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Exhibit 4.5
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated July 13, 2000 (this
"Agreement"), is entered into by and between Z-TEL TECHNOLOGIES, INC., a
Delaware corporation (the "Company"), and each of the investors listed on the
signature pages hereto (the "Investors").
WHEREAS, the Company and the Investors have executed a Stock Purchase
Agreement, dated as of July 6, 2000, by and among the Company and the Investors
(the "Stock Purchase Agreement"); and
WHEREAS, the Company and the Investors wish to agree upon the terms and
conditions on which the Company will provide for registration of the Conversion
Shares and the Warrant Shares;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
I. DEFINITIONS
Capitalized terms used but not defined herein have the meaning assigned
to such terms in the Stock Purchase Agreement.
"Affiliate" means affiliate, as that term is defined under Rule
144.
"Prospectus" means the prospectus included in any Registration
Statement (including without limitation a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to such
prospectus, including without limitation post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such prospectus.
"Registrable Securities" means the Conversion Shares and Warrant
Shares that are issued to the Investors, any of their respective Affiliates or
any permitted transferee or designee or upon any stock split, stock dividend,
recapitalization or other distribution with respect to, conversion or exchange
of or in replacement of such shares until, in the case of any such security, (i)
it is registered under the Securities Act and disposed of in accordance with the
Registration Statement covering it, (ii) it is saleable by
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the holder thereof pursuant to Rule 144(k) without any volume limitation
applicable thereto, or (iii) it is distributed to the public pursuant to Rule
144.
"Registration Expenses" means all fees and expenses relating to a
Registration Statement incident to the performance of or compliance with this
Agreement by the Company, including without limitation (i) all registration and
filing fees (including without limitation fees and expenses (x) with respect to
filings required to be made with the National Association of Securities Dealers,
Inc. and (y) in compliance with securities or "blue sky" laws (including without
limitation reasonable fees and disbursements of counsel for the underwriters or
selling holders in connection with "blue sky" qualifications of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as the managing
underwriters, if any, or holders of a majority of the Registrable Securities
being sold may designate)), (ii) printing expenses (including printing of
prospectuses if requested by the holders of a majority of the Registrable
Securities included in any Registration Statement), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company,
(v) fees and disbursements of independent certified public accountants of the
Company (including the reasonable expenses of any special audit and "comfort"
letters required by or incident to such performance), (vi) fees and expenses of
any "qualified independent underwriter" or other independent appraiser
participating in an offering pursuant to Section 3 of Schedule E to the By-laws
of the National Association of Securities Dealers, Inc., if any, (vii)
Securities Act liability insurance if the Company so desires such insurance,
(viii) the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange on which similar
securities by the Company are then listed, (ix) fees and expenses of all other
persons retained by the Company, and (x) the reasonable fees and disbursements,
not to exceed a total of $25,000, of not more than one counsel chosen by the
holders of a majority of the Registrable Securities being registered; provided,
however, that Registration Expenses will not include underwriting discounts and
commissions relating to the offer and sale of Registrable Securities, all of
which shall be borne by the holders of such Registrable Securities.
"Registration Statement" means any registration statement under the
Securities Act that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including without limitation the related
Prospectus, all amendments and supplements to such registration statement
(including post-effective amendments), all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
"SEC" means the Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of equity securities of the Company
outstanding from time to time.
"Underwritten Offering" means a distribution, registered pursuant
to the Securities Act, in which securities of the Company are sold to an
underwriter for reoffering to the public.
1.2 Whenever a number or percentage of Registrable Securities is to be
determined hereunder, each then-outstanding Share that is exercisable to
purchase, convertible into or exchangeable for shares of capital stock of the
Company will be deemed to be equal to the number of shares of Common Stock for
which such Share (or the security into which such Share is then convertible) is
then so purchasable, convertible or exercisable.
