Document:

exv4w1

Exhibit 4.1

EXECUTION COPY

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

     THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as
of September 3, 2009, by and among Leap Wireless International, Inc., a Delaware corporation (the
“Company”), and the Holders (as hereinafter defined) of Registrable Securities (as
hereinafter defined) who are parties to this Agreement, including any Additional Holders (as
hereinafter defined) who subsequently become parties to this Agreement.

RECITALS

A. Whereas, the Company and certain of the Holders entered into that certain Registration Rights
Agreement, dated as of August 16, 2004, pursuant to, and as authorized by, the Bankruptcy Court
order confirming the Plan (as hereinafter defined), which was amended by that certain amendment,
dated as of June 7, 2005 (the “Original Registration Rights Agreement”).

B. Whereas, in connection with the Company’s proposed sale of Common Stock pursuant to that certain
registration statement on Form S-3 filed with the Commission (as hereinafter defined) on March 4,
2009, the Company and certain of the Holders entered into that certain agreement (the
“Registration Rights Agreement Waiver”) on May 28, 2009, whereby such Holders agreed to
waive certain rights that they had pursuant to the Original Registration Rights Agreement.

C. Whereas, in consideration for the waiver of such rights as set forth in the Registration Rights
Agreement Waiver, the Company has agreed to amend and restate the Original Registration Rights
Agreement as set forth herein.

AGREEMENTS

          In consideration of the foregoing, and the agreements set forth below, the parties agree with
each other as follows:

1. DEFINITIONS.

     As used in this Agreement, the following capitalized terms (in their singular and plural
forms, as applicable) have the following meanings:

          “Action” has the meaning assigned to such term in Section 7.3 hereof.

          “Additional Holder” means any (i) Affiliate of any Holder or (ii) Permitted Assignee,
in each case who, at any time and from time to time, owns Registrable Securities, and has agreed to
be bound by the terms hereof and thereby has become a Holder for purposes of this Agreement, all at
the relevant time.

          “Adverse Effect” has the meaning assigned to such term in Section 2.5 hereof.

          “Affiliate” of a Person shall mean (i) any Person that is an “affiliate” of such
Person as

 

 

such term is defined in Rule 405 under the Securities Act or any successor thereto, in each case as
may be amended or interpreted by the Commission from time to time, (ii) in the case of the Company
or any of its Successors or any of their respective subsidiaries, any Person that is, or is an
Affiliate of any Person that is, a member of any of their respective Boards of Directors at the
relevant time or (iii) in the case of the Company or any of its Successors, any Person that,
together with such Person’s Affiliates, beneficially owns Common Stock representing 10% or more of
the aggregate voting power of all outstanding shares of capital stock at the relevant time.

          “Agreement” has the meaning assigned to such term in the introductory paragraph to
this Agreement, as the same may be amended, supplemented or restated from time to time.

          “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not
a day on which banking institutions in the Borough of Manhattan, The City of New York are
authorized or obligated by law or executive order to close.

          “Commission” means the United States Securities and Exchange Commission and any
successor United States federal agency or governmental authority having similar powers.

          “Common Stock” means the authorized common stock, par value $0.0001 per share, of the
Company or the authorized common stock or similar equity security of any Successor.

          “Company” has the meaning assigned to such term in the introductory paragraph to this
Agreement.

          “Company Indemnified Person” has the meaning assigned to such term in Section 7.2
hereof.

          “Company Standstill Period” has the meaning assigned to such term in Section 5.1
hereof.

          “Demand Registration” has the meaning assigned to such term in Section 2.1 hereof.

          “Demand Request” has the meaning assigned to such term in Section 2.1 hereof.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations of the Commission thereunder.

          “FINRA” has the meaning assigned to such term in Section 6.1(n) hereof.

          “Holder” means any (i) Person who owns Registrable Securities at the relevant time and
is a party to this Agreement or (ii) Additional Holder.

          “Indemnified Person” has the meaning assigned to such term in Section 7.1 hereof.

          “Indemnitee” has the meaning assigned to such term in Section 7.3 hereof.

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          “Inspectors” has the meaning assigned to such term in Section 6.1(k) hereof.

          “Joining Holder” has the meaning assigned to such term in Section 2.2 hereof.

          “Loss” and “Losses” have the meanings assigned to such terms in Section 7.1
hereof.

          “Major Holder” means any Holder that holds (together with its Affiliates who are
Holders), in the aggregate, a minimum of 2,500,000 shares of Registrable Securities (subject to
equitable adjustment for any stock splits, stock dividends, combinations, reorganizations or
similar events occurring after the date of this Agreement) at the time such Holder makes a Demand
Request pursuant to Section 2.1 hereof.

          “Majority Participating Holders” means, with respect to any registration of
Registrable Securities under this Agreement, the Holder or Holders at the relevant time of at least
a majority of the Registrable Securities to be included in the registration statement in question.

          “Material Disclosure Event” means, as of any date of determination, any pending or
imminent event relating to the Company or any of its subsidiaries, which, in the good faith
determination of the Company (i) requires disclosure of material, non-public information relating
to such event in any registration statement or related prospectus (including documents incorporated
by reference therein) so that such registration statement would not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are made, not misleading,
(ii) is otherwise not required to be publicly disclosed at that time (e.g., on Forms 10-K, 8-K, or
10-Q) under applicable federal or state securities laws and (iii) if publicly disclosed at the time
of such event, could reasonably be expected to have a material adverse effect on the business,
financial condition or prospects of the Company and its subsidiaries or would materially adversely
affect a pending or proposed acquisition, merger, recapitalization, consolidation, reorganization,
financing or similar transaction, or negotiations with respect thereto.

          “New Shelf Registration Statement” has the meaning assigned to such term in Section
4.1 hereof.

          “Participating Holder” means any Holder on whose behalf Registrable Securities are
registered pursuant to Sections 2, 3 or 4 hereof.

          “Permitted Assignee” means any (i) Affiliate of any Holder who acquires Registrable
Securities from such Holder or its Affiliates or (ii) any other Person who acquires at least 20%
(calculated at the time of such purchase) of any Holder’s Registrable Securities and who shall have
been designated as a Permitted Assignee by such Holder in a written notice to the Company; provided
that the rights of any Person designated as a Permitted Assignee referred to in the foregoing
clause (ii) shall be limited if, and to the extent, provided in such notice.

          “Person” means any individual, corporation, partnership, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated organization, government or
any

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agency or political subdivision thereof or any other entity.

          “Plan” means the Fifth Amended Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code, dated as of July 30, 2003, which Plan was confirmed on October 22, 2003 by order
of the United States Bankruptcy Court for the Southern District of California, as the same may be
amended, modified or supplemented from time to time in accordance with the terms thereof.

          “Records” has the meaning assigned to such term in Section 6.1(k) hereof.

          The terms “register,” “registered” and “registration” mean a
registration effected by preparing and filing with the Commission a registration statement, an
amendment to a registration statement or a prospectus supplement to a shelf registration statement,
in each case on an appropriate form in compliance with the Securities Act, and the declaration or
order of the Commission of the effectiveness of such registration statement or amendment under the
Securities Act or the automatic effectiveness of such registration statement or amendment under the
Securities Act pursuant to the rules of the Commission.

          “Registration Rights Agreement Waiver” has the meaning assigned to such term in the
Recitals.

          “Registrable Securities” means (x) any shares of Common Stock held by any of the
Holders now or at any time and from time to time in the future (regardless of when acquired and
regardless of prior sales or purchases of any Common Stock by the Holder), and (y) any securities
of the Company or any of its Successors that may be issued by the Company or any of its Successors
with respect to Registrable Securities, including by way of a stock dividend, stock split or
reverse stock split or in connection with a combination of shares, recapitalization, stock
purchase, merger, consolidation or otherwise; provided, however, that as to any
Registrable Securities, such securities shall cease to constitute “Registrable Securities”
for purposes of this Agreement if and when (i) a registration statement with respect to the sale of
such securities shall have been declared effective by the Commission and such securities shall have
been sold pursuant thereto, or (ii) such securities are sold or transferred in accordance with the
provisions of Rule 144 (or Rule 145, if applicable), or (iii) such securities are sold or
transferred (other than in a transaction under clause (i) or (ii) above) by a Person in a
transaction in which such Person’s rights under this Agreement are not assigned, or (iv) such
securities are no longer outstanding, or (v) such securities are eligible (including following the
satisfaction of any applicable holding period requirements) for sale without registration pursuant
to Rule 144 (or Rule 145, if applicable) without restriction (including current public information
requirements, volume limitations, manner of sale limitations or notice requirements), or (vi) as to
any such securities that are not “restricted securities” (as defined under Rule 144), neither the
Holder of such securities nor any of its Affiliates are then Affiliates of the Company or any of
its Successors, as the case may be, nor shall any such Holder of such securities nor any of its
Affiliates have been an Affiliate of the Company or any of its Successors, as the case may be, at
any time during the then immediately preceding ninety (90) days.

          “Requesting Holder” has the meaning assigned to such term in Section 2.1 hereof.

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          “Required Filing Date” has the meaning assigned to such term in Section 2.1 hereof.

          “Required Period” has the meaning assigned to such term in Section 4.3 hereof.

          “Rule 144” means Rule 144 (or any similar provision then in force) promulgated under
the Securities Act, as amended from time to time, or any successor rule or regulation.

          “Securities Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations of the Commission thereunder.

          “Shelf Registration Statement” means that certain registration statement on Form S-3
(No. 333-157697) filed with the Commission on March 4, 2009.

          “Successor” means (x) any Person or Persons that issue(s) any securities into which
Registrable Securities are converted or replaced or for which they are exchanged, including in
connection with any business combination or otherwise or (y) any Person whose securities are issued
to any Holder in connection with any transaction involving a sale of all or substantially all of
the assets of the Company.

          “Suspension Notice” has the meaning assigned to such term in Section 5.2 hereof.

          “Suspension Period” has the meaning assigned to such term in Section 5.2 hereof.

          The words “include,” “includes” and “including,” when used in this
Agreement, shall be deemed to be followed by the words “without limitation.”

