IWL COMMUNICATIONS, INCORPORATED
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Registration Rights Agreement")
is made as of January 22, 1998, by and among IWL Communications, Incorporated, a
Texas corporation ("IWL"), and Nera Limited incorporated in England and Wales
("Nera").
WHEREAS, Nera as a shareholder of Integrated Communications and Engineering
Limited ("ICEL") has sold its shares of ICEL to IWL in exchange for cash and for
the issuance of a certain number of the $.01 par value per share shares of
Common Stock of IWL ("IWL Common Stock") pursuant to that Agreement dated as of
January 22, 1998 (the "Share Purchase Agreement");
NOW THEREFORE, for good and valuable consideration, the parties hereby
agree as follows:
1. DEFINITIONS. As used in this Registration Rights Agreement:
a. "1934 Act" means the Securities Exchange Act of 1934, as amended.
b. "Act" means the Securities Act of 1933, as amended.
c. "Commission" means the Securities and Exchange Commission.
d. "Completion Date" means the date on which the completion of the
sale and purchase of all the issued shares in the capital of ICEL in accordance
with the Share Purchase Agreement occurs.
e. "Expiration Date" means the date that is two years after the
Completion Date.
f. "Form S-3" means such form under the Act as in effect on the date
hereof or any registration form under the Act subsequently adopted by the
Commission which similarly permits inclusion or incorporation of substantial
information by reference to other documents filed by IWL with the Commission.
g. "Holders" means (i) Nera, and (ii) any company which is a
permitted transferee of Registrable Securities from Nera pursuant to Section
12.6 of the Share Purchase Agreement.
h. "Registrable Securities" means the shares of IWL Common Stock
issued to the Holders pursuant to the Share Purchase Agreement rounded to the
nearest integral amount.
Terms not otherwise defined herein have the meanings given to them in the
Share Purchase Agreement.
2. REGISTRATION.
a. DEMAND REGISTRATION. From and after such time that IWL has
qualified for the use of Form S-3 (or a successor form), the Holders of at least
10% of the Registrable Securities shall have the right to request the
registration of Registrable Securities on Form S-3; provided, however, that IWL
shall not be required to effect more than three (3) such registrations under
this section 2(a) and in no event shall IWL be required to register Registrable
Securities with an aggregate market
value of less than $100,000. Any such request shall be in writing and shall
state the number of shares of Registrable Securities to be disposed of and the
intended methods of disposition of such shares by such Holders. Upon receipt of
such request, IWL shall use commercially reasonable efforts to cause the
requested Registrable Securities to be registered under the Act so as to permit
the sale thereof, and in connection therewith shall prepare and file with the
Commission within 30 days following the receipt of such request a registration
statement in such form as is then available under the Act covering the
Registrable Securities; provided, however, that each requesting Holder shall
provide all such information and materials and take all such action as may be
required under the Act to be provided or taken by such requesting Holder in
order to permit IWL to comply with all applicable requirements of the Commission
and to obtain any desired acceleration of the effective date of such
registration statement, such provision of information and materials to be a
condition precedent to the obligations of IWL pursuant to this Registration
Rights Agreement.
b. "PIGGY BACK" REGISTRATIONS.
(i) If IWL shall determine to register any of its securities,
either for its own account or the account of a security
holder or holders exercising their registration rights,
other than a registration relating solely to employee
benefit plans, or other than a registration on any
registration form which does not permit secondary sales or
does not include substantially the same information as would
be required to be included in a registration statement
covering the sale of Registrable Securities, or other than a
registration relating solely to shares to be sold in a
transaction under Rule 145 of the Act, IWL will:
(A) Promptly give to each Holder of Registrable Securities
written notice thereof (which shall include the number
of shares IWL or other security holder proposes to
register and, if known, the name of the proposed
underwriter); and
(B) Use its commercially reasonable efforts to include in
such registration all the Registrable Securities
specified in a written request or requests, made by any
Holder within fifteen (15) days after the date of
delivery of the written notice from IWL described in
clause (A) above. If the underwriter advises IWL that
marketing considerations require a limitation on the
number of shares offered pursuant to any registration
statement, then subject to such limitation such shares
shall be registered in the following priority, (i)
FIRST, IWL may offer all of the securities it proposes
to register for its own account, (ii) SECOND, a holder
of securities who has exercised demand registration
rights for such registration shall be entitled to offer
all the securities it proposes to register, and (iii)
THIRD, any remaining securities requested to be
registered that may, in the opinion of the underwriter,
be sold, will be included in such registration pro rata
among all shareholders who are entitled to include
shares in such registration statement (subject to any
piggy back registration rights granted by IWL prior to
the date hereof that grant the holders of such rights
preferential treatment in the event of any market
cutbacks).