II. PIGGYBACK REGISTRATION
2.1 If at any time the Company proposes to file a registration
statement under the Securities Act with respect to an offering of any class of
Shares (other than a registration statement (i) on Form ▇-▇, ▇-▇ or any
successor form thereto or (ii) filed solely in connection with an offering made
solely to employees of the Company, whether or not for its own account), then
the Company will give written notice of such proposed filing to the holders of
Registrable Securities promptly, but in any event at least 15 calendar days
before the anticipated filing date.
2.2 (a) Such notice will offer such holders the opportunity to register
such amount of Registrable Securities for sale, in the same manner as the manner
in which the shares to be registered in such Registration Statement are to be
offered, as each such holder may request (a "Piggyback Registration"). Sections
3.2 and 3.3 shall apply to holders of Registrable Securities in a Piggyback
Registration where shares are registered for sale on a continuous or delayed
basis. Subject to Section 2.3 hereof, the Company will include in each such
Piggyback Registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein.
(b) The holders of Registrable Securities will be permitted to
withdraw all or part of the Registrable Securities from a Piggyback Registration
at any time prior to the effective date of such Piggyback Registration.
(c) The Company will be responsible for all Registration Expenses
related to such Piggyback Registration.
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2.3 Priority on Piggyback Registration.
(a) The Company will cause the managing underwriter or underwriters
of a proposed Underwritten Offering to permit holders of Registrable Securities
requested to be included in the registration for such offering to include
therein all such Registrable Securities requested to be so included on the same
terms and conditions as any similar securities, if any, of the Company included
therein.
(b) Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering deliver a statement in writing to the Company to
the effect that the total amount of securities proposed to be included in such
offering is such as to adversely affect the success of such offering, the number
of Registrable Securities included in such offering shall be reduced, to the
extent necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such managing underwriter or underwriters,
and any securities to be excluded shall come (i) first, pro rata, on the basis
of the number of shares proposed to be registered, from the holders of
Registrable Securities and other participating selling shareholders who are not
holders of Registrable Securities, if any, who are to offer shares on a
"piggyback" basis in such offering, and (ii) after all such securities are
excluded, from the shares to be offered by the Company and any shareholder or
shareholders on whose behalf the secondary registration was initiated, in
accordance with the agreement of such parties.
III. SHELF REGISTRATION
3.1 The Company shall, as promptly as practicable after the first
anniversary of the first Closing under the Stock Purchase Agreement (the "Shelf
Filing Date"), file a registration statement on an appropriate form (the
"Shelf") to effect a shelf registration pursuant to Rule 415 under the
Securities Act of all of the Registrable Securities that holders of Registrable
Securities have indicated a desire to have registered pursuant to the following
sentence. No later than 15 days prior to the Shelf Filing Date, each holder of
Registrable Securities shall notify the Company in writing if such holder
desires that all or a portion of its Registrable Securities be included in the
Shelf, and, if so, such holder's intended method of distribution thereof;
provided that the Company shall not be obligated to incur any expense or
otherwise participate in any underwritten public offering of Registrable
Securities. The Company shall cause such registration statement to become and
remain effective until the second anniversary of the date of the last Closing
under the Stock Purchase Agreement.
3.2 Any holder of Registrable Securities wishing to sell its
Registrable Securities pursuant to the Shelf and related Prospectus it will do
so only in accordance with this Section 3. Each holder of Registrable Securities
agrees to give written notice to the Company at least three (3) business days
prior to any intended sale or distribution of Registrable Securities pursuant to
the Shelf, which notice shall specify the date on which such holder intends to
begin such distribution and any information with respect to such
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holder and the intended method of distribution that is required to amend or
supplement the Registration Statement with respect to such intended
distribution. As promptly as is practicable after the date such notice is
provided, and in any event within two (2) business days after such date (such
second business day after such date, referred to as the "First Sale Date"), the
Company shall either (a) provide the notice to the holders contemplated by
Section 3.3 or (b) if necessary, prepare and file with the SEC a post-effective
amendment to the Shelf or a supplement to the related Prospectus or a supplement
or amendment to any document incorporated therein by reference, or file any
other required document so that such Registration Statement will 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 not misleading,
and so that, as thereafter delivered to purchasers of the Registrable Securities
being sold thereunder, such Prospectus will 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 the light of the circumstances
under which they were made, not misleading. In addition, within such time
period, the Company shall provide the holders of the Registrable Securities who
gave such notice copies of any documents filed pursuant to this Section. Each
holder who has given notice of intention to distribute such holder's Registrable
Securities in accordance with this Section (a "Notice Holder") will sell
Registrable Securities pursuant to the Shelf and related Prospectus only during
the 45-day period commencing on the First Sale Date (such 45-day period is
referred to as a "Selling Period"). The Notice Holders will not sell any
Registrable Securities pursuant to such Registration Statement or Prospectus
after such Selling Period without giving a new notice of intention to sell
pursuant to this Section and otherwise complying with the requirements of this
Section.
