders as
soon as practicable, but in no event later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement. The Company will be
deemed to have complied with its obligations under this Section 3(h) upon the
Company's filing, on an appropriate form, the appropriate report of the Company
as required by the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Exchange Act").
(i) The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement that includes such
Investor's Registrable Securities, (iii) the release of such information is
ordered pursuant to a subpoena or other order from a court or governmental body
of competent jurisdiction, (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement, or (v) such Investor consents to the form and content of any
such disclosure. The Company shall, upon learning that disclosure of any
information concerning an Investor is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt notice to
such Investor prior to making such disclosure, and cooperate with the Investor,
at the Investor's expense, in taking appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.
(j) The Company shall use its best efforts to promptly cause all of the
Registrable Securities covered by any Registration Statement to be listed or
designated for quotation on the Bulletin Board or the SmallCap Market, the
National Market, the NYSE, the AMEX or any other national securities exchange or
automated quotation system and on each additional national securities exchange
or automated quotation system on which securities of the same class or series
issued by the Company are then listed or quoted, if any, if the listing or
quotation of such Registrable Securities is then permitted under the rules of
such exchange or automated quotation system, and in any event, without limiting
the generality of the foregoing, to arrange for or maintain at least two market
makers to register with the National Association of Securities Dealers, Inc. as
such with respect to the Registrable Securities.
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(k) The Company shall provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement required to be filed pursuant to Section 2(a)
hereof.
(l) The Company shall cooperate with any Investor who holds Registrable
Securities being offered and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to any Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, and registered in such names,
as such Investor or the managing underwriter or underwriters, if any, may
reasonably request. Without limiting the generality of the foregoing, within
three business days after any Registration Statement that includes Registrable
Securities is declared effective by the SEC, the Company shall cause legal
counsel selected by the Company to deliver to the transfer agent for the
Registrable Securities (with copies to any Investor whose Registrable Securities
are included in such Registration Statement), an opinion of such counsel in the
form attached hereto as Exhibit A.
(m) At the request of any Investor, the Company shall prepare and file
with the SEC such amendments (including post-effective amendments) and
supplements to any Registration Statement required to be filed hereunder and the
prospectus used in connection with such Registration Statement as may be
necessary in order to change the plan of distribution set forth in such
Registration Statement.
(n) The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including, without limitation, the Securities Act and the Exchange Act and the
rules and regulations thereunder promulgated by the SEC.)
(o) From and after the date of this Agreement, the Company shall not, and
shall not agree to, allow the holders of any securities of the Company to
include any of their securities that are not Registrable Securities in the
Registration Statement required to be filed pursuant to Section 2(a) or 3(b)
hereof without the consent of the holders of a majority in interest of the
Registrable Securities.
(p) The Company shall make available for inspection by (i) each Investor,
(ii) any underwriter participating in any disposition pursuant to any
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Investors, and (iv) one firm of attorneys
retained by all such underwriters (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably deemed
necessary by each Inspector to enable such Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information that any Inspector may reasonably request
for purposes of such due diligence; provided, however, that each Inspector shall
hold in confidence and shall not make any disclosure (except to an Investor) of
any Record or other information that the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(A) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (B) the
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release of such Records is ordered pursuant to a subpoena or other order from a
court or government body of competent jurisdiction, or (C) the information in
such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement. Nothing herein shall be
deemed to limit any Investor's ability to sell Registrable Securities in a
manner that is otherwise consistent with applicable laws and regulations.
(q) In the case of an underwritten public offering, at the request of any
Investor, the Company shall furnish, on the date of effectiveness of the
Registration Statement (i) an opinion, dated as of such date, from counsel
representing the Company addressed to any such Investor and in form, scope and
substance as is customarily given in an underwritten public offering and (ii) a
letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and any such Investor.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, each
Investor shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
effect the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable Securities
held by it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five trading days
prior to the first anticipated filing date of the Registration Statement, the
Company shall notify each Investor of the information the Company requires from
each such Investor.
(b) Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement required to be filed hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from such Registration Statement.
(c) Upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e) or 3(f) with respect to any
Registration Statement including Registrable Securities, each Investor shall
immediately discontinue disposition of Registrable Securities pursuant to such
Registration Statement until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Sections 3(e) and 3(f), as
applicable, and, if so directed by the Company, such Investor shall deliver to
the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in such Investor's possession
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice. Notwithstanding the foregoing or anything to the
contrary in this Agreement, but subject to compliance with applicable laws, the
Company shall cause the transfer agent for the Registrable Securities to deliver
unlegended shares of Common Stock to a
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transferee of an Investor in accordance with the terms of the Preferred Stock in
connection with any sale of Registrable Securities with respect to which any
such Investor has entered into a contract for sale prior to receipt of such
notice and for which any such Investor has not yet settled.