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(ii) IWL shall select the underwriter, if any, for an offering
made pursuant to this Section 2(b).
3. POSTPONEMENT OF REGISTRATION. Notwithstanding the provisions of
subsection 2(a) and (b) above, if (i) in the good faith judgment of the Board of
Directors of IWL, a registration requested pursuant to either of such
subsections would be seriously detrimental to IWL or would impede or require the
disclosure before it would otherwise be disclosed to the public of any pending
merger, sale, acquisition or other transaction then under consideration by the
Board of Directors ("Transaction Under Consideration"), and the Board of
Directors of IWL concludes, as a result, that it is in the best interests of IWL
to defer the filing of such registration statement at such time, and (ii) IWL
furnishes to the Holders who requested registration under such subparagraph a
certificate signed by the President of IWL stating that in the good faith
judgment of the Board of Directors of IWL, it would be seriously detrimental to
IWL for such registration statement to be filed in the near future, or that it
would impede or require the disclosure before it would otherwise be disclosed to
the public of any Transaction Under Consideration and that it is, in the best
interests of IWL to defer the filing of such registration statement, then IWL
shall have the right to defer such filing for the period during which such
disclosure would be seriously detrimental to IWL or during which time the filing
would impede or require the disclosure of a Transaction Under Consideration
before it is otherwise disclosed to the public, except that IWL may not defer
the filing for a period of more than ninety (90) days after receipt of a
request, and may not exercise its right of deferral more than once. In
addition, IWL shall not be required to effect any demand registrations pursuant
to Section 2(a) during any Lock-Up Period as defined in section 8 or within
ninety (90) days after the effective date of any other registration statement
filed by IWL (other than a registration statement on Form S-8).
4. OBLIGATIONS OF IWL. IWL shall (i) prepare and file with the Commission
the registration statement in accordance with Section 2 hereof with respect to
the shares of Registrable Securities requested to be registered and shall use
commercially reasonable efforts to cause such registration statement to become
effective as promptly as practicable after filing and to keep such registration
statement effective until the earlier of the sale of all securities registered
thereby or the expiration of ninety (90) days; (ii) prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary and comply with
the provisions of the Act with respect to the sale or other disposition of all
Registrable Securities proposed to be registered in such registration statement
until the earlier of the sale of all of the shares of Registrable Securities so
registered and the Expiration Date; (iii) furnish to each Holder such number of
copies of any prospectus (including any preliminary prospectus and any amended
or supplemented prospectus) in conformity with the requirements of the Act, and
such other documents, as such Holder may reasonably request in order to effect
the offering and sale of the shares of the Registrable Securities to be offered
and sold, but only while IWL shall be required under the provisions hereof to
cause the registration statement to remain current; (iv) use commercially
reasonable efforts to register or qualify the shares of the Registrable
Securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions as such Holder shall reasonably request (provided
that IWL shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such jurisdiction where it has not been qualified), and do any and all other
acts or things which may be necessary or advisable to enable each Holder to
consummate the public sale or other disposition of the Registrable Securities in
such jurisdictions; (v) notify each Holder upon the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing; (vi) so
long as the registration statement remains effective, promptly prepare, file and
furnish to each Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
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delivered to the purchasers of the Registrable Securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; (vii) notify
each Holder, promptly after it shall receive notice thereof, of the date and
time the registration statement and each post-effective amendment thereto has
become effective or a supplement to any prospectus forming a part of such
registration statement has been filed; (viii) notify each Holder promptly of any
request by the Commission for the amending or supplementing of such registration
statement or prospectus or for additional information; and (ix) advise each
Holder, promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the Commission suspending the effectiveness of
the registration statement or the initiation or threatening of any proceeding
for that purpose and promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such stop order should be issued.
5. AVAILABILITY OF FORM S-3. IWL shall use its best efforts to qualify
for registration on Form S-3 (or a successor form). However, if IWL is unable
to qualify for registration on Form S-3 (or a successor form), or if Form S-3
(or a successor form) is not otherwise available for use by IWL, IWL shall have
no obligations under Section 2(a) hereof. Pursuant to the eligibility
requirements to use Form S-3, the earliest that IWL could qualify to use Form
S-3 is June 12, 1998.
6. EXPENSES. IWL shall pay the out-of-pocket expenses incurred by IWL,
other than underwriting discounts and commissions attributable to the shares of
the Holders, in connection with any registration of Registrable Securities
pursuant to this Registration Rights Agreement, including, without limitation,
all Commission, Nasdaq Stock Market, NASD and blue sky registration and filing
fees, printing expenses, transfer agents' and registrars' fees, and the fees and
disbursements of IWL's outside counsel and independent accountants.