3.3 Upon receipt of a notice from a Notice Holder pursuant to Section
3.2, or at any time during any Selling Period, if there exists any state of
facts that, in the judgment of the Company, makes it advisable to suspend use of
the Prospectus for a discrete period of time due to pending material corporate
developments or similar material events that have not yet been publicly
disclosed and as to which the Company believes public disclosure would not be in
the best interests of the Company, the Company shall deliver to the Notice
Holders a notice to the effect of the foregoing and, upon receipt of such
notice, each such Notice Holder's Selling Period will not commence or resume, as
the case may be, until such Notice Holder is advised in writing by the Company
that the Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such Prospectus. The Company will use its reasonable efforts to ensure that
the use of the Prospectus may be resumed, and the Selling Period will commence,
as promptly as is practicable and, in the case of a pending development or
event, as soon as the earlier of (x) public disclosure of such pending material
corporate development or similar material event or (y) the time at which, in the
judgment of the Company, public disclosure of such material corporate
development or similar material event would be in the best interests of the
Company. Notwithstanding the foregoing, as to each Notice Holder, the Company
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shall not be entitled to exercise its right under this paragraph to defer sales
for more than 90 days in any twelve-month period.
IV. OTHER AGREEMENTS
4.1 Granting of Other Registration Rights. Without the written consent
of the holders of 66% of the then-outstanding Registrable Securities, the
Company will not grant to any person the right to request the Company to
register any equity securities of the Company under the Securities Act in a
manner inconsistent with the provisions of this Agreement.
4.2 Restrictions on Sale by Holders of Registrable Securities. Each
holder of Registrable Securities whose Registrable Securities are covered by a
Registration Statement filed pursuant hereto agrees, and will confirm such
agreement in writing if such holder is so requested (pursuant to a timely
written notice) by the managing underwriter or underwriters in an Underwritten
Offering, not to effect any public sale or distribution of any of the Company's
Shares (except as part of such Underwritten Offering), including a sale pursuant
to Rule 144, during the 90-calendar day period (or such shorter period
applicable to any officer, director or 5% or greater stockholder in connection
with any underwritten public offering, without regard to any exception to such
agreement granted by the managing underwriter or underwriters; provided that any
such exceptions shall not exceed 500,000 shares in the aggregate) beginning on
the effective date of the Registration Statement in connection with an
Underwritten Offering.