2. DEMAND REGISTRATION.

     2.1 Request for Registration. Subject to the provisions contained in this Section 2.1
and in Sections 3.2(b), 5.2 and 5.3 hereof, any Major Holder may, from time to time, request (each,
a “Requesting Holder”) in writing (a “Demand Request”) that the Company effect the
registration under the Securities Act of a specified number of Registrable Securities held by the
Requesting Holders (a “Demand Registration”); provided, however, that the
Company will in no event be required to effect more than three (3) Demand Registrations in total;
provided, further that the Company will in no event be required to effect more than one (1) Demand
Registration in any 12-month period; and provided, further, that, subject to the
Company’s compliance with its obligations under Article 3 hereof, the Company will not be obligated
to take any action to effect any Demand Registration during the period commencing with the
Company’s issuance of a notice of a proposed registration of an underwritten offering of equity
securities of the Company for its own account (except pursuant to registrations on Form S-4 or any
successor form, or on Form S-8 or any successor form relating solely to securities issued pursuant
to any benefit plan) to the Holders pursuant to Section 3.1 hereof, continuing while the Company
uses reasonable best efforts to pursue such registered underwritten offering, and ending upon the
earliest to occur of: (i) 45 days immediately following the Company’s issuance of the notice of
such proposed registered underwritten offering pursuant to Section 3.1 hereof, unless, within such
45-day

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period, the Company shall have filed the registration statement, an amendment to a registration
statement or a prospectus supplement to a shelf registration statement for such proposed
underwritten offering, or shall have issued a press release disclosing such proposed underwritten
offering pursuant to Rule 135 (or its successor) promulgated under the Securities Act thereby
enabling the Holders to sell all their then registered Registrable Securities pursuant to the Shelf
Registration Statement or any New Shelf Registration Statement, as applicable; (ii) the
abandonment, cessation or withdrawal of such proposed registered underwritten offering; or (iii) 90
days immediately following the effective date of the registration statement or amendment to the
registration statement pertaining to such underwritten offering or, if applicable, 90 days
immediately following the date of the final prospectus supplement to the shelf registration
statement pertaining to such underwritten offering; and provided, further, that the
Company shall not be obligated to effect any Demand Registration for any Registrable Securities if
the Shelf Registration Statement or, if applicable, any New Shelf Registration Statement is then
effective, and such Shelf Registration Statement or, if applicable, any New Shelf Registration
Statement may be utilized by the Requesting Holder for the offering and sale of all Registrable
Securities then held by the Requesting Holder without a requirement under the Commission’s rules
and regulations for a post-effective amendment thereto; and provided, further, that
the Company shall not be obligated to effect any Demand Registration for any Registrable Securities
(other than Registrable Securities issued under the Plan) prior to December 2, 2009. Subject to
the provisions contained in this Section 2.1 and in Sections 3.2(b), 5.2 and 5.3 hereof, upon
receipt of a Demand Request, the Company will cause to be included in a registration statement on
an appropriate form under the Securities Act, filed with the Commission as promptly as practicable
but in any event not later than 60 days after receiving a Demand Request (the “Required Filing
Date”), such Registrable Securities as may be requested by such Requesting Holders in their
Demand Request together with any other Registrable Securities of the same class as requested by
Joining Holders joining in such request pursuant to Section 2.2 hereof. The Company shall use its
reasonable efforts to cause any such registration statement to be declared effective by the
Commission as promptly as possible after such filing.

     2.2 Joining Holders. If at any time the Company proposes to register Registrable
Securities for the account of the Requesting Holders pursuant to Section 2.1 hereof, then (i) the
Company shall give, or cause to be given, written notice of such proposed filing to all the Holders
as soon as practicable (but in no event less than 30 days before the anticipated filing date). Upon
the written request of any Holder, received by the Company no later than the 10th
Business Day after receipt by such Holder of the notice sent by the Company (each such Holder, a
“Joining Holder”), to register, on the same terms and conditions as the securities
otherwise being sold pursuant to such Demand Registration, any of its Registrable Securities of the
same class as the securities otherwise being sold pursuant to such Demand Registration, the Company
will use its reasonable best efforts to cause such Registrable Securities to be included in the
registration statement proposed to be filed by the Company on the same terms and conditions as any
securities of the same class included therein.

     2.3 Effective Registration. A registration will not count as a Demand Registration (i)
unless the related registration statement has been declared effective and has remained effective
until such time as all of such Registrable Securities covered thereby have been disposed of in
accordance with the intended methods of disposition by the Participating Holders (but in no

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event for a period of more than 180 days after such registration statement becomes effective not
including any Suspension Period); it being understood that if, after it has become effective, an
offering of Registrable Securities pursuant to a registration statement is terminated by any stop
order, injunction, or other order of the Commission or other governmental agency or court, such
registration pursuant thereto will be deemed not to have been effected and will not count as a
Demand Registration for purposes of Section 2.1, or (ii) if pursuant to Section 2.5 hereof, the
Requesting Holders and Joining Holders are cut back to fewer than 75% of the Registrable Securities
requested to be registered and at the time of the request there was not in effect a Shelf
Registration Statement and, if applicable, a New Shelf Registration Statement, covering all
Registrable Securities then beneficially owned by the Holders.

     2.4 Selection of Underwriters. With respect to any offering of Registrable
Securities pursuant to a Demand Registration in the form of an underwritten offering, the
Company shall select an investment banking firm of national standing to be the managing underwriter
for the offering, which firm shall be reasonably acceptable to the Majority Participating Holders.

     2.5 Priority on Demand Registrations. With respect to any offering of Registrable
Securities pursuant to a Demand Registration in the form of an underwritten offering, no securities
to be sold for the account of any Person (including the Company) other than the Requesting Holders
and Joining Holders shall be included in a Demand Registration unless the managing underwriter
advises the Requesting Holders in writing that the inclusion of such securities will not adversely
affect the price or success of the offering (an “Adverse Effect”). Furthermore, in the
event that the managing underwriter advises the Requesting Holders in writing that the amount of
Registrable Securities proposed to be included in such Demand Registration by Requesting Holders
and Joining Holders is sufficiently large (even after exclusion of all securities of any other
Person pursuant to the immediately preceding sentence) to cause an Adverse Effect, the number of
Registrable Securities to be included in such Demand Registration shall be allocated among all such
Requesting Holders and Joining Holders pro rata based on the ratio that the number of Registrable
Securities that each such Holder requested to be included in such Demand Registration bears to the
total number of Registrable Securities that all Requesting Holders and Joining Holders requested to
be included in such Demand Registration; provided that if, as a result of such pro-ration, any
Requesting Holder or Joining Holder shall not be entitled to include in a registration all
Registrable Securities of the class that such Holder had requested to be included, such Holder may
elect to withdraw its request to include such Registrable Securities in such registration or may
reduce the number requested to be included; provided, however, that (a) such request must be made
in writing prior to the earlier of the execution of the underwriting agreement or the execution of
the custody agreement with respect to such registration and (b) such withdrawal or reduction shall
be irrevocable.

     2.6 Cancellation of Registration. The Majority Participating Holders shall have the
right to cancel a proposed Demand Registration of Registrable Securities pursuant to this Article 2
when the request for cancellation is based upon material adverse information relating to the
Company that is different from the information known to the participating Holders at the time of
the Demand Request. Such cancellation of a registration shall not be counted as one of the three
(3) Demand Registrations and notwithstanding anything to the contrary in the Agreement, the

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Company shall be responsible for the expenses of the participating Holders incurred in connection
with the registration through the date that is seven (7) days after the time such information
became known to the participating Holders, to the extent such expenses are as described in clauses
(i) through (x) of the first sentence of Section 8 hereof.

3. PIGGYBACK REGISTRATIONS.

     3.1 Holder Piggyback Registration. If the Company (i) proposes to file a registration
statement under the Securities Act with respect to an offering of any equity securities (except
pursuant to registrations on Form S-4 or any successor form, or on Form S-8 or any successor form
relating solely to securities issued pursuant to any benefit plan) on a form that would permit
registration of Registrable Securities for sale to the public under the Securities Act or (ii)
proposes to file an initial prospectus supplement to a shelf registration statement with respect to
an underwritten offering of Common Stock on a form that would permit registration of Registrable
Securities for sale to the public under the Securities Act, then the Company shall give written
notice of such proposed filing to the Holders not less than 21 days before the anticipated filing
date, describing in reasonable detail the proposed offering (including the number and class of
securities proposed to be offered, the proposed date of filing of such registration statement or
prospectus supplement, any proposed means of distribution of such securities, any proposed managing
underwriter of such securities and a good faith estimate by the Company of the proposed maximum
offering price of such securities as such price is proposed to appear on the facing page of such
registration statement or prospectus supplement), and offering such Holders the opportunity to
register and offer such number of Registrable Securities of the same class as those being offered
by the Company as each such Holder may request. Upon the written request of any Holder, received by
the Company no later than 10 Business Days after receipt by such Holder of the notice sent by the
Company, to register and offer, on the same terms and conditions as the securities otherwise being
sold pursuant to such registration statement or prospectus supplement, any of such Holder’s
Registrable Securities of the same class as those being offered (which request shall state the
intended method of disposition thereof if the securities otherwise being sold are being sold by
more than one method of disposition), the Company will use its reasonable efforts to cause such
Registrable Securities as to which registration shall have been so requested to be included in the
registration statement or prospectus supplement proposed to be filed by the Company on the same
terms and conditions as the securities otherwise being sold pursuant to such registration statement
or prospectus supplement; provided, however, that, notwithstanding the foregoing,
the Company may at any time, in its sole discretion, without the consent of any other Holder, delay
or abandon the proposed offering in which any Holder had requested to participate pursuant to this
Section 3.1 or cease the filing (or obtaining or maintaining the effectiveness) of or withdraw the
related registration statement or prospectus supplement or other governmental approvals,
registrations or qualifications. In such event, the Company shall so notify each Holder that had
notified the Company in accordance with this Section 3.1 of its intention to participate in such
offering and the Company shall incur no liability for its failure to complete any such offering.

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     3.2 Priority on Piggyback Registrations.

          (a) If the managing underwriter for the related underwritten offering advises the
Company in writing that the inclusion of such Registrable Securities would cause an Adverse Effect,
and the Company notifies the requesting Holders in writing of such advice, then the Company will be
obligated to include in such registration statement or prospectus supplement only that number of
Registrable Securities which, in the judgment of the managing underwriter, would not have an
Adverse Effect; provided, however, that no such reduction shall reduce the
aggregate amount of Registrable Securities included in such registration statement or prospectus
supplement for the benefit of the requesting Holders to less than fifty percent (50%) of the total
number of securities that are included such registration statement or prospectus supplement. Any
partial reduction in the number of Registrable Securities to be included in a registration
statement or prospectus supplement pursuant to the immediately preceding sentence shall be affected
pro rata based on the ratio that the number of Registrable Securities that each such Holder
requested to be included in such registration statement or prospectus supplement bears to the total
number of Registrable Securities that all Holders requested to be included in such registration
statement or prospectus supplement.

          (b) Subject to the Company’s compliance with its obligations under this Article 3, if after a
Demand Request by the Holders pursuant to Section 2.1 hereof the Company initiates a proposal to
register an underwritten offering of equity securities (or to file an initial prospectus supplement
to a shelf registration statement for an underwritten offering of equity securities) for its own
account pursuant to this Article 3 and the Holders will be afforded the right (whether or not
exercised by the Holders) to include Registrable Securities in such underwritten offering in
accordance with and subject to the provisions of this Article 3, then the proposed offering for the
account of the Company pursuant to this Article 3 shall be given priority over such Demand Request
in all respects.

     3.3 Withdrawals. Each Holder shall have the right to withdraw its request for
inclusion of its Registrable Securities in any registration statement or prospectus supplement
pursuant to this Article 3 by giving written notice to the Company of its request to withdraw;
provided, however, that (i) such request must be made in writing prior to the
earlier of the execution of the underwriting agreement or the execution of the custody agreement
with respect to such offering and (ii) such withdrawal shall be irrevocable.

     3.4 Underwritten Offerings.

          (a) In connection with the exercise of any registration rights granted to Holders pursuant to
this Article 3, if the offering is to be effected by means of an underwritten offering, the Company
may condition participation in such offering by any such Holder upon inclusion of the Registrable
Securities being so offered in such underwriting and such Holder’s entering into an underwriting
agreement pursuant to Section 6.2(d) hereof.