5. EXPENSES OF REGISTRATION.
All expenses incurred by the Company or the Investors in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3 above
(including, without limitation, all registration, listing and qualification
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company and the fees and disbursements of one counsel selected by the
Investors, and any underwriting discounts and commissions) shall be borne by the
Company. In addition, the Company shall pay each Investor's costs and expenses
(including legal fees) incurred in connection with the enforcement of the rights
of such Investor hereunder.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company shall indemnify, hold
harmless and defend (i) each Investor who holds such Registrable Securities, and
(ii) the directors, officers, partners, members, employees and agents of each
such Investor and each person, if any, who controls each such Investor within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, an "Investor Indemnified Person"), against any joint or several
losses, claims, damages, liabilities or expenses (collectively, together with
actions, proceedings or inquiries by any regulatory or self-regulatory
organization, whether commenced or threatened, in respect thereof, "Claims") to
which any of them may become subject insofar as such Claims arise out of or are
based upon: (A) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated or necessary to make the
statements therein not misleading, (B) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (C) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act or any other law (including, without
limitation, any state securities law), rule or regulation relating to the offer
or sale of the Registrable Securities (the matters in the foregoing clauses (A)
through (C), collectively, "Violations"). Subject to the restrictions set forth
in Section 6(c) with respect to the number of legal counsel, the Company shall
reimburse each Investor and each other Investor Indemnified Person, promptly as
such expenses are incurred and are due and payable, for any reasonable legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (x) shall not apply to a Claim arising out of or based upon a
Violation that occurs in reliance upon and in conformity with information
furnished in
10
writing to the Company by such Investor Indemnified Person expressly for use in
the Registration Statement or any such amendment thereof or supplement thereto;
(y) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld; and (z) with respect to any
preliminary prospectus, shall not inure to the benefit of any Investor
Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, if such corrected prospectus was
timely made available by the Company pursuant to Section 3(c) hereof, and the
Investor Indemnified Person was promptly advised in writing not to use the
incorrect prospectus prior to the use giving rise to a Violation and such
Investor Indemnified Person, notwithstanding such advice, used it. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Investor Indemnified Person and shall survive the
transfer of the Registrable Securities by the Investors pursuant to Section 9
hereof.
(b) In connection with any Registration Statement in which an Investor is
participating, (i) each such Investor shall, severally and not jointly,
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, its employees and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder within the meaning of the
Securities Act or the Exchange Act (each, a "Company Indemnified Person"),
against any Claims to which any of them may become subject insofar as such
Claims arise out of or are based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and (ii)
subject to the restrictions set forth in Section 6(c), such Investor shall
reimburse the Company Indemnified Persons, promptly as such expenses are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim; provided, however, that the indemnification obligations contained in this
Section 6(b) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld; and provided, further, that the
Investor shall be liable under this Agreement (including this Section 6(b) and
Section 7) for only that amount as does not exceed the net proceeds actually
received by such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Company Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investor pursuant to Section 9 hereof. Notwithstanding
anything to the contrary contained herein, the indemnification obligations
contained in this Section 6(b) with respect to any preliminary prospectus shall
not inure to the benefit of any Company Indemnified Person if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.
