Exhibit 10.34
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of June ___, 2000, is
entered into by and between GENUITY INC., a corporation organized and existing
under the laws of the state of Delaware (the "COMPANY"), and GTE CORPORATION, a
corporation organized and existing under the laws of the state of New York, and
CONTEL FEDERAL SYSTEMS, INC., a corporation organized and existing under the
laws of the state of Delaware ( the "SHAREHOLDERS").
W I T N E S S E T H
WHEREAS, as of the date hereof, the Shareholders own all of the issued
and outstanding shares of Class B common stock, par value $0.01 per share of the
Company (the "CLASS B STOCK"), which as of the date hereof are all of the issued
and outstanding shares of capital stock of the Company; and
WHEREAS, the Class B Stock is convertible either (i) into shares of
Class C common stock, par value $0.01 per share, of the Company (the "CLASS C
STOCK"), which is in turn convertible into shares of Class A common stock, par
value $0.01 per share, of the Company (the "CLASS A STOCK") or (ii) directly
into shares of Class A Stock, in each case, as provided in the Company's Amended
and Restated Certificate of Incorporation, dated June __, 2000 (the "CERTIFICATE
OF INCORPORATION").
WHEREAS, the Company contemplates an initial public offering of shares
of Class A Stock and in connection therewith has agreed to provide the
Shareholders with liquidity for the shares of Class A Stock which they will
acquire upon conversion directly or indirectly of the Class B Stock, by
providing the Shareholders with registration rights with respect thereto;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is hereby agreed as follows:
1. Definitions. The following terms shall have (unless otherwise provided
elsewhere in this Agreement) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such Person.
"AGREEMENT" shall mean this Registration Rights Agreement, including
all amendments, modifications and supplements and any exhibits or schedules
hereto, and shall refer to the Registration Rights Agreement as the same may be
in effect at the time such reference becomes operative.
"BLACKOUT PERIOD" shall have the meaning assigned to such term in
Section 5 hereof.
"BUSINESS DAY" shall mean any day that is not a Saturday, a Sunday or
a day on which commercial banks are required or permitted by law to be closed in
New York, New York, United States of America.
"CLASS A STOCK" shall be the Class A common stock of the Company, par
value $0.01 per share, and any Securities issuable or issued or distributed in
respect of the Class A Stock by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, reorganization,
merger, consolidation or otherwise.
"CLASS B STOCK" shall be the Class B common stock of the Company, par
value $0.01 per share, and any Securities issuable or issued or distributed in
respect of the Class B Stock by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, reorganization,
merger, consolidation or otherwise.
"CLASS C STOCK" shall be the Class C common stock of the Company, par
value $0.01 per share, and any Securities issuable or issued or distributed in
respect of the Class C Stock by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, reorganization,
merger, consolidation or otherwise.
"DEMAND REGISTRATION" shall have the meaning assigned to such term in
Section 2(a) hereof.
"DEMAND REGISTRATION STATEMENT" shall have the meaning assigned to
such term in Section 2(a) hereof.
"DERIVATIVE SECURITIES" shall have the meaning assigned to such term
in Section 4 hereof.
"EFFECTIVE DATE" shall mean the closing date of the Company's initial
public offering.
"HOLDER" shall mean the Shareholders and any assignee or transferee of
Class A Stock, Class B Stock or Class C Stock owned by the Shareholders or any
Holder who continues to be entitled to the rights of a Holder hereunder.
"INDEMNIFIED PARTY" shall have the meaning assigned to such term in
Section 8(d) hereof.
"INDEMNIFYING PARTY" shall have the meaning assigned to such term in
Section 8(d) hereof.
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"INITIATING DEMAND HOLDER" shall have the meaning assigned to such
term in Section 2(a) hereof.
"MAXIMUM NUMBER OF SECURITIES" shall have the meaning assigned to such
term in Section 2(b) hereof.
"NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor entity thereof.
"PARTICIPATING DEMAND HOLDERS" shall have the meaning assigned to such
term in Section 2(a) hereof.