          (b) With respect to any offering of Registrable Securities pursuant to this Article 3 in the
form of an underwritten offering, the Company shall select an investment banking firm of national
standing to be the managing underwriter for the offering.

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4. SHELF REGISTRATION.

     4.1 New Shelf Registration Statement Filing. Notwithstanding any other provision of
this Agreement, (i) no later than December 2, 2009 and (ii) thereafter, within sixty (60) days
following the request of any Holder with respect to any Registrable Securities, the Company shall
file with the Commission (x) if permitted by the rules and regulations of the Commission, a
post-effective amendment to the Shelf Registration Statement (or any New Shelf Registration
Statement, as applicable) or (y) if a post-effective amendment described in clause (x) above is not
then permitted by the rules and regulations of the Commission, a new shelf registration statement
(the “New Shelf Registration Statement”), in either case relating to the offer and sale of
all Registrable Securities then beneficially owned by any of the Holders to the public, from time
to time, on a delayed or continuous basis, that are not then included in the Shelf Registration
Statement or any New Shelf Registration Statement, as applicable.

     4.2 New Shelf Registration Statement Requirements. In the event that the Company is at
any time required to file a New Shelf Registration Statement pursuant to Section 4.1, then:

          (a) subject to the provisions contained in this Section 4.2 and in Sections 5.2 and 5.3
hereof, the Company shall use its reasonable best efforts to cause the New Shelf Registration
Statement to be declared effective by the Commission or to otherwise become effective as soon as
practicable after the filing thereof with the Commission;

          (b) the New Shelf Registration Statement shall specify the intended method of distribution of
the subject Registrable Securities substantially in the form of Exhibit A attached hereto; and

          (c) the Company shall file the New Shelf Registration Statement on Form S-3 or, if the Company
or the offering of the Registrable Securities does not satisfy the requirements for use of such
form, such other form as may be appropriate; provided, that if the New Shelf Registration
Statement is not filed on Form S-3, the Company shall, promptly upon meeting the requirements for
use of such form, file an appropriate amendment to the New Shelf Registration Statement to convert
it to Form S-3.

Notwithstanding the foregoing, subject to the Company’s compliance with its obligations under
Article 3 hereof, (x) the Company will not be obligated to take any action to effect any New Shelf
Registration Statement during the period commencing with the Company’s issuance of a notice of a
proposed registration of an underwritten offering of equity securities (or the filing of an initial
prospectus supplement to a shelf registration statement for an underwritten offering of equity
securities) of the Company for its own account (except pursuant to registrations on Form S-4 or any
successor form, or on Form S-8 or any successor form relating solely to securities issued pursuant
to any benefit plan) to the Holders pursuant to Section 3.1 hereof, continuing while the Company
uses reasonable best efforts to pursue such registered underwritten offering, and ending upon the
earliest to occur of: (i) 45 days immediately following the Company’s issuance of the notice of
such proposed registered underwritten offering pursuant to Section 3.1 hereof, unless, within such
45-day period, the Company shall have filed the registration statement or prospectus supplement for
such proposed underwritten offering, or shall have issued a press release disclosing such proposed
underwritten offering pursuant to Rule 135 (or its successor) promulgated under the Securities Act
thereby enabling the Holders to sell their

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Registrable Securities then registered pursuant to the Shelf Registration Statement or any existing
New Shelf Registration Statement, as applicable; (ii) the abandonment, cessation or withdrawal of
such proposed registered underwritten offering; or (iii) 90 days immediately following the
effective date of the registration statement or amendment to registration statement pertaining to
such underwritten offering or, if applicable, 90 days immediately following the date of the final
prospectus supplement to a shelf registration statement pertaining to such underwritten offering;
and (y) subject to Section 5.3, the Company will not be obligated to take any action to effect any
amendment to the Shelf Registration Statement or any existing New Shelf Registration Statement, as
applicable, during the period commencing on the effective date of a registration statement or
amendment to registration statement for an underwritten offering of equity securities (or the
filing of the final prospectus supplement to a shelf registration statement for an underwritten
offering of equity securities) of the Company for its own account (except pursuant to registrations
on Form S-4 or any successor form, or on Form S-8 or any successor form relating solely to
securities issued pursuant to any benefit plan) and ending 90 days immediately following the
effective date of the registration statement or amendment to registration statement pertaining to
such underwritten offering or, if applicable, 90 days immediately following the date of the final
prospectus supplement to a shelf registration statement pertaining to such underwritten offering.
If the Company issues a notice of a proposed underwritten public offering of equity securities of
the Company for its own account pursuant to Section 3.1 hereof during a period in which a
registration request pursuant to Section 4.1 is outstanding and the Company subsequently abandons,
ceases or withdraws such offering, the Company will not issue a notice of a subsequent proposed
registered underwritten offering of equity securities of the Company for its own account pursuant
to Section 3.1 hereof during the period in which such registration request pursuant to Section 4.1
is outstanding unless and until such amendment to the Shelf Registration Statement (or any New
Shelf Registration Statement, as applicable) is first declared effective by the Commission or
otherwise becomes effective.

     4.3. Required Shelf Registration Period and Shelf Registration Procedures. The Company
shall (i) cause the Shelf Registration Statement and any New Shelf Registration Statement, if
applicable, to include a resale prospectus intended to permit each Holder to sell, at such Holder’s
election, all or part of the Registrable Securities held by such Holder without restriction, (ii)
use its reasonable efforts to prepare and file with the Commission such supplements, amendments and
post-effective amendments to the Shelf Registration Statement and any New Shelf Registration
Statement, if applicable, as may be necessary to keep the Shelf Registration Statement and New
Shelf Registration Statement, if applicable, continuously effective (subject to any Suspension
Period(s) referred to below) for so long as the securities registered thereunder constitute
Registrable Securities (the “Required Period”), and (iii) use its reasonable efforts to
cause the resale prospectus to be supplemented by any required prospectus supplement (subject to
any Suspension Period(s) referred to below).

5. STANDSTILL AND SUSPENSION PERIODS.

     5.1 Company Standstill Period. In the event of an underwritten public offering of
Registrable Securities on a firm commitment basis pursuant to Section 2.1 hereof, the Company
agrees not to, without the prior written consent of the managing underwriter, offer, pledge, sell,
contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose
of, directly or

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indirectly, any securities (except securities that may be held by the Company for its own account
under the relevant registration statement) that are the same as, or similar to, the Registrable
Securities, or any securities convertible into, or exchangeable or exercisable for, any securities
of the Company that are the same as, or similar to, the Registrable Securities (except pursuant to
registrations on Form S-4 or any successor form, or otherwise in connection with the acquisition of
a business or assets of a business, a merger, or an exchange offer for the securities of the issuer
or another entity, or pursuant to a Company dividend reinvestment plan, or for issuances of
securities pursuant to the conversion, exchange or exercise of then-outstanding convertible or
exchangeable securities, options, rights or warrants, or pursuant to registrations on Form S-8 or
any successor form or otherwise relating solely to securities offered pursuant to any benefit
plan), during the period commencing 15 days prior to the effective date of the registration
statement relating to such Registrable Securities (to the extent timely notified in writing by the
Majority Participating Holders or the managing underwriter of such distribution) and ending on the
90th day after such effective date (the “Company Standstill Period”).

     5.2 Suspension Period. The Company may, by notice in writing to each Holder, postpone
the filing or effectiveness of the Shelf Registration Statement, any New Shelf Registration
Statement or any other registration requested pursuant to this Agreement (including any
post-effective amendments to the Shelf Registration Statement or New Shelf Registration Statement,
as applicable, requested pursuant to clause (x) of Section 4.1), or otherwise suspend the Demand
Registration rights of the Holders and/or require the Holders to suspend use of any resale
prospectus included in the Shelf Registration Statement or, if applicable, any New Shelf
Registration Statement, for any period of time determined by the Company if there shall occur a
Material Disclosure Event (such period, a “Suspension Period”). Notwithstanding anything
herein to the contrary, the Company shall not be entitled to more than four (4) Suspension Periods,
which Suspension Periods shall have durations of not more than thirty (30) days each (but may at
the Company’s determination run consecutively for not more than ninety (90) days in the aggregate
for a given Material Disclosure Event), during any consecutive 12 month period, and which
Suspension Periods shall not exceed more than ninety (90) days in the aggregate in any consecutive
12 month period; provided, however, that if the Company deems in good faith that it is necessary to
file a post-effective amendment to the Shelf Registration Statement and, if applicable, the New
Shelf Registration Statement, in order to comply with Section 4 hereof, then such period of time
from the date of filing of such post-effective amendment until the date on which the Shelf
Registration Statement or, if applicable, the New Shelf Registration Statement is declared
effective by the Commission or otherwise becomes effective shall not be treated as a Suspension
Period and the Company shall use its reasonable best efforts to cause such post-effective amendment
to be declared effective or otherwise become effective as promptly as possible. Each Holder agrees
that, upon receipt of notice from the Company of the occurrence of a Material Disclosure Event (a
“Suspension Notice”), such Holder will forthwith discontinue any disposition of Registrable
Securities pursuant to the Shelf Registration Statement and, if applicable, the New Shelf
Registration Statement or any public sale or distribution, including pursuant to Rule 144, until
the earlier of (i) the expiration of the Suspension Period and (ii) such Holder’s receipt of a
notice from the Company to the effect that such suspension has terminated. Any Suspension Notice
shall be accompanied by a certificate of the Chief Executive Officer, Chief Financial Officer,
President or any Vice President of the Company confirming the existence of the Material Disclosure
Event. If so directed by the Company, such Holder will

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deliver to the Company (at the Company’s expense) all copies, other than permanent file copies,
then in such Holder’s possession, of the most recent prospectus(es) covering such Registrable
Securities at the time of receipt of such Suspension Notice. The Company covenants and agrees that
it will not deliver a Suspension Notice with respect to a Suspension Period unless Company
employees, officers and directors are also prohibited by the Company for the duration of such
Suspension Period from effecting any public sales of shares of Common Stock beneficially owned by
them. In the event of a Suspension Notice, the Company shall, promptly after such time as the
related Material Disclosure Event no longer exists, provide notice to all Holders that the
Suspension Period has ended, and take any and all actions necessary or desirable to give effect to
any Holders’ rights under this Agreement that may have been affected by such notice, including the
Holders’ Demand Registration rights and rights with respect to any Shelf Registration Statement or
New Shelf Registration Statement.

     5.3 Holder Standstill Period. Each Holder of Registrable Securities (whether or not
such Registrable Securities are covered by the Shelf Registration Statement, any New Shelf
Registration Statement or by a Registration Statement filed pursuant to Section 2.1 or 3.1 hereof)
agrees to enter into a customary lock-up agreement with the managing underwriter for any
underwritten offering of the Company’s equity securities for its own account, containing terms
reasonably acceptable to such managing underwriter, covering the period commencing 15 days prior to
the effective date of any registration statement or amendment to registration statement pertaining
to such underwritten offering or, if applicable, 15 days prior to the date of the final prospectus
supplement to a shelf registration statement pertaining to such underwritten offering, and ending
on the 90th day after such effective date or final prospectus supplement date (or such shorter
period as shall have been agreed to by the Company’s executive officers and directors in their
respective lock-up agreements); provided, however, that the obligations of each Holder under this
Section 5.3 shall apply only if: (i) such Holder will be afforded the right (whether or not
exercised by the Holder) to include Registrable Securities in such underwritten offering in
accordance with and subject to the provisions of Article 3 hereof; (ii) each of the Company’s
executive officers and directors enter into lock-up agreements with such managing underwriter,
which agreements shall not contain terms more favorable to such executive officers or directors
than those contained in the lock-up agreement entered into by such Holder; and (iii) the aggregate
restriction periods in such Holder’s lock-up agreements entered into pursuant to this Section 5.3
shall not exceed an aggregate of 180 days during any 365-day period.