(c) Promptly after receipt by any party entitled to indemnification under
this Section 6 of notice of the commencement of any action (including any
governmental action), such indemnified party shall, if a Claim in respect
thereof is to made against any indemnifying party
11
under this Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the indemnified party; provided, however, that such indemnifying party shall not
be entitled to assume such defense and an indemnified party shall have the right
to retain its own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the indemnified party
and the indemnifying party would be inappropriate due to actual or potential
conflicts of interest between such indemnified party and any other party
represented by such counsel in such proceeding or the actual or potential
defendants in, or targets of, any such action include both the indemnified party
and the indemnifying party and any such indemnified party reasonably determines
that there may be legal defenses available to such indemnified party that are in
conflict with those available to such indemnifying party. The indemnifying party
shall pay for only one separate legal counsel for the indemnified parties, and
such legal counsel shall be selected by Investors holding a majority in interest
of the Registrable Securities included in the Registration Statement to which
the Claim relates (if the parties entitled to indemnification hereunder are
Investor Indemnified Persons) or by the Company (if the parties entitled to
indemnification hereunder are Company Indemnified Persons). The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the indemnified party under this Section 6, except to the extent
that the indemnifying party is actually prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party shall make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the indemnified
party, on the other hand, with respect to the Violation giving rise to the
applicable Claim; provided, however, that (a) no contribution shall be made
under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6, (b) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation,
and (c) contribution (together with any indemnification or other obligations
under this Agreement) by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time
12
permit the Investors to sell securities of the Company to the public without
registration ("Rule 144"), the Company agrees to:
(a) file with the SEC in a timely manner and make and keep available all
reports and other documents required of the Company under the Securities Act and
the Exchange Act so long as the Company remains subject to such requirements (it
being understood that nothing herein shall limit the Company's obligations under
Section 4(c) of the Securities Purchase Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
(b) furnish to each Investor so long as such Investor holds Preferred
Stock or Registrable Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
to permit such Investor to sell such securities under Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assignable by each Investor to any transferee of all or any
portion of the Preferred Stock or the Registrable Securities if: (a) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company after such
assignment, (b) the Company is furnished with written notice of (i) the name and
address of such transferee or assignee, and (ii) the securities with respect to
which such registration rights are being transferred or assigned, (c) following
such transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (d) the transferee or assignee agrees in writing for the
benefit of the Company to be bound by all of the provisions contained herein,
and (e) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement and the Certificate of
Designation, as applicable. In addition, and notwithstanding anything to the
contrary contained in this Agreement, the Securities Purchase Agreement, the
Certificate of Designation or the Securities (as defined in the Securities
Purchase Agreement) may be pledged, and all rights of the Investor under this
Agreement or any other agreement or document related to the transactions
contemplated hereby may be assigned, without further consent of the Company, to
a bona fide pledgee in connection with an Investor's margin or brokerage
account.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company and the Investor(s)
who hold a majority in interest of the Registrable Securities or, in the case of
a waiver, with the written consent of the party charged with the enforcement of
any such provision; provided, however, that (a) no amendment hereto that
restricts the ability of an Investor to elect not to participate in an
underwritten offering shall be effective against any Investor that does not
consent in writing to such amendment; (b) no
13
consideration shall be paid to an Investor by the Company in connection with an
amendment hereto unless each Investor similarly affected by such amendment
receives a pro rata amount of consideration from the Company; and (c) unless an
Investor otherwise agrees, each amendment hereto must similarly affect each
Investor. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
(b) Any notices required or permitted to be given under the terms of this
Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally, by responsible overnight carrier or by
confirmed facsimile, and shall be effective five days after being placed in the
mail, if mailed, or upon receipt or refusal of receipt, if delivered personally
or by responsible overnight carrier or confirmed facsimile, in each case
addressed to a party. The initial addresses for such communications shall be as
follows, and each party shall provide notice to the other parties of any change
in such party's address:
(i) If to the Company:
P-Com, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy simultaneously transmitted by like means (which
transmittal shall not constitute notice hereunder) to:
Xxxxxxxx Xxxxxx Xxxxxxx & Xxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: C. Xxxxxx Xxxxxxx, Esq.
(ii) If to any Investor, to such address as such Investor shall have
provided in writing to the Company.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
14
(d) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and to be
performed in the State of Delaware. The Company irrevocably consents to the
exclusive jurisdiction of the United States federal courts and the state courts
located in the County of New Castle, State of Delaware in any suit or proceeding
based on or arising under this Agreement and irrevocably agrees that all claims
in respect of such suit or proceeding may be determined in such courts. The
Company irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The Company further agrees that service
of process upon the Company, mailed by first class mail shall be deemed in every
respect effective service of process upon the Company in any such suit or
proceeding. Nothing herein shall affect any Investor's right to serve process in
any other manner permitted by law. The Company agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
(e) This Agreement and the other Transaction Documents (including any
schedules and exhibits hereto and thereto) constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and thereof. There
are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement and the other
Transaction Documents supersede all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
(g) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
(i) Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
(j) Unless other expressly provided herein, all consents, approvals and
other determinations to be made by the Investors pursuant to this Agreement
shall be made by the Investors holding a majority in interest of the Registrable
Securities (determined as if all Preferred Stock then outstanding had been
converted into or exercised for Registrable Securities) held by all Investors.
(k) The initial number of Registrable Securities included on any
Registration Statement filed pursuant to Section 2(a) or 3(b), and each increase
to the number of Registrable
15
Securities included thereon, shall be allocated pro rata among the Investors
based on the number of Registrable Securities held by each Investor at the time
of such establishment or increase, as the case may be. In the event an Investor
shall sell or otherwise transfer any of such holder's Registrable Securities,
each transferee shall be allocated a pro rata portion of the number of
Registrable Securities included on a Registration Statement for such transferor.