"PARTICIPATING PIGGY-BACK HOLDERS" shall have the meaning assigned to
such term in Section 3(b) hereof.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, firm, trust, unincorporated organization, government or any agency or
political subdivision thereof or other entity.
"PIGGY-BACK REGISTRATION" shall have the meaning assigned to such term
in Section 3(a) hereof.
"PIGGY-BACK REGISTRATION STATEMENT" shall have the meaning assigned to
such term in Section 3(a) hereof.
"REGISTRABLE SECURITIES" shall mean (a) the Class A Stock held by a
Holder and (b) any Securities issuable or issued or distributed in respect of
any of the Class A Stock identified in clause (a) by way of stock dividend or
stock split or in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise. For purposes of this
Agreement, (i) Registrable Securities shall cease to be Registrable Securities
when a Registration Statement covering such Registrable Securities has been
declared effective under the Securities Act by the SEC and such Registrable
Securities have been disposed of pursuant to such effective Registration
Statement and (ii) the Registrable Securities of a Holder shall not be deemed to
be Registrable Securities at any time when such Registrable Securities have been
sold in a sale made pursuant to Rule 144 (or any successor provision then in
effect) of the Securities Act.
"REGISTRATION STATEMENT" shall mean a Demand Registration Statement, a
Piggy-Back Registration Statement and/or a Shelf Registration Statement, as the
case may be.
"SECURITIES" shall have the meaning assigned to such term in Section
2(a)(1) of the Securities Act.
"SECURITIES ACT" shall mean the United States Securities Act of 1933,
as amended, and all rules and regulations promulgated thereunder.
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"SEC" shall mean the United States Securities and Exchange Commission,
or any successor thereto.
"SHELF REGISTRATION" shall have the meaning assigned to such term in
Section 4 hereof.
"SHELF REGISTRATION STATEMENT" shall have the meaning assigned to such
term in Section 4 hereof.
2. Demand Registration.
(a) At any time from and after 180 days following the Effective Date
and subject to Sections 2(c) and 2(d) hereof, after receipt of a written request
from a Holder (the "INITIATING DEMAND HOLDER") requesting that the Company
effect a registration (a "DEMAND REGISTRATION") under the Securities Act
covering all or part of the Registrable Securities held by such Holder, which
specifies the intended method or methods of disposition thereof, the Company
shall promptly notify all Holders in writing of the receipt of such request and
each such Holder, in lieu of exercising its rights under Section 3 hereof, may
elect (by written notice sent to the Company within twenty (20) days from the
date of such Holder's receipt of the aforementioned Company's notice) to have
all or part of such Holder's Registrable Securities included in such
registration thereof pursuant to this Section 2, and such Holder shall specify
in such notice the number of Registrable Securities that such Holder elects to
include in such registration. Thereupon the Company shall, as expeditiously as
is reasonably possible, file with the SEC and use commercially reasonable
efforts to cause to be declared effective, a registration statement (a "DEMAND
REGISTRATION STATEMENT") relating (subject to Section 2(b) hereof) to all of the
Registrable Securities which the Company has been so requested to register by
such Holders ("PARTICIPATING DEMAND HOLDERS") for sale, to the extent required
to permit the disposition (in accordance with the intended method or methods
thereof, as aforesaid) of the Registrable Securities so registered, provided,
however, that the aggregate number of Registrable Securities requested to be
registered by all Participating Demand Holders shall be, subject to Section 2(b)
below, at least the greater of (a) five percent (5%) of the Class A Stock issued
and outstanding on the Effective Date, calculated on an As Converted Basis (as
defined in the Certificate of Incorporation) as of the date of the Demand
Registration Statement, and (b) an aggregate value of $100,000,000, based on the
closing trading price of the Class A Stock on the date the demand to file such
Demand Registration Statement is made.