6. REGISTRATION PROCEDURES.

     6.1 Company Obligations. Whenever the Company is required pursuant to this Agreement
to register Registrable Securities, it will (it being understood and agreed that except as
otherwise expressly set forth in this Article 6, if any other provision of this Agreement is more
favorable to the Holders than the provisions of this Article 6, such other provision shall apply):

          (a) provide the Participating Holders with a reasonable opportunity to review, and comment on,
any registration statement and related prospectus and any amendment or supplement thereto, to be
prepared and filed pursuant to this Agreement prior to the filing thereof with the Commission, and
make all changes thereto as any Participating Holder may request in writing to the extent such
changes are required, in the reasonable judgment of the Company’s counsel, by the Securities Act;

13

 

          (b) cause any such registration statement and the related prospectus and any amendment or
supplement thereto, as of the effective date of such registration statement, amendment or
supplement, (i) to comply in all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the Commission promulgated thereunder and (ii) not
to 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, in light of the circumstances under
which they were made, not misleading;

          (c) furnish, at its expense, to the Participating Holders such number of conformed copies of
such registration statement and of each such amendment thereto (in each case including all exhibits
thereto, except that the Company shall not be obligated to furnish to any such Participating Holder
more than two (2) copies of such exhibits), such number of copies of the prospectus included in
such registration statement (including each preliminary prospectus and each supplement thereto),
and such number of the documents, if any, incorporated by reference in such registration statement
or prospectus, as the Participating Holders reasonably may request;

          (d) use its reasonable efforts to register or qualify the Registrable Securities covered by
such registration statement under such securities or “blue sky” laws of the states of the United
States as the Participating Holders reasonably shall request, to keep such registration or
qualification in effect for so long as such registration statement remains in effect, and to do any
and all other acts and things that may be necessary or advisable to enable the Participating
Holders to consummate the disposition in such jurisdictions of the Registrable Securities covered
by such registration statement, except that the Company shall not, for any such purpose, be
required to qualify generally to do business as a foreign corporation in any jurisdiction in which
it is not obligated to be so qualified, or to subject itself to material taxation in any such
jurisdiction, or to consent to general service of process in any such jurisdiction; and use its
reasonable efforts to obtain all other approvals, consents, exemptions or authorizations from such
securities regulatory authorities or governmental agencies as may be necessary to enable such
Participating Holders to consummate the disposition of such Registrable Securities;

          (e) promptly notify the Participating Holders, at any time when a prospectus or prospectus
supplement relating thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the occurrence of any event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading, which untrue
statement or omission requires amendment of the registration statement or supplementing of the
prospectus, and, as promptly as practicable (subject to Sections 3.2 and 5.2 hereof), prepare and
furnish, at its expense, to the Participating Holders a reasonable number of copies of a supplement
to such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading; provided,
however, that with respect to Registrable Securities registered pursuant to

14

 

such registration statement, each Holder agrees that it will not enter into any transaction for the
sale of any Registrable Securities pursuant to such registration statement during the time after
the furnishing of the Company’s notice that the Company is preparing such supplement to or such
amendment of such prospectus or registration statement and until the filing and effectiveness
thereof;

          (f) use its reasonable efforts to comply with all applicable rules and regulations of the
Commission, and make available to holders of its securities, as soon as practicable, an earnings
statement covering the period of at least 12 months, but not more than 18 months, beginning with
the first month of the first fiscal quarter after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder;

          (g) provide, and cause to be maintained, a transfer agent and registrar for the Registrable
Securities covered by such registration statement (which transfer agent and registrar shall, at the
Company’s option, be the Company’s existing transfer agent and registrar) from and after a date not
later than the effective date of such registration statement;

          (h) notify the Participating Holders and the managing underwriter, if any, promptly, and (if
requested by any such Person) confirm such notice in writing, (i) when a registration statement,
prospectus, prospectus supplement or post-effective amendment related to such registration
statement has been filed, and, with respect to such registration statement or any post-effective
amendment thereto, when the same has become effective, (ii) of any request by the Commission or any
other federal or state governmental authority for amendments or supplements to such registration
statement or related prospectus, (iii) of the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of such registration
statement or the initiation of any proceedings for that purpose and (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose;

          (i) use its reasonable best efforts to obtain the withdrawal of any order suspending the
effectiveness of such registration statement, or the lifting of any suspension of the qualification
(or exemption from qualification) of any of the Registrable Securities for sale in any
jurisdiction, as soon as practicable;

          (j) in the event of an underwritten public offering of Registrable Securities pursuant to
Section 2.1 hereof, enter into customary agreements (including underwriting agreements in customary
form, which may include, in the case of an underwritten offering on a firm commitment basis,
“lock-up” obligations substantially similar to Section 5.1 hereof) and take such other actions
(including using its reasonable efforts to make such road show presentations and otherwise engaging
in such reasonable marketing support in connection with any such underwritten offering, including
the obligation to make its executive officers available for such purpose if so requested by the
managing underwriter for such offering) as are reasonably requested by the managing underwriter in
order to expedite or facilitate the sale of such Registrable Securities;

15

 

          (k) make available for inspection by each Participating Holder, any underwriter participating
in any disposition pursuant to such registration, and any attorney, accountant or other agent
retained by such Participating Holder or any such underwriter (collectively, the
“Inspectors”), all financial and other records, pertinent corporate documents and
properties of the Company and any of its subsidiaries (collectively, the “Records”) as
shall be reasonably necessary to enable them to exercise their due diligence responsibility, and
cause the officers, directors and employees of the Company to supply all information reasonably
requested by any such Inspector in connection with such registration, provided, however, that (i)
in connection with any such inspection, any such Inspectors shall cooperate to the extent
reasonably practicable to minimize any disruption to the operation by the Company of its business
and shall comply with all Company site safety rules, (ii) Records and information obtained
hereunder shall be used by such Inspectors only to exercise their due diligence responsibility and
(iii) Records or information furnished or made available hereunder shall be kept confidential and
shall not be disclosed by such Participating Holder, underwriter or Inspectors unless (A) the
disclosing party advises the other party that the disclosure of such Records or information is
necessary to avoid or correct a misstatement or omission in a registration statement or is
otherwise required by law, (B) the release of such Records or information is ordered pursuant to a
subpoena or other order from a court or governmental authority of competent jurisdiction (provided
that such person shall use its reasonable efforts to provide the Company with prior written notice
of such requirement to afford the Company with an opportunity to seek a protective order or other
appropriate remedy in response) or (C) such Records or information otherwise become generally
available to the public other than through disclosure by such Participating Holder, underwriter or
Inspector in breach hereof or by any Person in breach of any other confidentiality arrangement;

          (l) in connection with any registration of an underwritten offering of Registrable Securities
hereunder, use all reasonable efforts to furnish to each Participating Holder and to the managing
underwriter, if any, a signed counterpart, addressed to such Participating Holder and the managing
underwriter, if any, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort
letter or comfort letters from the Company’s independent public accountants pursuant to Statement
on Auditing Standards No. 72 (or any successor thereto), each in customary form and covering such
matters of the type customarily covered by opinions or comfort letters, as the case may be, as each
such Participating Holder and the managing underwriter, if any, reasonably requests;

          (m) in connection with any registration of an underwritten offering of Registrable Securities
hereunder, provide officers’ certificates and other customary closing documents;

          (n) reasonably cooperate with each seller of Registrable Securities and any underwriter in the
disposition of such Registrable Securities and with underwriters’ counsel, if any, in connection
with any filings required to be made with the Financial Industry Regulatory Authority (the
“FINRA”); and

          (o) use its reasonable efforts to cause all such Registrable Securities to be listed on each
securities exchange on which securities of the same class issued by the Company are then listed.

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     6.2 Holder Obligations. Each Holder agrees:

          (a) that it shall furnish to the Company such information regarding such Holder and the plan
and method of distribution of Registrable Securities intended by such Holder (i) as the Company
may, from time to time, reasonably request in writing and (ii) as shall be required by law or by
the Commission in connection therewith;

          (b) that information obtained by it or by its Inspectors shall be deemed confidential and
shall not be used by it as the basis for any market transactions in the securities of the Company
or its Affiliates unless and until such information is made generally available to the public;

          (c) to use its reasonable efforts, prior to making any disclosure allowed by Section
6.1(k)(iii)(A) or (B) hereof, to inform the Company that such disclosure is necessary to avoid or
correct a misstatement or omission in the registration statement or ordered pursuant to a subpoena
or other order from a court or governmental authority of competent jurisdiction or otherwise
required by law; and

          (d) in the case of an underwritten offering of Registrable Securities pursuant to this
Agreement, if requested by the managing underwriter, to enter into an underwriting agreement with
the underwriters for such offering containing such representations and warranties by each Holder
and such other terms and provisions as are customarily contained in such underwriting agreements,
including customary indemnity and contribution provisions and “lock-up” obligations substantially
similar to Section 5.3 hereof.

7. INDEMNIFICATION.

     7.1 Indemnification by the Company. In the event of any registration of any
Registrable Securities under the Securities Act pursuant to this Agreement, the Company shall
indemnify and hold harmless (i) each Holder and its Affiliates, (ii) any selling agent selected by
the Holders with respect to such Registrable Securities, and (iii) each Person who controls any
Holder or such Affiliate, or selling agent, including directors and officers thereof (each such
Person being sometimes referred to as an “Indemnified Person”), within the meaning of
Section 15 of the Securities Act, against any losses, claims, damages, expenses or liabilities,
joint or several (each a “Loss” and collectively “Losses”), to which such
Indemnified Person may become subject under the Securities Act or otherwise, to the extent that
such Losses (or related actions or proceedings) arise out of or are based upon (A) any untrue
statement or alleged untrue statement of any material fact contained in any registration statement
in which such Registrable Securities were included for registration under the Securities Act, or
any preliminary prospectus or any final prospectus included in such registration statement (or any
amendment or supplement to such registration statement or prospectus) or (B) 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 under which they were made, not
misleading; and the Company agrees to reimburse such Indemnified Person for any legal or other
expenses reasonably incurred by it in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company shall have no obligation
to provide any indemnification or reimbursement hereunder (i) to the extent that any such Losses
(or actions or

17

 

proceedings in respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration statement, preliminary
prospectus, final prospectus, amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by the Holder, or on the Holder’s behalf, specifically
for inclusion, respectively, in such registration statement, preliminary prospectus, final
prospectus, amendment or supplement, or (ii) in the case of a sale directly by a Holder of
Registrable Securities (including a sale of such Registrable Securities through any underwriter
retained by such Holder engaging in a distribution solely on behalf of such Holder), to the extent
that such untrue statement or alleged untrue statement or omission or alleged omission was
contained in a preliminary prospectus and corrected in a final, amended or supplemented prospectus
provided to such Holder prior to the time of the sale (which shall be the time of confirmation, if
applicable) of the Registrable Securities to the person asserting any such Loss, and such Holder
failed to deliver a copy of the final, amended or supplemented prospectus at or prior to the time
of such sale (which shall be the time of confirmation, if applicable) in any case in which such
delivery is required by the Securities Act, or (iii) in the case of a sale directly by a Holder of
Registrable Securities (including a sale of such Registrable Securities through any underwriter
retained by such Holder engaging in a distribution solely on behalf of such Holder), to the extent
that such untrue statement or alleged untrue statement or omission or alleged omission was
contained in a final prospectus but was corrected in an amended or supplemented final prospectus
provided to such Holder prior to the time of such sale (which shall be the time of confirmation, if
applicable) of the Registrable Securities to the person asserting any such Loss, and such Holder
failed to deliver a copy of the amended or supplemented final prospectus at or prior to the time of
such sale (which shall be the time of confirmation, if applicable) in any case in which such
delivery is required by the Securities Act. The indemnity provided in this Section 7.1 shall
survive the transfer of the Registrable Securities by the Holder or any such other Persons.