Any shares of Common Stock included on a Registration Statement and that remain
allocated to any person or entity that does not hold any Registrable Securities
shall be allocated to the remaining Investors, pro rata based on the number of
shares of Registrable Securities then held by such Investors. For the avoidance
of doubt, the number of Registrable Securities held by any Investor shall be
determined as if all Preferred Stock then outstanding were converted into or
exercised for Registrable Securities.
(l) Each party to this Agreement has participated in the negotiation and
drafting of this Agreement. As such, the language used herein shall be deemed to
be the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction will be applied against any party to this
Agreement.
(m) The Company acknowledges that the obligations of each Investor under
this Agreement and each of the other Transaction Documents are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under the Transaction Documents. Each Investor acknowledges that it has
independently evaluated the merits of the transactions contemplated by this
Agreement and the other Transaction Documents, that it has independently
determined to enter into the transactions contemplated hereby and thereby, that
it is not relying on any advice from or evaluation by any other Investor, and
that it is not acting in concert with any other Investor in making its purchase
of securities hereunder or in monitoring its investment in the Company. The
Investors and, to its knowledge, the Company agree that the no action taken by
any Investor pursuant hereto or to the other Transaction Documents, shall be
deemed to constitute the Investors as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Investors
are in any way acting in concert or would deem such Investors to be members of a
"group" for purposes of Section 13(d) of the Exchange Act, and the Investors
have not agreed to act together for the purpose of acquiring, holding, voting or
disposing of equity securities of the Company. The Company has elected to
provide all Investors with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so
by the Investors. The Company acknowledges that such procedure with respect to
the Transaction Documents in no way creates a presumption that the Investors are
in any way acting in concert or as a "group" for purposes of Section 13(d) of
the Exchange Act with respect to the Transaction Documents or the transactions
contemplated hereby or thereby. Each Investor acknowledges that it has been
represented by its own separate legal counsel in their review and negotiation of
the Transaction Documents. Each Investor further acknowledges that SDS Capital
has retained Drinker Xxxxxx & Xxxxx LLP to act as its counsel in connection with
the transactions contemplated by this Agreement and the other Transaction
Documents and that Drinker Xxxxxx & Xxxxx LLP has not acted as counsel for any
of the other Investors in connection therewith and none of the other Investors
have the status of a client of Drinker Xxxxxx & Xxxxx LLP for conflict of
interest or other purposes as a result thereof.
16
(n) For purposes of this Agreement, the term "business day" means any day
other than a Saturday or Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law, regulation or executive
order to close, and the term "trading day" means any day on which the Bulletin
Board or, if the Common Stock is not then traded on the Bulletin Board, the
principal national securities exchange, automated quotation system or other
trading market where the Common Stock is then listed, quoted or traded, is open
for trading.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
17
IN WITNESS WHEREOF, the undersigned Initial Investor and the Company have
caused this Agreement to be duly executed as of the date first above written.
P-COM, INC.
By:
--------------------------------
Name:
Title:
INITIAL INVESTORS:
(Print or Type Name of Purchaser)
By:
--------------------------------
Name:
Title:
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
EXHIBIT A
[Date]
[Transfer Agent]
RE: P-COM, INC.
Ladies and Gentlemen:
We are counsel to P-Com, Inc., a corporation organized under the laws of the
State of Delaware (the "Company"), and we understand that [Name of Investor]
(the "Holder") has purchased from the Company (i) shares of Series C Convertible
Preferred Stock that are convertible into shares of the Company's common stock,
par value $0.0001 per share (the "Common Stock"), and (ii) warrants to acquire
shares of Common Stock. Pursuant to a Registration Rights Agreement, dated as of
December 18, 2003, by and among the Company and the signatories thereto (the
"Registration Rights Agreement"), the Company agreed with the Holder, among
other things, to register the Registrable Securities (as that term is defined in
the Registration Rights Agreement) under the Securities Act of 1933, as amended
(the "Securities Act"), upon the terms provided in the Registration Rights
Agreement. In connection with the Company's obligations under the Registration
Rights Agreement, on [_____________ ___, ____], the Company filed a Registration
Statement on Form S-___ (File No. 333- _____________) (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") relating to
the Registrable Securities, which names the Holder as a selling stockholder
thereunder. The Registration Statement was declared effective by the SEC on
_____________, ____.
In connection with the foregoing, we advise you that a member of the SEC's staff
has advised us by telephone that the SEC has entered into an order declaring the
Registration Statement effective under the Securities Act at [time of
effectiveness] on [date of effectiveness], and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC.
Based on the foregoing, we are of the opinion that the Registrable Securities
are available for resale under the Securities Act pursuant to the Registration
Statement.
Very truly yours,
[NAME OF COUNSEL]
cc: [Name of Investor]