(b) If the Initiating Demand Holder so requests that the offering be
underwritten with a managing underwriter (which shall be selected in the manner
set forth in Section 12 below) and such managing underwriter of such Demand
Registration advises the Company in writing that, in its opinion, the number of
Securities to be included in such offering is greater than the total number of
Securities which can be sold therein without having a material adverse effect on
the distribution of such Securities or otherwise having a material adverse
effect on the marketability thereof (the "MAXIMUM NUMBER OF SECURITIES"), then
the Company shall include in such Demand Registration
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the Registrable Securities that the Participating Demand Holders have requested
to be registered thereunder only to the extent the number of such Registrable
Securities does not exceed the Maximum Number of Securities. The Company shall
include such Registrable Securities in a Demand Registration even if the Maximum
Number of Securities is less than the threshold set forth in Section 2(a) above.
If such amount exceeds the Maximum Number of Securities, the number of
Registrable Securities included in such Demand Registration shall be allocated
among all the Participating Demand Holders on a pro rata basis, unless any of
the Participating Demand Holders otherwise agree between or among themselves and
notifies the Company in writing of such agreement. If the amount of such
Registrable Securities does not exceed the Maximum Number of Securities, the
Company may include in such Registration any other Securities of the Company,
and then other Securities held by other security holders of the Company, on a
pro rata basis if necessary, in an amount which together with the Registrable
Securities included in such Demand Registration shall not exceed the Maximum
Number of Securities.
(c) The Shareholders together with all Holders who are assignees or
transferees of the Shareholders, or assignees or transferees of an assignee or
transferee of the Shareholders shall collectively be entitled to sixteen (16)
registrations of Registrable Securities pursuant to this Section 2.
Each Shelf Registration pursuant to Section 4 hereof shall be deemed one
Demand Registration pursuant hereto.
(d) Notwithstanding anything to the contrary contained herein, the
Company shall not be required to prepare and file (i) more than one (1) Demand
Registration Statement under this Agreement in any six-month period, or (ii) any
Demand Registration Statement within ninety (90) days following the date of
effectiveness of any Registration Statement (other than a Shelf Registration
Statement).
(e) A Demand Registration requested pursuant to Section 2(a) hereof
shall not be deemed to have been effected with respect to any Participating
Demand Holder that is not able to register and sell at least 80% of the amount
of Registrable Securities requested to be included on behalf of such Holder in
such registration.
(f) A Participating Demand Holder may withdraw its request with
respect to a Demand Registration at any time prior to the effective date of the
Demand Registration Statement relating thereto by providing to the Company
written notice. Upon any such withdrawal, if the Company determines not to
otherwise continue with such Registration Statement for the purpose of
registering Class A Stock of the Company, another Holder or another shareholder
of the Company, the withdrawing Participating Demand Holder shall be obligated,
pro rata with any other withdrawing Participating Demand Holder, to reimburse
the Company, within 20 days of the date of the written notice of withdrawal, for
all Expenses (as defined in Section 12 below) incurred by the Company, in
connection with such withdrawn Demand Registration that would not
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otherwise have been incurred by the Company. Any such withdrawn Demand
Registration shall be counted with respect to such Holder for purposes of
Section 2(c) hereof as a completed Demand Registration, unless such withdrawal
was the result of a change in market conditions that would materially adversely
effect the amount and/or price of the Registrable Securities to be included in
the Demand Registration.
3. Piggy-Back Registration.
(a) If the Company at any time after 180 days after the Effective Date
proposes to file on its behalf and/or on behalf of any holder of its Securities
a registration statement under the Securities Act on any form for the
registration of Securities in connection with an underwritten offering of equity
Securities for cash (a "PIGGY-BACK REGISTRATION"), it will give written notice
to all Holders at least 20 days before the initial filing with the SEC of such
piggy-back registration statement (a "PIGGY-BACK REGISTRATION STATEMENT"). The
notice shall offer to include in such filing the aggregate number of shares of
Registrable Securities as such Holders may request.
(b) Each Holder desiring to have Registrable Securities registered
under this Section 3 ("PARTICIPATING PIGGY-BACK HOLDERS") shall advise the
Company in writing within ten (10) days after the date of receipt of such offer
from the Company, setting forth the amount of such Registrable Securities for
which registration is requested. The Company shall thereupon include in such
filing the number or amount of Registrable Securities for which registration is
so requested, subject to paragraph (c) below, and shall use commercially
reasonable efforts to effect registration of such Registrable Securities under
the Securities Act.