4.3 Registration Procedures. In connection with the Company's
registration obligations pursuant to this Agreement, the Company will:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the holders thereof in
accordance with the intended method or methods of distribution thereof, and
cause each such Registration Statement to become effective and, if such
registration is pursuant to Section 3.1, remain effective as provided in Section
3.1; provided, however, that before filing a Registration Statement or
Prospectus or any amendments or supplements thereto, the Company will furnish to
the holders of the Registrable Securities covered by such Registration Statement
copies of all such documents proposed to be filed, and will provide such holders
a reasonable period of time to review and comment on such documents (or have
counsel do the same). The Company will not file any such Registration Statement
or amendment thereto or any Prospectus or any supplement thereto to which the
holders of a majority of the Registrable Securities covered by such Registration
Statement shall reasonably object on a timely basis;
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(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the required period,
if any; cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended methods of disposition by the sellers thereof
set forth in such Registration Statement as so amended or to such Prospectus as
so supplemented;
(c) Notify the selling holders of Registrable Securities and their
counsel promptly (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the SEC or any other federal or state governmental
authority for amendments or supplements to a Registration Statement or related
Prospectus or for additional information, (iii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (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, (v) of the occurrence of any event which makes any statement made in
such Registration Statement or related Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or which requires the making of any changes in a Registration Statement,
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and, in the case of the Prospectus, it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated or that is necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
(vi) of any Company determination that a post-effective amendment to a
Registration Statement would be appropriate; provided that each such selling
holder shall cease using such Prospectus or amendment or supplement thereto
immediately upon receipt of written notice from the Company as to the matters in
(ii), (iii), (iv), (v) and (vi) above;
(d) Use every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a 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, at the earliest
reasonably possible moment;
(e) Furnish to each selling holder of Registrable Securities and
their counsel, without charge, at least one conformed copy of the Registration
Statement and
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any post-effective amendment thereto, including financial statements (but
excluding schedules, all documents incorporated or deemed incorporated therein
by reference and all exhibits, unless requested);
(f) Deliver to each selling holder of Registrable Securities and
their counsel, without charge, as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each preliminary prospectus)
and any amendment or supplement thereto as such persons may reasonably request;
and the Company hereby consents to the use of such Prospectus or each amendment
or supplement thereto by each of the selling holders of Registrable Securities
in connection with the offering and sale of the Registrable Securities covered
by such Prospectus or any amendment or supplement thereto, subject to Section
3.3.
(g) Register or qualify or cooperate with the selling holders of
Registrable Securities and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions within the United States as
any seller reasonably requests in writing; keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdiction of the Registrable Securities covered by the applicable
Registration Statement; provided, however, that the Company will not be required
to (i) qualify generally to do business or pay taxes in any jurisdiction in
which it is not then so qualified or so required or (ii) take any action that
would subject it to general service of process in any such jurisdiction in which
it is not then so subject;
(h) Cooperate with the selling holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold, which certificates will not bear any
restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as are reasonably requested by the
holders of Registrable Securities;
(i) Cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States except as may be
required solely as a consequence of the nature of such selling holder's
business, in which case the Company will cooperate in all reasonable respects
with the filing of such Registration Statement and the granting of such
approvals as may be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Registrable
Securities;
(j) Upon the occurrence of any event contemplated by Section
4.3(c)(v) or 4.3(c)(vi) hereof, prepare a supplement or post-effective amendment
to each
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Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered, such Prospectus will 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 the light of the circumstances
under which they were made, not misleading;
(k) Use its commercially reasonable efforts to cause all
Registrable Securities covered by such Registration Statement to be listed on
each securities exchange, if any, on which similar securities issued by the
Company are then listed;
(l) Make available for inspection by a representative of the
holders of Registrable Securities being sold and any attorney or accountant
retained by such selling holders, all financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries, and
cause the officers, directors and employees of the Company and its subsidiaries
to supply all information reasonably requested by any such representative,
attorney or accountant in connection with such Registration Statement; provided,
however, that any records, information or documents that are designated by the
Company in writing as confidential at the time of delivery of such records,
information or documents will be kept confidential by such persons unless (i)
such records, information or documents are in the public domain or otherwise
publicly available, (ii) disclosure of such records, information or documents is
required by court or administrative order or is necessary to respond to inquires
of regulatory authorities, or (iii) disclosure of such records, information or
documents, in the opinion of counsel to such person, is otherwise required by
law (including without limitation pursuant to the requirements of the Securities
Act); and
(m) Comply with applicable rules and regulations of the SEC and
make generally available to its security holders earning statements satisfying
the provisions of Section 1l(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45
calendar days after the end of any 12-month period (or 90 calendar days after
the end of any 12-month period if such period is a fiscal year) commencing on
the first day of the first fiscal quarter of the Company, after the effective
date of a Registration Statement, which statements shall cover said 12-month
period.
4.4 Information. The Company may require each seller of Registrable
Securities as to which any registration is being effected to furnish to the
Company such information regarding the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request in writing
and the Company may exclude from such registration the Registrable Securities of
any seller who unreasonably fails to furnish such information within a
reasonable time after receiving such request.