     7.2 Indemnification by the Holders. In the event of any registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, each Holder shall indemnify and
hold harmless (in the same manner and to the same extent as set forth in Section 7.1 hereof) the
Company, each director and officer of the Company and each other Person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act (each such person being sometimes
referred to as a “Company Indemnified Person”), against Losses to which the Company or any
such Persons may become subject under the Securities Act or otherwise, to the extent that such
losses (or related actions or proceedings) arise out of or are based upon (A) any untrue statement
or alleged untrue statement of any material fact contained in any registration statement in which
Registrable Securities were included for registration under the Securities Act, or any preliminary
prospectus or any final prospectus included in such registration statement (or any amendment or
supplement to such registration statement or prospectus), or (B) 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 under which they were made, not misleading, in each case,
only to the extent that such untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement, preliminary prospectus, final prospectus,
amendment or supplement in reliance upon and in conformity with written information furnished to
the Company by such Holder, or on such Holder’s behalf, specifically for inclusion, respectively,
in such registration statement, preliminary prospectus,

18

 

final prospectus, amendment or supplement; and each Holder agrees to reimburse such Company
Indemnified Person for any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such action or claim as such expenses are incurred; provided,
however, that a Holder’s aggregate liability under this Agreement shall be limited to an amount
equal to the net proceeds (after deducting the underwriter’s discount but before deducting
expenses) received by such Holder from the sale of such Holder’s Registrable Securities pursuant to
such registration.

     7.3 Notice of Claims, Etc. Promptly after receipt by any Person entitled to indemnity
under Section 7.1 or 7.2 hereof (an “Indemnitee”) of notice of the commencement of any
action or proceeding (an “Action”) involving a claim referred to in such Sections, such
Indemnitee shall, if indemnification is sought against an indemnifying party, give written notice
to such indemnifying party of the commencement of such Action; provided, however, that the failure
of any Indemnitee to give said notice shall not relieve the indemnifying party of its obligations
under Sections 7.1 or 7.2 hereof, except to the extent that the indemnifying party is actually
prejudiced by such failure. In case an Action is brought against any Indemnitee, and such
Indemnitee notifies the indemnifying party of the commencement thereof, each indemnifying party
shall be entitled to participate therein and, to the extent it elects to do so by written notice
delivered to the Indemnitee promptly after receiving the aforesaid notice, to assume the defense
thereof with counsel reasonably satisfactory to such Indemnitee. Notwithstanding the foregoing, the
Indemnitee shall have the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Indemnitee, unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying party, (ii) the indemnifying
party shall not have employed counsel to take charge of the defense of such Action, reasonably
promptly after notice of the commencement thereof or (iii) such Indemnitee reasonably shall have
concluded that there may be defenses available to it which are different from or additional to
those available to the indemnifying party which, if the indemnifying party and the Indemnitee were
to be represented by the same counsel, could result in a conflict of interest for such counsel or
materially prejudice the prosecution of the defenses available to such Indemnitee. If any of the
events specified in clauses (i), (ii) or (iii) of the preceding sentence shall have occurred or
otherwise shall be applicable, then the fees and expenses of counsel for the Indemnitee shall be
borne by the indemnifying party; it being understood, however, that the indemnifying party shall
not, in connection with any one such claim or proceeding, or separate but substantially similar or
related claims or proceedings arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnitees hereunder, or for fees and expenses that
are not reasonable. Anything in this Section 7.3 to the contrary notwithstanding, an indemnifying
party shall not be liable for the settlement of any action effected without its prior written
consent (which consent shall not unreasonably be withheld or delayed), but if settled with the
prior written consent of the indemnifying party, or if there shall be a final judgment adverse to
the Indemnitee, the indemnifying party agrees to indemnify the Indemnitee from and against any loss
or liability by reason of such settlement or judgment. No indemnifying party shall, without the
prior consent of the Indemnitee (which consent shall not be unreasonably withheld or delayed),
consent to entry of any judgment or enter into any settlement or compromise, with respect to any
pending or threatened action or claim in respect of which the Indemnitee would be entitled to
indemnification or contribution hereunder (whether or not the

19

 

Indemnitee is an actual party to such action or claim), which (i) does not include as a term
thereof the unconditional release of the Indemnitee from all liability in respect of such action or
claim or (ii) includes an admission of fault, culpability or a failure to act by or on behalf of
the Indemnitee.

     7.4 Contribution. If the indemnification provided for in this Article 7 is unavailable
or insufficient to hold harmless an Indemnitee in respect of any Losses, then each indemnifying
party shall, in lieu of indemnifying such Indemnitee, contribute to the amount paid or payable by
such Indemnitee as a result of such Losses in such proportion as appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the Indemnitee, on the other hand,
which relative fault 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 Indemnitee or indemnifying party, and such parties’
relative intent, knowledge, access to information and opportunity to correct or mitigate the damage
in respect of or prevent the untrue statement or omission giving rise to such indemnification
obligation; provided, however, that a Holder’s aggregate liability under this Section 7.4 shall be
limited to an amount equal to the net proceeds (after deducting the underwriter’s discount but
before deducting expenses) received by such Holder from the sale of such Holder’s Registrable
Securities pursuant to such registration. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 7.4 were determined solely by pro rata
allocation or by any other method of allocation which did not take account of the equitable
considerations referred to above. 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 is not guilty of such fraudulent misrepresentation.

     7.5 Indemnification Payments; Other Remedies.

          (a) Periodic payments of amounts required to be paid pursuant to this Article 7 shall be made
during the course of the investigation or defense, as and when reasonably itemized bills therefor
are delivered to the indemnifying party in respect of any particular Loss as incurred.

          (b) The remedies provided in this Article 7 are not exclusive and shall not limit any rights
or remedies that may otherwise be available to an Indemnitee at law or in equity.

8. REGISTRATION EXPENSES.

     In connection with any offerings pursuant to a registration statement hereunder, the Company
will pay (i) all registration and filing fees, (ii) all fees and expenses of compliance with state
securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection
with “blue sky” laws qualifications of the Registrable Securities), (iii) printing and duplicating
expenses, (iv) internal expenses of the Company (including all salaries and expenses of its
officers and employees performing legal or accounting duties), (v) fees and disbursements of
counsel for the Company and fees and expenses of independent certified public accountants retained
by the Company (including the expenses of any comfort letters or costs associated with the delivery
by independent certified public accountants of a comfort letter or comfort letters or with any
required special audits), (vi) the reasonable fees and expenses of any special experts

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retained by the Company, (vii) fees and expenses in connection with any review of underwriting
arrangements by the FINRA, including fees and expenses of any “qualified independent underwriter”
in connection with an underwritten offering, (viii) reasonable fees and expenses of not more than
one counsel for the Participating Holders (as a group), (ix) fees and expenses in connection with
listing, if applicable, the Registrable Securities on a securities exchange or the Nasdaq Stock
Market, and (x) all duplicating, distribution and delivery expenses. In connection any offerings
pursuant to a registration statement, each Participating Holder will pay (i) any underwriting fees,
discounts or commissions attributable to the sale of Registrable Securities by such Participating
Holder in connection with an underwritten offering; (ii) any out-of-pocket expenses of such
Participating Holder including any fees and expenses of counsel to such Participating Holder (other
than as set forth in clause (viii) of the immediately preceding sentence); and (iii) any applicable
transfer taxes.

9. RULE 144.

     With a view to making available to the Holders the benefits of Rule 144 and any other similar
rule or regulation of the Commission that may at any time permit a Holder to sell securities of the
Company to the public without registration or pursuant to a registration on Form S-3, the Company
covenants that for so long as it is subject to Section 13 or 15(d) of the Exchange Act, it shall
use its reasonable efforts to file in a timely manner all reports required to be filed by it under
the Exchange Act, and that it shall comply with the requirements of Rule 144(c), as such Rule may
be amended from time to time (or any similar rule or regulation hereafter adopted by the
Commission), regarding the availability of current public information to the extent required to
enable any Holder to sell Registrable Securities without registration under the Securities Act
pursuant to the resale provisions of Rule 144 (or any similar rule or regulation). Upon the request
of any Holder, the Company will promptly deliver to such Holder a written statement as to whether
it has complied with such requirements and, upon such Holder’s compliance with the applicable
provisions of Rule 144 and its delivery of such documents and certificates as the Company’s
transfer agent may reasonably request in connection therewith, will take such reasonable action as
may be required (including using its reasonable efforts to cause legal counsel to issue an
appropriate opinion) to cause its transfer agent to effectuate any transfer of Registrable
Securities properly requested by such Holder, in accordance with the terms and conditions of Rule
144.

10. MISCELLANEOUS.

     10.1 Notice Generally. Any notice, demand, request, consent, approval, declaration,
delivery or other communication hereunder to be made pursuant to the provisions of this Agreement
shall be deemed sufficiently given or made if in writing and signed by the party making the same,
and either delivered in person with receipt acknowledged or sent by registered or certified mail,
return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy answerback,
addressed, if to any Holder, at the address of such Holder as set forth on Schedule I hereto, with
copies to

O’Melveny & Myers LLP

Times Square Tower

21

 

7 Times Square

New York, New York 10036

Attn: Doron Lipshitz

Telephone: (212) 326-2220

Facsimile: (212) 326-2061

and if to the Company, at

Leap Wireless International, Inc.

10307 Pacific Center Court

San Diego, CA 92121

Attn: General Counsel

Telephone: (858) 882-6000

Facsimile: (858) 882-6080

With copies to:

Latham & Watkins LLP

12636 High Bluff Drive, Suite 400

San Diego, CA 92130

Attn: Barry Clarkson, Esq.