(c) If the managing underwriter of such proposed public offering
advises in writing that, in its opinion, the amount of Registrable Securities
requested to be included in the Piggy-Back Registration in addition to the
Securities being registered by the Company would be greater than the Maximum
Number of Securities, then:
(i) in the event the Company initiated the Piggy-Back Registration,
the Company shall include in such Piggy-Back Registration first, the
Securities the Company proposes to register and second, the Securities of
all other selling security holders, including the Participating Piggy-Back
Holders, to be included in such Piggy-Back Registration in an amount which
together with the Securities the Company proposes to register, shall not
exceed the Maximum Number of Securities, such amount to be allocated among
such other selling security holders on a pro rata basis;
(ii) in the event any holder (or holders) of Securities of the Company
initiated the Piggy-Back Registration, the Company shall include in such
Piggy-Back Registration first, the Securities such security holder (or
holders) proposes to register, second, any Securities that the Company
proposes to register, and third, the Securities of any other selling
security holders, in an aggregate amount which shall not exceed the Maximum
Number of Securities; if the
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aggregate of all Securities proposed to be registered exceeds the Maximum
Number of Securities, the number to be registered shall be allocated in the
foregoing order and among any such other selling security holders piggy
backing on such registration, on a pro rata basis;
(d) The Company will not hereafter enter into any agreement which is
inconsistent with the rights of priority provided in paragraph (c) above.
4. Shelf Registration. In the event that at any time from and after twelve
(12) full calendar months following the Effective Date, and subject to Sections
2(c) and 2(d) above, the Shareholders or one of their Affiliates issues
Securities (the "DERIVATIVE SECURITIES") that by their terms are convertible
into or exchangeable for Registrable Securities and which will be issued in
reliance on Regulation S and/or Rule 144A under the Securities Act, upon the
written request of GTE Corporation, provided that the aggregate number of
Registrable Securities requested to be registered shall be at least the greater
of (a) five percent (5%) of the Class A Stock issued and outstanding on the
Effective Date, calculated on an As Converted Basis (as defined in the
Certificate of Incorporation) as of the date of the Demand Registration
Statement, and (b) an aggregate value of $100,000,000, based on the closing
trading price of the Class A Stock on the date the request for such shelf
registration statement is made, as promptly as practicable, but in any event no
later than 45 days after receipt of such request, the Company shall file with
the SEC and thereafter use commercially reasonable efforts to cause to be
declared effective as promptly as practicable, but no later than 110 days after
receipt of such request, a shelf registration statement (the "SHELF REGISTRATION
STATEMENT") on an appropriate form under the Securities Act relating to the
conversion or exchange of the Derivative Securities from time to time in
accordance with the methods and distribution set forth in the Shelf Registration
Statement and Rule 415 under the Securities Act (hereafter, the "SHELF
REGISTRATION"). Subject to Section 5 below, the Company shall use commercially
reasonable efforts to keep the Shelf Registration Statement continuously
effective in order to permit the prospectus included therein to be lawfully
delivered to holders of the Derivative Securities for a period of time until
such time as all the Derivative Securities have been converted or exchanged
pursuant thereto.
5. Blackout Periods. Notwithstanding anything to the contrary contained in
this Agreement, the Company shall have the right to delay the filing or
effectiveness of a Registration Statement requested pursuant to Section 2, 3 or
4 hereof, or to suspend after a period of 30 days the right of a Holder to sell
Registrable Securities under an effective Registration Statement, during no more
than two (2) periods aggregating to not more than 90 days in any twelve-month
period (a "BLACKOUT PERIOD") in the event that (i) (a) the Company would, in
accordance with the reasonable advice of its counsel, be required to disclose in
the prospectus information not otherwise then required by law to be publicly
disclosed, and (b) in the judgment of the Company's Board of Directors, there is
a reasonable likelihood that such disclosure, or any other action to be taken in
connection with the prospectus, would materially and adversely affect or
interfere with any financing, acquisition, merger, material joint venture,
disposition of assets (not in the ordinary course of business), corporate
reorganization or other similar transaction
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involving the Company, or (ii) the Company is actively involved in the
preparation of its annual audited financial statements (during which time, if a
Blackout Period, the Company shall not be required to permit the use of an
effective Registration Statement and related Prospectus); provided, however,
that during any such Blackout Period, the Company shall also delay the filing or
effectiveness of any registration statement with respect to any Securities of
the Company or any other shareholder of the Company. The Company shall promptly
give the Holders written notice of such determination containing a general
statement of the reasons for such postponement and an approximation of the
anticipated delay; and provided further, however, that the implementation of any
Blackout Period shall be done in good faith, and not for the purpose or
intention of impeding such rights.