Notwithstanding the above, the fees and expenses of all counsel, accountants and
advisors of the Holders shall be paid by the Holders pro rata on the basis of
the number of their shares so registered.
7. INDEMNIFICATION. In the event of any offering registered pursuant to
this Registration Rights Agreement:
a. IWL will indemnify each Holder, and each underwriter which
facilitates the disposition of such Registered Securities, and each of their
respective officers and directors, and each person controlling such Holder or
underwriter within the meaning of Section 15 of the Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Registration Rights Agreement, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, 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 amendment or supplement thereto, 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, in light of the circumstances in which
they are made, not misleading, or any violation by IWL of any rule or regulation
promulgated under the Act, or state securities laws, or common law, applicable
to IWL in connection with any such registration, qualification or compliance,
and will reimburse each Holder, underwriter and the respective officers,
directors and controlling persons thereof, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action, provided that IWL 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 or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to IWL in an instrument
(including,
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but not limited to the Share Purchase Agreement of even date herewith) duly
executed by any Holder.
b. Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which registration, qualification or
compliance is being effected, indemnify IWL, each of its directors and officers
and its legal counsel and independent accountants, each underwriter, if any, of
IWL's securities covered by such a registration statement, and each person who
controls IWL or such underwriter within the meaning of Section 15 of the Act,
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) or 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 IWL,
such directors, officers, legal counsel, independent accountants, 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 IWL in an instrument duly executed by such Holder (including, but
not limited to the Share Purchase Agreement of even date herewith); provided,
however, that the obligations of such Holders hereunder shall be limited to an
amount equal to the net proceeds, after deduction of expenses and commissions,
to each such Holder of Registrable Securities sold as contemplated herein.
c. 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 written notice of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that if Holder is the Indemnified Party
and the defendants in any such action shall include both Holder, as the
Indemnified Party, and the Indemnifying Party shall have reasonably concluded
that there may be legal defenses available to it which are different from or
additional to those available to the Indemnifying Party, the Indemnified Party
shall have the right to select separate counsel to assert such legal defenses
and otherwise participate in the defense of such action on behalf of such
Indemnified Party and the fees and expenses of such counsel shall be paid by the
Indemnifying Party. The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Registration Rights Agreement, except to the extent, but only to the
extent, that the Indemnifying Party's ability to defend against such claim or
litigation is materially prejudiced as a result of such failure to give notice.
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 any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation.
d. If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection a. or b. above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses, claims, damages
or
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liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 7.d. were determined by
pro rata allocation (even if the Holders or any underwriters, or all of them
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 7.d. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the Holders in
this Section 7.d. to contribute shall be several in proportion to the percentage
of principal amount of Registrable Securities registered or underwritten, as the
case may be, by them and not joint.
e. The obligations of IWL and each Holder under this Section 7 shall
survive the completion of any offering of stock in a registration statement
under this Registration Rights Agreement and otherwise.
8. HOLDBACK AGREEMENTS. Each Holder shall enter into such agreements
(including underwriting agreements and lock-up agreements) as the managing
underwriter of any offering made by IWL and/or made by any selling shareholders,
in each case of IWL's equity securities registered under the Act, shall
reasonably request; provided that any holdback shall not exceed a period of
sixty (60) days before the filing date of such registration and one hundred
eighty (180) days after the effective date thereof (the "Lock-up Period")
9. TERMINATION. The registration rights set forth in this Registration
Rights Agreement shall terminate with respect to a Holder on the Expiration Date
or such earlier time as such Registrable Securities are exchanged for or
converted into securities in a transaction registered under the Act or at such
earlier time as such Holder has sold all Registrable Securities.
10. NOTICES. Notices may be given in the manner set forth in the Share
Purchase Agreement.
11. GOVERNING LAWS. This Registration Rights Agreement shall be governed
by the laws of the State of Texas, U.S.A.
12. COUNTERPARTS. This Registration Rights Agreement may be executed in
multiple counterparts, each of which shall constitute an original, but all of
which shall constitute but one and the same instrument. One or more counterpart
to this Registration Rights Agreement may be delivered via telecopier, with the
intention that they shall have the same effect as an original counterpart
hereof.
Executed this 22nd day of January, 1998.
IWL COMMUNICATIONS, INCORPORATED
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By: /s/ Xxxxxxxx X. Xxxxxxxx
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Its: President
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NERA LIMITED
By:
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Its:
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