Telephone: (858) 523-5400

Facsimile: (858) 523-5450

or at such other address as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to receive such
notice. Every notice, demand, request, consent, approval, declaration, delivery or other
communication hereunder shall be deemed to have been duly given or served on the date on which
personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback or
three (3) Business Days after the same shall have been deposited in the United States mail (by
registered or certified mail, return receipt requested, postage prepaid), whichever is earlier.
Each Holder as of the date hereof acknowledges and agrees that, as of the date hereof, it holds the
number of Registrable Securities set forth next to its name on Schedule I attached hereto.
Any Person that desires to become an Additional Holder pursuant to this Agreement shall provide
written notice to the Company setting forth its address and the number of Registrable Securities
held by such Person and agreeing to be bound by the terms hereof, and upon receipt of such notice
the Company shall amend Schedule I attached hereto to reflect such Additional Holder, its
address and the number of Registrable Securities held thereby without any further action or consent
required from the parties to this Agreement. From time to time, each such Holder and Additional
Holder shall provide written notice to the Company of any increase or decrease in the number of
Registrable Securities held by such Person, and upon receipt of any such notice, the Company shall
amend Schedule I attached hereto to reflect such increase or decrease in the number of
Registrable Securities held by such Person without any further action or consent required from the
parties to this Agreement; provided that if any such Holder or Additional Holder discloses such
increase or decrease in the number of Registrable Securities held by such person in any filing made
pursuant to Section 13 or 16 of the Exchange Act, such

22

 

Holder or Additional Holder, as the case may be, shall be deemed to have provided notice to the
Company as provided in this sentence. Solely for purposes of this Agreement, in determining the
number of Registrable Securities outstanding at any time and the Holders thereof, the Company shall
be entitled to rely conclusively on Schedule I attached hereto (as so amended in accordance
with the terms of this Agreement to reflect all such written notices received by the Company from
time to time).

     10.2 Successors and Assigns. This Agreement may not be assigned by any Holder other
than to a Permitted Assignee (provided such Permitted Assignee agrees in writing to be bound by the
terms of this Agreement), whereupon such Permitted Assignee shall be deemed to be a Holder for all
purposes of this Agreement. Subject to the preceding sentence, this Agreement shall be binding upon
and inure to the benefit of the parties hereto, all Successors and all successors and assigns (by
operation of law or otherwise) of the Holders.

     10.3 Amendments; Waivers. This Agreement may be amended or modified only by a written
agreement signed by the Company and Holders of a majority of the Registrable Securities then
outstanding. No provision of this Agreement may be waived except pursuant to a writing signed by
the Company and Holders of a majority of the Registrable Securities then outstanding.

     10.4 Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

     10.5 Headings. The headings used in this Agreement are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Agreement.

     10.6 Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED
EXCLUSIVELY BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Each
party to this Agreement hereby irrevocably agrees that any legal action or proceeding arising out
of or relating to this Agreement or any agreements or transactions contemplated hereby may be
brought in the courts of the State of New York or of the United States of America for the Southern
District of New York and hereby expressly submits to the personal jurisdiction and venue of such
courts for the purposes thereof and expressly waives any claim of improper venue and any claim that
such courts are an inconvenient forum. Each party hereby irrevocably consents to the service of
process of any of the aforementioned courts in any such suit, action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to the address set forth in
Section 10.1 hereof, such service to become effective 10 days after such mailing.

     10.7 Counterparts and Facsimile Execution. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute one and the same instrument. This
Agreement may be executed by facsimile signatures.

23

 

     10.8 Entire Agreement. This Agreement embodies the entire agreement and understanding
between the Company and the Holders in respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the parties with respect to
the subject matter of this Agreement.

     10.9 Further Assurances. Each of the parties hereto shall execute such documents and
perform such further acts as may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement.

     10.10 Termination. This Agreement shall terminate at such time as there are no
Holders of Registrable Securities hereunder. The provisions of Articles 7 and 10 (and any
correlative defined terms in Section 1) shall survive the termination of this Agreement.

[Remainder of page intentionally left blank.]

24

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered
as of the date first above written.

	 	 	 	 	 
	 	LEAP WIRELESS INTERNATIONAL, INC.

 	 
	 	By:  	/s/ Robert J. Irving, Jr.
 	 
	 	 	Name:  	Robert J. Irving, Jr., Esq. 	 
	 	 	Title:  	Senior Vice President, General Counsel and Secretary 	 
	 
	 	MHR CAPITAL PARTNERS MASTER ACCOUNT LP

MHR CAPITAL PARTNERS (100) LP
 	 
	 	By:  	MHR Advisors LLC
 	 
	 	Its: 	General Partner 	 
	 	 	 	 
	 	By:  	/s/ Hal Goldstein
 	 
	 	 	Name:  	Hal Goldstein 	 
	 	 	Title:  	Vice President 	 
	 
	 	MHR INSTITUTIONAL PARTNERS II LP

MHR INSTITUTIONAL PARTNERS IIA LP
 	 
	 	By:  	MHR Institutional Advisors II LLC
 	 
	 	Its: 	General Partner 	 
	 	 	 	 
	 	By:  	/s/ Hal Goldstein
 	 
	 	 	Name:  	Hal Goldstein 	 
	 	 	Title:  	Vice President 	 
	 
	 	MHR INSTITUTIONAL PARTNERS III LP
 	 
	 	By:  	MHR Institutional Advisors III LLC
 	 
	 	Its: 	  General Partner 	 
	 	 	 	 
	 	By:  	                                        /s/ Hal Goldstein
 	 
	 	 	Name:  	Hal Goldstein 	 
	 	 	Title:  	Vice President 	 
	 

25

 

EXHIBIT A

PLAN OF DISTRIBUTION

     The selling securityholders, or their pledgees, donees, transferees, or any of their
successors in interest selling shares received from a named selling securityholder as a gift,
partnership distribution or other non-sale-related transfer after the date of this prospectus (all
of whom may be selling securityholders), may sell the securities from time to time on any stock
exchange or automated interdealer quotation system on which the securities are listed, in the
over-the-counter market, in privately negotiated transactions or otherwise, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices related to prevailing
market prices or at prices otherwise negotiated. The selling securityholders may sell the
securities by one or more of the following methods, without limitation:

     (a) block trades in which the broker or dealer so engaged will attempt to sell the securities
as agent but may position and resell a portion of the block as principal to facilitate the
transaction;

     (b) purchases by a broker or dealer as principal and resale by the broker or dealer for its
own account pursuant to this prospectus;

     (c) an exchange distribution in accordance with the rules of any stock exchange on which the
securities are listed;

     (d) ordinary brokerage transactions and transactions in which the broker solicits purchases;

     (e) privately negotiated transactions;

     (f) short sales;

     (g) through the writing of options on the securities, whether or not the options are listed on
an options exchange;

     (h) through the distribution of the securities by any selling securityholder to its partners,
members or stockholders;

     (i) one or more underwritten offerings on a firm commitment or best efforts basis; and

     (j) any combination of any of these methods of sale.

     The selling securityholders may also transfer the securities by gift. We do not know of any
arrangements by the selling securityholders for the sale of any of the securities.

     The selling securityholders may engage brokers and dealers, and any brokers or dealers may
arrange for other brokers or dealers to participate in effecting sales of the securities. These
brokers, dealers or underwriters may act as principals, or as an agent of a selling securityholder.
Broker-dealers may agree with a selling securityholder to sell a specified number of the securities
at a stipulated price per security. If the broker-dealer is unable to sell securities acting

 

 

as agent for a selling securityholder, it may purchase as principal any unsold securities at the
stipulated price. Broker-dealers who acquire securities as principals may thereafter resell the
securities from time to time in transactions on any stock exchange or automated interdealer
quotation system on which the securities are then listed, at prices and on terms then prevailing at
the time of sale, at prices related to the then-current market price or in negotiated transactions.
Broker-dealers may use block transactions and sales to and through broker-dealers, including
transactions of the nature described above. The selling securityholders may also sell the
securities in accordance with Rule 144 under the Securities Act of 1933, as amended, rather than
pursuant to this prospectus, regardless of whether the securities are covered by this prospectus.

     From time to time, one or more of the selling securityholders may pledge, hypothecate or grant
a security interest in some or all of the securities owned by them. The pledgees, secured parties
or persons to whom the securities have been hypothecated will, upon foreclosure in the event of
default, be deemed to be selling securityholders. As and when a selling securityholder takes such
actions, the number of securities offered under this prospectus on behalf of such selling
securityholder will decrease. The plan of distribution for that selling securityholder’s securities
will otherwise remain unchanged. In addition, a selling securityholder may, from time to time, sell
the securities short, and, in those instances, this prospectus may be delivered in connection with
the short sales and the securities offered under this prospectus may be used to cover short sales.

     To the extent required under the Securities Act of 1933, as amended, the aggregate amount of
selling securityholders’ securities being offered and the terms of the offering, the names of any
agents, brokers, dealers or underwriters and any applicable commission with respect to a particular
offer will be set forth in an accompanying prospectus supplement. Any underwriters, dealers,
brokers or agents participating in the distribution of the securities may receive compensation in
the form of underwriting discounts, concessions, commissions or fees from a selling securityholder
and/or purchasers of selling securityholders’ securities for whom they may act (which compensation
as to a particular broker-dealer might be in excess of customary commissions).

     The selling securityholders and any underwriters, brokers, dealers or agents that participate
in the distribution of the securities may be deemed to be “underwriters” within the meaning of the
Securities Act of 1933, as amended, and any discounts, concessions, commissions or fees received by
them and any profit on the resale of the securities sold by them may be deemed to be underwriting
discounts and commissions.

     A selling securityholder may enter into hedging transactions with broker-dealers and the
broker-dealers may engage in short sales of the securities in the course of hedging the positions
they assume with that selling securityholder, including, without limitation, in connection with
distributions of the securities by those broker-dealers. A selling securityholder may enter into
option or other transactions with broker-dealers that involve the delivery of the securities
offered hereby to the broker-dealers, who may then resell or otherwise transfer those securities. A
selling securityholder may also loan or pledge the securities offered hereby to a broker-dealer and
the broker-dealer may sell the securities offered hereby so loaned or upon a default may sell or
otherwise transfer the pledged securities offered hereby.

2

 

     A selling securityholder may enter into derivative transactions with third parties, or sell
securities not covered by this prospectus to third parties in privately negotiated transactions. If
the applicable prospectus supplement indicates, in connection with those derivatives, the third
parties may sell securities covered by this prospectus and the applicable prospectus supplement,
including in short sale transactions. If so, the third party may use securities pledged by the
selling securityholder or borrowed from the selling securityholder or others to settle those sales
or to close out any related open borrowings of stock, and may use securities received from the
selling securityholder in settlement of those derivatives to close out any related open borrowings
of stock. The third party in such sale transactions will be an underwriter and, if not identified
in this prospectus, will be identified in the applicable prospectus supplement (or a post-effective
amendment).

     The selling securityholders and other persons participating in the sale or distribution of the
securities will be subject to applicable provisions of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, including Regulation M. This regulation may
limit the timing of purchases and sales of any of the securities by the selling securityholders and
any other person. The anti-manipulation rules under the Securities Exchange Act of 1934 may apply
to sales of securities in the market and to the activities of the selling securityholders and their
affiliates. Furthermore, Regulation M may restrict the ability of any person engaged in the
distribution of the securities to engage in market-making activities with respect to the particular
securities being distributed for a period of up to five business days before the distribution.
These restrictions may affect the marketability of the securities and the ability of any person or
entity to engage in market-making activities with respect to the securities.