6. Registration Procedures. If the Company is required by the provisions of
Section 2, 3 or 4 to use commercially reasonable efforts to effect the
registration of any of its Securities under the Securities Act, the Company
will, as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement with
respect to such Securities and use commercially reasonable efforts to cause such
Registration Statement to become and remain effective for a period of time
required for the disposition of such Securities by the Holders thereof (or with
respect to a Shelf Registration Statement, the Holder of the Derivative
Securities) but not to exceed 90 days (except in any such case with respect to a
Shelf Registration Statement). The Company shall not be deemed to have used
commercially reasonable efforts to keep a Registration Statement effective
during the applicable period if it voluntarily takes any action that would
result in the Holders of such Securities (or with respect to a Shelf
Registration, the holders of the Derivative Securities) not being able to sell
such Securities (or convert or exchange such Derivative Securities) during that
period, unless such action is required under applicable law or otherwise
permitted by this Agreement;
(b) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective and to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of all Securities covered by such Registration Statement until the
earlier of such time as all of such Securities have been disposed of in a public
offering and (except with respect to a Shelf Registration Statement) the
expiration of 90 days;
(c) furnish to all selling security holders such number of copies of
the applicable Registration Statement and each such amendment and supplement
thereto, and of a summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements of the the thereto,
and of a summary prospectus or other prospectus, including a Securities Act, and
such other documents, as such selling security holders may reasonably request;
(d) use commercially reasonable efforts to register or qualify the
Securities covered by such Registration Statement under such other securities or
blue sky
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laws of such jurisdictions within the United States and Puerto Rico as
each Holder of such Securities shall reasonably request (provided, however, that
the Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it is not then qualified,
to subject itself to taxation in any such jurisdiction, or to file any general
consent to service or process), and do such other reasonable acts and things as
may be required of it to enable such Holder to consummate the disposition in
such jurisdiction of the Securities covered by such Registration Statement;
(e) furnish, at the request of any Holder requesting registration of
Registrable Securities, on the date that such Registrable Securities are
delivered to the underwriters for sale pursuant to such registration (1) an
opinion, dated such date, of the independent counsel representing the Company
for the purposes of such registration, addressed to the underwriters, in
customary form and covering matters of the type customarily covered in such
legal opinions; and (2) a comfort letter dated such date, from the independent
certified public accountants of the Company, addressed to the underwriters, in a
customary form and covering matters of the type customarily covered by such
comfort letters and as the underwriters shall reasonably request. Such opinion
of counsel shall additionally cover such other legal matters with respect to the
registration in respect of which such opinion is being given as the underwriters
may reasonably request;
(f) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities;
(g) otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make earnings statements
satisfying the provisions of Section 11(a) of the Securities Act generally
available to the Holders no later than 45 days after the end of any twelve-month
period (or 90 days, if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Securities are sold to underwriters
in an underwritten public offering, or (ii) if not sold to underwriters in such
an offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration Statement, which
statements shall cover said twelve-month periods;
(h) use commercially reasonable efforts to cause all such Registrable
Securities to be listed on each securities exchange or quotation system on which
similar Securities issued by the Company are listed or traded;
(i) give prompt written notice to Holders:
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(i) when such Registration Statement or any amendment thereto has
been filed with the SEC and when such Registration Statement or any post-
effective amendment thereto has become effective;
(ii) of any request by the SEC for amendments or supplements to such
Registration Statement or the prospectus included therein or for additional
information;
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of such Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Class A Stock for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to make
changes in such Registration Statement or the prospectus in order to make
the statements therein not misleading (which notice shall be accompanied by
an instruction to suspend the use of the prospectus until the requisite
changes have been made);
(j) use commercially reasonable efforts to prevent the issuance or
obtain the withdrawal of any order suspending the effectiveness of such
Registration Statement at the earliest possible time;
(k) furnish to each Holder, without charge, at least one copy of such
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits (including those, if any, incorporated by reference);
(l) upon the occurrence of any event contemplated by Section 6(i)(v)
above, promptly prepare a post-effective amendment to such Registration
Statement or a supplement to the related prospectus or file any other required
document so that, as thereafter delivered to Holders, the prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. If the Company notifies the Holders
in accordance with Section 6(i)(v) above to suspend the use of the prospectus
until the requisite changes to the prospectus have been made, then the Holders
shall suspend use of such prospectus, and the period of effectiveness of such
Registration Statement provided for above shall be extended by the number of
days from and including the date of the giving of such notice to the date
Holders shall have received such amended or supplemented prospectus pursuant to
this Section 6(l);
(m) (i) make reasonably available for inspection by a single
representative of the Holders, any underwriter participating in any disposition
pursuant to such Registration Statement and any attorney, accountant or other
agent retained by such representative or any such underwriter all relevant
financial and other records, pertinent
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corporate documents and properties of the Company and (ii) cause the Company's
officers, directors and employees during normal business hours and upon
reasonable advance notice to supply all relevant information reasonably
requested by such representative or any such underwriter, attorney, accountant
or agent in connection with the registration; and
(n) in connection with any underwritten offering, make appropriate
officers of the Company available to the selling security holders for meetings
with prospective purchasers of the Registrable Securities and prepare and
present to potential investors customary "road show" material in a manner
consistent with other new issuances of Securities similar to the Registrable
Securities, in connection with any proposed sale of the Registrable Securities
in an aggregate offering of at least $250,000,000 (or such lesser amount as
permitted under Section 2(b) above).
It shall be a condition precedent to the obligation of the Company to
take any action pursuant to this Agreement in respect of the Securities which
are to be registered at the request of any Holder that such Holder shall furnish
to the Company such information regarding the Securities held by such Holder and
the intended method of disposition thereof as the Company shall reasonably
request and as shall be required in connection with the action taken by the
Company.
7. Expenses. All expenses incurred in complying with the provisions of this
Agreement, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD), printing expenses,
fees and disbursements of counsel for the Company, the reasonable fees and
expenses of a single counsel for the selling security holders (selected by the
Initiating Demand Holder, in the case of a Demand Registration, and otherwise
selected by those holding a majority of the shares being registered), expenses
of any special audits incident to or required by any such registration and
expenses of complying with the Securities or blue sky laws of any jurisdiction
pursuant to Section 6(d), shall be paid by the Company ("Expenses"), except
that:
(a) all such expenses in connection with any amendment or supplement
to the Registration Statement or prospectus filed more than 180 days after the
effective date of such Registration Statement (except with respect to a Shelf
Registration Statement) because any Holder has not effected the disposition of
the Securities requested to be registered shall be paid by such Holder; and
(b) The Company shall not be liable for any fees, discounts or
commissions to any underwriter or any fees or disbursements of any underwriter
or counsel for any underwriter in respect of the Securities sold by such Holder.