     We have agreed to indemnify in certain circumstances the selling securityholders and any
brokers, dealers and agents (who may be deemed to be underwriters), if any, of the securities
covered by the registration statement, against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. The selling securityholders have agreed to indemnify us in
certain circumstances against certain liabilities, including liabilities under the Securities Act
of 1933, as amended.

     We agreed to register the securities under the Securities Act of 1933, as amended, and to keep
the registration statement of which this prospectus is a part effective for a specified period of
time. We have agreed to pay all expenses in connection with this offering, including the fees and
expenses of counsel to the selling securityholders, but not including underwriting discounts,
concessions, commissions or fees of the selling securityholders.

     We will not receive any proceeds from sales of any securities by the selling securityholders.

     We cannot assure you that the selling securityholders will sell all or any portion of the
securities offered hereby.

3

 

SCHEDULE I

	 	 	 	 	 	 	 
	Name of Holder/Additional	 	Address of Holder/Additional	 	Number of Registrable
	Holder	 	Holder	 	Securities Held
	MHR Capital Partners Master 

Account LP
	 	40 West 57th Street, 24th Floor

New York, NY 10019
	 	 	353,420	 
	MHR Capital Partners (100) LP
	 	40 West 57th Street, 24th Floor

New York, NY 10019
	 	 	42,514	 
	MHR Institutional Partners II LP
	 	40 West 57th Street, 24th Floor

New York, NY 10019
	 	 	3,340,378	 
	MHR Institutional Partners IIA LP
	 	40 West 57th Street, 24th Floor

New York, NY 10019
	 	 	8,415,428	 
	MHR Institutional Partners III LP
	 	40 West 57th Street, 24th Floor

New York, NY 10019
	 	 	3,386,129exv10w40

Exhibit 10.40

CONSULTING AGREEMENT BETWEEN BOOKHAM, INC., AVANEX CORPORATION AND GIOVANNI

BARBAROSSA

     This Consulting Agreement (the “Agreement”), is entered into as of the 27th day of
January, 2009, by and between Bookham Incorporated, a Delaware corporation (“Parent”), Avanex
Corporation, a Delaware corporation (the “Company), and Giovanni Barbarossa (“Consultant”).

RECITALS

     WHEREAS, Consultant currently serves as the President and Chief Executive Officer of the
Company; and

     WHEREAS, the Company and Consultant have entered into a Change in Control Agreement dated as
of November 28, 2008 (the “Change in Control Agreement”); and

     WHEREAS, Parent and the Company (and a wholly-owned subsidiary of Parent) have entered into an
Agreement and Plan of Merger and Reorganization dated as of January 27, 2009 (the “Merger
Agreement”), pursuant to which the Company will become a wholly-owned subsidiary of Parent; and

     WHEREAS, effective as of the Closing Date (as described in the Merger Agreement), the parties
hereto desire to terminate Consultant’s employment as President and Chief Executive Officer of the
Company, and as a member of the Board of Directors of the Company; and

     WHEREAS, effective as of the Closing Date, Parent desires to retain Consultant as a consultant
and as a member of its Board of Directors, and Consultant has agreed to accept such positions, on
the terms and conditions described herein.

     NOW, THEREFORE, in consideration of the covenants and conditions set forth herein and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the parties, intending to be legally bound, agree as follows, effective as of the Closing Date:

AGREEMENT

1. Termination of Employment; Release.

	 	(a)	 	Effective as of the Closing Date, Consultant will resign from his position as
President and Chief Executive Officer of the Company and any of its subsidiaries. The
parties agree that, as of the Closing Date, all rights and obligations of Consultant
and the Company with respect to such employment shall terminate, except for the
continuing obligations of both parties under this Agreement, the Change of Control
Agreement, the Release Agreement (as described below), or any plan, program, policy,
corporate governance document, agreement, award or other arrangement of the Company or
its affiliates (each, a “Company Arrangement”).
	 
	 	(b)	 	As of the Closing Date, all existing equity awards granted to Consultant by the
Company shall become fully vested, exercisable and nonforfeitable, and will otherwise
be treated no less favorably than any other outstanding equity awards.
	 
	 	(c)	 	As of the Closing Date, Company or Parent will pay Consultant all base salary
and any accrued but unused vacation in accordance with Company policies based on
Consultant’s employment up to and including the Closing Date.
	 
	 	(d)	 	Contingent upon Consultant (i) executing a Separation and Release Agreement
(the “Release Agreement”), in the form attached hereto as Exhibit A, within thirty (30)
days after the Closing Date, and (ii) not revoking or challenging the enforceability of
the Release Agreement, Consultant shall be entitled to the payments and benefits
described in the Release Agreement (in addition to the compensation provided
hereunder).
	 
	 	(e)	 	Nothing in this Agreement or the Release Agreement is intended to waive or
release Consultant from any and all obligations to Company or Parent under any
confidentiality, proprietary or non-disclosure agreement, or any obligation created by
statutory or common law to protect any intellectual property or proprietary information
of Company or Parent.

2. Appointment as Consultant and Director.

	 	(a)	 	Consultant agrees to serve as a consultant to the Parent, and Parent agrees to
so engage Consultant, commencing as of the Closing Date and ending on the twelve (12)
month anniversary of the Closing Date, unless such service is earlier terminated
pursuant to Section 5 below (the “Consulting Term”).
	 
	 	(b)	 	Parent shall also cause Consultant to be appointed to the Board of Directors of
Parent to serve as a Class I director until the annual meeting of stockholders to be
held in 2011.

 

 

3. Consulting Services. As a consultant to Parent, Consultant shall be available to the
Chief Executive Officer of Parent to provide general advice and assistance including integration,
strategic and technology related matters, customer visits and customer relations and other similar
services relating to transition matters arising from the transactions described in the Merger
Agreement and requested by the Chief Executive Officer of Parent. Consultant shall provide such
services during normal business hours, subject to Consultant’s reasonable availability. The
parties intend the Consultant’s termination of employment from the Company to constitute a
“termination of employment” within the meaning of Treas. Reg. Section 1.409A-1(h)(ii). The parties
also expressly agree that Consultant will be entitled to accept employment or other consulting
engagements during the Consulting Term, provided (i) that such services are not provided to a
person, company or entity that provides products or services that compete with products or services
provided by the Parent, (ii) such other consulting engagements or employment will not interfere
with Consultant providing his services to Parent on an as requested and priority basis, and (iii)
that such obligations do not otherwise preclude the Consultant’s from complying with the provisions
of this Agreement.

	 	(a)	 	Consulting Fees. Parent will pay Consultant a consulting fee at the
rate of $30,000 per month, which shall be paid no less frequently than on a monthly
basis. For Consultant’s service as a member of Parent’s Board of Directors, Consultant
will be provided compensation no less favorable than compensation provided to other
non-employee directors.
	 
	 	(b)	 	Independent Contractor. Consultant understands and agrees that, during
the Consulting Term, he will be an independent contractor and he will not be considered
an employee of Parent or the Company. No Federal, state and local income taxes or
payroll taxes of any kind shall be withheld or paid by Parent on Consultant’s behalf,
and Consultant acknowledges that he shall not be treated as an employee with respect to
the consulting services performed hereunder for Federal, State and local tax purposes.
Consultant agrees to pay, and be solely responsible for, any applicable Federal, State
and local taxes that are imposed on him for the consulting fees provided hereunder.
	 
	 	(c)	 	Authority. Consultant understands and agrees that he is not authorized
to enter into any contracts or agreements on behalf of Parent or the Company, or to
otherwise create obligations of the Parent or Company to third parties, unless
expressly authorized to do so by Parent or the Company.
	 
	 	(d)	 	Expenses. Parent shall reimburse Consultant for the reasonable
expenses actually incurred by him during the Consulting Term in performing the
consulting services described hereunder, upon submission by him of sufficient
substantiation of such expenses, subject to the terms and conditions of Company’s
written policies with respect to expense reimbursements (as provided in advance to
Consultant). At the expiration of the Consulting Term, Parent shall, upon the
presentation of an itemized invoice from an executive outplacement firm, reimburse
Consultant for costs incurred by Consultant in the engagement of such outplacement firm
used for a search for a new position for Consultant as a Chief Executive Officer. To
the extent such payments constitute a taxable benefit or reimbursement that is subject
to Section 409A of the Internal Revenue Code (“Section 409A”), they shall be paid or
provided in accordance with Section 409A, including but not limited to the following
provisions: (i) the amount of any such expense reimbursement or in-kind benefit
provided during the Consultant’s taxable year shall not affect any expenses eligible
for reimbursement in any other taxable year; (ii) the reimbursement of the eligible
expense shall be made no later than the last day of the Consultant’s taxable year that
immediately follows the taxable year in which the expense was incurred; and (iii) the
right to any reimbursement shall not be subject to liquidation or exchange for another
benefit or payment.

4. Attorney Fees. Company shall pay directly all attorney fees and other expenses of
counsel that were reasonably incurred by Consultant in connection with the negotiation and
implementation of this Agreement, promptly upon receipt of an itemized invoice for same.

5. Termination.

	 	(a)	 	The Consulting Term may be terminated by either Parent or Consultant at any
time upon thirty (30) days’ prior written notice to the other, provided, however, that
Consultant may not terminate the Consulting Term before the sixth (6) month anniversary
of the Closing Date.

	 	(i)	 	In the event of either (x) a termination of the Consulting
Term by Parent for Cause (as described in paragraph (c) below) or (y) a
voluntary termination of the Consulting Term by Consultant, the Parent will
only pay the consulting fees earned by the Consultant prior to the effective
date of such a termination.
	 
	 	(ii)	 	In the event that the Consulting Term is terminated by Parent
for any reason other than Cause (or in the event of Consultant’s death),
Parent shall make a lump sum cash payment to Consultant (or, in the event of
his death, to his estate) in an amount equal to the remaining consulting fees
that would otherwise have been payable through the end of the Consulting Term.
Such payment shall be made within thirty (30) days of the termination date.

 

 

	 	(b)	 	Upon termination of the Consulting Term for any reason, Consultant shall
continue to retain all of his rights and obligations under this Agreement, the Change
of Control Agreement and the Release Agreement, and shall retain all of his rights
under the existing terms of any Company Arrangement.
	 
	 	(c)	 	Cause. For purposes of this Agreement, “Cause” will mean:

	 	(i)	 	Any act of personal dishonesty taken by Consultant in
connection with Consultant’s responsibilities hereunder and intended to result
in substantial personal enrichment of Consultant;
	 
	 	(ii)	 	Consultant’s conviction of a felony that is injurious to
Parent;
	 
	 	(iii)	 	A willful act by Consultant which constitutes gross
misconduct and which is injurious to Parent, after there has been delivered to
Consultant a written notice from the Chairman of the Board of Directors of
Parent which describes the nature of such misconduct and Consultant has not
cured such misconduct (if capable of cure) within two (2) weeks of such
written notice;
	 
	 	(iv)	 	Consultant’s willful and continued failure to perform the
duties and responsibilities hereunder after there has been delivered to
Consultant a written demand for performance from the Chairman of the Board of
Directors of Parent which describes the basis for the belief that Consultant
has not substantially performed such duties and responsibilities, and
Consultant has not corrected such failure within two (2) weeks of such written
demand.