8. Indemnification and Contribution.
(a) In the event of any registration of any Registrable Securities
under the Securities Act pursuant to this Agreement, the Company shall
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indemnify and hold harmless the Holder of such Registrable Securities, such
Holder's partners, directors and officers, and each other person (including each
underwriter) to the extent permitted by law who participated in the offering of
such Registrable Securities and each other Person, if any, who controls such
Holder or such participating person within the meaning of the Securities Act,
against any losses, claims, damages or liabilities ("Losses"), to which such
Holder or any such partner, director or officer or participating person or
controlling person may become subject under the Securities Act or any other
statute or at common law, insofar as such Losses (or actions in respect thereof)
arise out of or are based upon (i) any alleged untrue statement of any material
fact contained, on the effective date thereof, in any Registration Statement
under which such Securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (ii) any alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and, upon receipt of reasonably detailed invoices relating
thereto, shall reimburse such Holder or such partner, director, officer or
participating person or controlling person for any legal or any other expenses
reasonably incurred by such Holder or such partner, director, officer or
participating person or controlling person in connection with investigating or
defending any such Loss or action; provided that the foregoing indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any
indemnified party from whom the person asserting such Losses, expenses and
judgments purchased securities if such untrue statement or omission or alleged
untrue statement or omission made in such preliminary prospectus is eliminated
or remedied in the final prospectus and a copy of the final prospectus shall not
have been furnished to such person in a timely manner, unless such prospectus
was not furnished because the Company failed to provide the indemnified party in
accordance with law and the terms hereof with sufficient copies of such
corrected prospectus within the time period required; provided, further that the
Company shall not be liable in any case to the extent such Losses arise out of
or are based upon any untrue statement or actual or alleged omission made in
such Registration Statement, preliminary prospectus, final prospectus or
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by such Holder or such Holder's partners,
directors, officers and/or controlling persons specifically for use therein, or
(in the case of any underwritten offering) so furnished for such purpose by any
underwriter.
(b) Each Holder, by acceptance hereof, agrees to indemnify and hold
harmless the Company, its directors and officers and each other person, if any,
who controls the Company within the meaning of the Securities Act against any
Losses, to which the Company or any such director or officer or controlling
person may become subject under the Securities Act or any other statute or at
common law, insofar as such Losses (or actions in respect thereof) arise out of
or are based upon information in writing provided to the Company by or on behalf
of such Holder specifically for use in, and contained, on the effective date, in
any Registration Statement under which Securities were registered under the
Securities Act at the request of such Holder, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto.
Notwithstanding the provisions of this paragraph (b) or paragraph (c) below, no
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Holder shall be required to indemnify any person pursuant to this Section 8 or
to contribute pursuant to paragraph (c) below if any such indemnification or
contribution combined with all previous payments made under this Section 8 would
in the aggregate be in an amount in excess of the amount of the aggregate net
proceeds received by such Holder in connection with any such registration under
the Securities Act.
(c) If the indemnification provided for in this Section 8 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any Losses or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses or expenses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with the actions which
resulted in such Losses or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the Losses and expenses referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding. If
the allocation provided in this paragraph (c) is not permitted by applicable
law, the parties shall contribute based upon the relevant benefits received by
the Company and the Holders from the sale of Securities.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
(d) Any person entitled to indemnification hereunder (the "INDEMNIFIED
PARTY") agrees to give prompt written notice to the indemnifying party (the
"INDEMNIFYING PARTY") after the receipt by the Indemnified Party of any written
notice of the commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which the Indemnified Party intends to claim
indemnification or contribution pursuant to this Agreement; provided, that the
failure so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of any liability that it may have to the Indemnified Party hereunder
unless such failure is materially prejudicial to the Indemnifying Party. If
notice of commencement of any such action is given to the Indemnifying Party as
above provided, the Indemnifying Party shall be entitled to participate in and,
to the extent it may wish, to assume the defense of such action at its own
expense, with counsel chosen by it and reasonably satisfactory to such
Indemnified
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Party. The Indemnified Party shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be paid by the Indemnified Party unless (i) the
Indemnifying Party agrees in writing to pay the same, (ii) the Indemnifying
Party fails to assume the defense of such action, or (iii) the named parties to
any such action (including any impleaded parties) have been advised in writing
by such counsel that either (A) representation of such Indemnified Party and the
Indemnifying Party by the same counsel would be inappropriate under applicable
standards of professional conduct or (B) there are one or more legal defenses
available to the Indemnified Party which are substantially different from or
additional to those available to the Indemnifying Party. No Indemnifying Party
shall be liable for any settlement entered into without its written consent,
which consent shall not be unreasonably withheld.