	 	(d)	 	This Agreement (except for Section 4 hereof) shall be null and void if the
Closing described in the Merger Agreement does not occur on or before the six (6) month
anniversary of the date of this Agreement.

6. Notices. Any notices to a party under this Agreement shall be directed to the following
address (or such other address as specified in writing):

To Parent

Bookham, Inc.

2584 Junction Ave

San Jose, CA 95134

Tel: (408) 383-1400

Attention: Chief Executive Officer and General Counsel

Facsimile:                     

To Company

Avanex Corporation

Address:                     

Attention: Chief Executive Officer

Facsimile:                     

To Consultant

Giovanni Barbarossa

Address:                    

 

 

7. Indemnity; D&O Insurance. Except for claims arising from circumstances constituting
“Cause” as defined by section 5(c) above, Parent agrees to indemnify and hold Consultant and his
heirs harmless in connection with the defense of a claim related to Consultant’s services to Parent
or its affiliates, to the maximum extent permitted by law. Parent also agrees to promptly advance
to Consultant all expenses and costs (including reasonable attorneys fees) incurred by Consultant with
respect to any such claim or to enforce this indemnity. Parent also agrees to maintain directors
and officers liability insurance, on terms no less favorable than those provided to its current
officers and directors, for any claim related to Consultant’s service as an officer or director or
Parent of the Company.

8. Arbitration. Consultant agrees to arbitrate any dispute regarding this Agreement in
accordance with Section 10 of the Change of Control Agreement.

9. Governing Law. This Agreement shall be governed by the laws of the State of California,
without giving effect to the conflicts of law principles thereof.

10. Entire Agreement. This Agreement, the Change in Control Agreement and the Release
Agreement constitute the entire agreement between the parties with respect to the subject matter
hereof, and supersede any and all prior agreements or understandings between the parties arising
out of the subject matter hereof, but shall not adversely effect any of Consultant’s rights under
the Merger Agreement (if any) or any Company Arrangement nor are they intended to waive, diminish
or release any obligation of Consultant under any confidentiality, non disclosure, proprietary
information or invention assignment agreement for the benefit of Company or Parent. In the event
of any conflict between the provisions of this Agreement and the provisions of the Merger Agreement
or any Company Arrangement, the provisions of this Agreement shall control to the extent more
favorable to Consultant. This Agreement may only be amended by a written agreement executed by all
of the parties that explicitly refers to the provision of this Agreement that is being amended.

11. Assignment. This Agreement will be binding upon and inure to the benefit of (a) the
heirs, executors and legal representatives of Consultant upon Consultant’s death and (b) any
successor of Parent.

12. Waiver. The waiver of the breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach of the same or other provision hereof.

13. Severability. If a court or other body of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable, this Agreement will continue in full force
and effect without said provision or portion of provision. The remainder of the Agreement shall be
deemed valid and enforceable to the extent possible.

14. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall be one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 
	 	BOOKHAM INCORPORATED

 	 
	 	By:  
	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	 	AVANEX CORPORATION

 	 
	 	By:  
	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 

	 	 	 	 	 
	 

	 	 

GIOVANNI BARBAROSSA
	 	 

 

 

EXHIBIT A —  SEPARATION AND RELEASE AGREEMENT

     This Separation and Release Agreement (this “Agreement”) is entered into as of this                      day
of                     , 2009, by and between Bookham Incorporated, a Delaware corporation (“Parent”),
Avanex Corporation, a Delaware corporation (the “Company) and Giovanni Barbarossa (“Executive”).

     Parent, Company and Executive hereby agree as follows:

     1. The employment relationship between the Executive and the Company and its subsidiaries and
affiliates, as applicable, terminated on                     , 200___(the “Termination Date”).

     2. In settlement of amounts owed under Section 4(a) of the Change in Control Agreement between
the Company and the Executive dated as of November 28, 2008 (the “Change in Control Agreement”),
the Executive shall receive:

          (a) a lump sum cash payment equal to the sum of (i) one year of Executive’s annual base salary
as of the Termination Date (which shall not be less than $360,000) and (ii) a pro-rata portion of
Executive’s target annual incentive award (equal to at least 60% of his annual base salary)
determined by multiplying such target annual incentive award by a fraction, the numerator of which
is the number of days in the current fiscal year of the Company through the Termination Date, and
the denominator of which is 365; and

          (b) the health coverage and benefits described in Section 4(a)(iv) of the Change in Control
Agreement; and

The cash payments described in this Section 2 shall be made no later than ten (10) days after the
expiration of the revocation period described in Section 8 of this Agreement.

     3. In consideration of the payments and benefits provided hereunder, the sufficiency of which
the Executive hereby acknowledges, the Executive, on behalf of the Executive and the Executive’s
heirs, executors and assigns, hereby releases and forever discharges the Company and its members,
parents, affiliates, subsidiaries, divisions, any and all current and former directors, officers,
employees and agents, from all claims, charges, or demands, in law or in equity, whether known or
unknown, which may have existed or which may now exist from the beginning of time to the date of
this Agreement, including, without limitation, any claims the Executive may have arising from or
relating to the Executive’s employment or termination from employment with the Company, including a
release of any rights or claims the Executive may have under Title VII of the Civil Rights Act of
1964, as amended, and the Civil Rights Act of 1991 (which prohibit discrimination in employment
based upon race, color, sex, religion, and national origin); the Americans with Disabilities Act of
1990, as amended, and the Rehabilitation Act of 1973 (which prohibit discrimination based upon
disability); the Family and Medical Leave Act of 1993 (which prohibits discrimination based on
requesting or taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866
(which prohibits discrimination based upon race); Section 1985(3) of the Civil Rights Act of 1871
(which prohibits conspiracies to discriminate); the Employee Retirement Income Security Act of
1974, as amended (which prohibits discrimination with regard to benefits); and any other federal,
state or local laws against discrimination; or any other federal, state, or local statute, or
common law relating to employment, wages, hours, or any other terms and conditions of employment.
This includes a release by the Executive of any claims for wrongful discharge, breach of contract,
torts or any other claims in any way related to the Executive’s employment with or resignation or
termination from the Company and its subsidiaries and affiliates, as applicable.

          This release also includes a release of any claims for age discrimination under the Age
Discrimination in Employment Act, as amended (“ADEA”). The ADEA requires that the Executive be
advised to consult with an attorney before the Executive waives any claim under ADEA. In addition,
the ADEA provides the Executive with at least 21 days to decide whether to waive claims under ADEA
and seven days after the Executive signs the Agreement to revoke that waiver.

          This release does not release Parent or the Company from any obligations concerning any
remaining rights the Executive has pursuant to the Consulting Agreement between the parties dated
as of January 27, 2009 (the “Consulting Agreement”), the Change of Control Agreement, under this
Agreement, or under any other Company Arrangement (as described in the Consulting Agreement),
including, without limitation, any rights to indemnification and/or advancement of expenses by the
Company or its affiliates pursuant to the Company’s (or any affiliate’s) corporate documents or
applicable law, or coverage under any applicable directors’ and officers’ liability insurance
policies. This release does not release claims that cannot be released as a matter of law,
including, but not limited to, Executive’s right to file a charge with or participate in a charge
by the Equal Employment Opportunity Commission.

          Additionally, the Company agrees to discharge and release the Executive and the Executive’s
heirs from any claims, demands, and/or causes of action whatsoever, presently known or unknown,
that are based upon facts or acts occurring prior to the date of this Agreement, including, but not
limited to, any claim, matter or action related to the Executive’s employment or affiliation with,
or termination or separation from the Company; provided that such release shall not release the
Executive with respect to any act by the Executive which is proven to be a felony under U.S.
Federal or applicable state law and which relates to the business of the Company or any of its
subsidiaries. As of the date of this Agreement, the Company represents that it knows of no act by
the Executive which would be deemed to be a felony under U.S. Federal or applicable state law which
relates to the business of the

 

 

Company. Nothing in this Release is intended to waive or release Consultant from any and all
obligations to Company or Parent under any confidentiality, proprietary information or
non-disclosure agreement, or any obligation created by statutory or common law to protect any
intellectual property or proprietary information of Company or Parent.

     4. This Agreement is not an admission by either the Executive or the Company of any wrongdoing
or liability.

     5. The Executive waives any right to reinstatement or future employment with the Company and
its subsidiaries and affiliates following the Executive’s separation from the Company and its
subsidiaries and affiliates on the Termination Date. Nothing herein shall prevent the Executive
from providing services to the Company pursuant to the Consulting Agreement.

     6. This Agreement shall be governed by and construed in accordance with the laws of the State
of California, without reference to the principles of conflict of laws. Exclusive jurisdiction
with respect to any legal proceeding against Executive, Parent, Company, or any successor or assign
brought concerning any subject matter contained in this Agreement shall be settled by arbitration
as provided in the Change of Control Agreement.

     7. Each of the sections contained in this Agreement shall be enforceable independently of
every other section in this Agreement, and the invalidity or non-enforceability of any section
shall not invalidate or render unenforceable any other section contained in this Agreement.

     8. It is further understood that for a period of 7 days following the execution of this
Agreement in duplicate originals, the Executive may revoke this Agreement, and this Agreement shall
not become effective or enforceable until the revocation period has expired. No revocation of this
Agreement by the Executive shall be effective unless the Company has received, within the 7-day
revocation period, written notice of his revocation of this Agreement.

     9. This Agreement has been entered into voluntarily and not as a result of coercion, duress,
or undue influence. The Executive acknowledges that the Executive has read and fully understands
the terms of this Agreement and has been advised to consult with an attorney before executing this
Agreement. Additionally, the Executive acknowledges that the Executive has been afforded the
opportunity of at least 21 days to consider this Agreement.

     Consultant is over the age of forty (40) years, and in accordance with the Age Discrimination
in Employment Act and Older Workers’ Benefit Protection Act (collectively, the “Act”), he
acknowledges that:

	(a)	 	He has been advised in writing to consult with an attorney prior to executing this
Release, and has had the opportunity to do so;
	 
	(b)	 	He is aware of certain rights to which he may be entitled under the Act;
	 
	(c)	 	In exchange for executing this Release, Consultant will receive severance pay to which
he would otherwise not be entitled, and in addition to the compensation and benefits that
he earned as an employee of Company;
	 
	(d)	 	By signing this Agreement, he will not waive rights or claims under the Act which may
arise after the execution of this Agreement;
	 
	(e)	 	He has been given a period of at least 21 days to consider this Release, and
understands that if he does not sign this Release he will not receive the severance pay
described in paragraph 2 above; and
	 
	(f)	 	Executive further acknowledges that he has a period of seven days from the date of
execution in which to revoke this Release by written notice to Kathy Zwickert, Parent’s VP
of HR. In the event Consultant does not exercise his right to revoke this Release, the
Release shall become effective on the date immediately following the seven day revocation
period described above.

     The parties to this Agreement have executed this Agreement as of the day and year first written above.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BOOKHAM INCORPORATED	 	 	 	 	 	 	 	 
	 

	 	By:  
	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 
 

	 	 	 	Title:
	 	 
 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	AVANEX CORPORATION	 	 	 	 	 	 	 	 
	 

	 	By:  
	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 
 

	 	 	 	Title:
	 	 
 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	GIOVANNI BARBAROSSA

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