(e) The agreements contained in this Section 8 shall survive the
transfer of the Registered Securities by any Holder and sale of all the
Registrable Securities pursuant to any Registration Statement and shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Holder or such partner, director, officer or participating or controlling
person.
9. Certain Additional Limitations on Registration Rights. Notwithstanding the
other provisions of this Agreement, the Company shall not be obligated to
register the Registrable Securities of any Holder (i) if such Holder or any
underwriter of such Registrable Securities shall fail to furnish to the Company
necessary information in respect of the distribution of such Registrable
Securities, or (ii) if such registration involves an underwritten offering, such
Registrable Securities are not included in such underwritten offering on the
same terms and conditions as shall be applicable to the other Securities being
sold through underwriters in the registration or such Holder fails to enter into
an underwriting agreement in customary form with the underwriter or underwriters
selected for such underwritten offering. In addition, each Holder agrees not to
effect any public sale or distribution of any Registrable Securities or of any
securities convertible into or exchangeable or exercisable for such Registrable
Securities, including a sale pursuant to Rule 144 under the Securities Act and
to enter into a customary lock-up agreement with the managing underwriter for an
offering, during the 90-day period beginning on the effective date of any Demand
Registration Statement (initiated by such Holder) or Piggy-Back Registration
Statement in which such Holder is participating or other underwritten offering
(initiated by the Company) (except as part of such registration), if and to the
extent requested by the managing underwriter for such offering.
10. Limitations on Registration of Other Securities; Representation. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of a majority in interest of the Holders, enter into any
agreement with any holder or prospective holder of any Securities of the Company
giving such Holder or prospective holder any registration rights the terms of
which are more favorable taken as a whole (taking into account the aggregate
remaining ownership interest of Registrable
14
Securities by the Holders) than the registration rights granted to the Holders
hereunder unless the Company shall also give such rights to the Holders
hereunder.
11. No Inconsistent Agreements. The Company will not hereafter enter into any
agreement with respect to its Securities which is inconsistent in any material
respects with the rights granted to the Holders in this Agreement.
12. Selection of Managing Underwriters. The managing underwriter or
underwriters for any offering of Registrable Securities to be registered
pursuant to Sections 2 or 3 hereto shall be selected by the Company and shall be
reasonably acceptable to the Initiating Demand Holder.
13. Miscellaneous.
(a) Remedies. Each Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate. In any action or proceeding brought to enforce any provision
of this Agreement or where any provision hereof is validly asserted as a
defense, the successful party shall be entitled to recover reasonable attorneys'
fees in addition to any other available remedy.
(b) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departure from the provisions hereof may not be given
unless the Company has obtained the written consent of GTE Corporation if it is
a Holder and a majority in interest of the other Holders.
(c) 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 sufficiently given or made if in
writing and either delivered in person with receipt acknowledged or sent by
overnight courier mail, return receipt requested, postage prepaid, or by
telecopy and confirmed by telecopy answerback, addressed as follows:
(i) If to any Holder, at its last known address appearing on the
books of the Company maintained for such purpose.
(ii) If to the Company, at
Genuity Inc.
▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
15
with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
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 sent by overnight courier.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto
including any person to whom Registrable Securities are assigned or transferred.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law; Jurisdiction. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of New York,
United States of America without giving effect to the conflict of laws
provisions thereof. Each of the parties hereby submits to personal jurisdiction
and waives any objection as to venue in the County of ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America. Service of process on the parties in any action
arising out of or relating to this Agreement shall be effective if mailed to the
parties in accordance with Section 13(c) hereof. The parties hereto waive all
right to trial by jury in any action or proceeding to enforce or defend any
rights hereunder.
(g) 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.
(h) Entire Agreement. This Agreement represents the complete agreement
and understanding of the parties hereto in respect of the subject
16
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the subject matter hereof.
(i) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GENUITY INC.
By:_________________________________
Name:
Title:
GTE CORPORATION
By:_________________________________
Name:
Title:
CONTEL FEDERAL SYSTEMS, INC.
By:_________________________________
Name:
Title:
17