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4.5 Discontinuation of Sales. Each holder of Registrable Securities
will be deemed to have agreed by virtue of its acquisition of such Registrable
Securities that, upon receipt of any notice from the Company of the occurrence
of any event of the kind described in Section 4.3(c)(ii), (iii), (v) or (vi)
hereof, such holder will forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4.3(j) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus.
In the event the Company shall give any such notice, the time period prescribed
in Section 3.1 hereof will be extended by the number of days during the time
period from and including the date of the giving of such notice to and including
the date when each seller of Registrable Securities covered by such Registration
Statement shall have received (x) the copies of the supplemented or amended
Prospectus contemplated by Section 4.3(j) hereof or (y) the Advice.
4.6 Rules 144 and 144A. Subject to Section 6.1 of the Stock Purchase
Agreement, the Company will file the reports required to be filed by it under
the Securities Act and the Exchange Act in a timely manner, and will cooperate
with any holder of Registrable Securities (including without limitation by
making such representations as any such holder may reasonably request), all to
the extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitations
of the exemptions provided by Rules 144 and 144A (including without limitation
the requirements of Rule 144A(d)(4)). Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such filing requirements.
4.7 Underwritten Registrations. If any Piggyback Registration is an
Underwritten Offering, the Company will have the right to select the investment
banker or investment bankers and managers to administer the offering.
V. INDEMNIFICATION
5.1 Indemnification by the Company. The Company will, without
limitation as to time, indemnify and hold harmless, to the fullest extent
permitted by law, each holder of Registrable Securities registered pursuant to
this Agreement, the officers, directors and agents and employees of each of
them, each person who controls such holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) from and against all
losses, claims, damages, liabilities, costs (including without limitation the
costs of investigation and attorneys' fees) and expenses (collectively,
"Losses"), as incurred, but only arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement,
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Prospectus or form of Prospectus or in any amendment or supplement thereto or in
any Preliminary prospectus, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
the same are based solely upon information furnished in writing to the Company
by such holder expressly for use therein; provided, however, that the Company
will not be liable to any holder of Registrable Securities to the extent that
any such Losses arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any preliminary
prospectus if either (A) (i) such holder failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written confirmation of the sale by
such holder of a Registrable Security to the person asserting the claim from
which such Losses arise and (ii) the Prospectus would have completely corrected
such untrue statement or alleged untrue statement or such omission or alleged
omission; or (B) such untrue statement or alleged untrue statement or such
omission or alleged omission is completely corrected in an amendment or
supplement to the Prospectus previously furnished by or on behalf of the Company
with copies of the Prospectus as so amended or supplemented, and such holder
thereafter fails to deliver such Prospectus as so amended or supplemented prior
to or concurrently with the sale of a Registrable Security to the person
asserting the claim from which such Losses arise.
The rights of any holder of Registrable Securities hereunder will not
be exclusive of the rights of any holder of Registrable Securities under any
other agreement or instrument of any holder of Registrable Securities to which
the Company is a party. Nothing in such other agreement or instrument will be
interpreted as limiting or otherwise adversely affecting a holder of Registrable
Securities hereunder and nothing in this Agreement will be interpreted as
limiting or otherwise adversely affecting the holder of Registrable Securities'
rights under any such other agreement or instrument, provided, however that no
indemnified party will be entitled hereunder to recover more than its
indemnified Losses.
5.2 Indemnification by Holders of Registrable Securities. In connection
with any Registration Statement in which a holder of Registrable Securities is
participating, such holder of Registrable Securities will furnish to the Company
in writing such information as the Company reasonably requests for use in
connection with any Registration Statement or Prospectus and will severally
indemnify, to the fullest extent permitted by law, the Company, its directors
and officers, agents and employees, each person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), from and against all Losses arising out of or based upon any untrue
statement of a material fact contained in any Registration Statement, Prospectus
or preliminary prospectus or arising out of or based upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that such untrue
statement or omission is finally judicially determined to have been contained in
any information so furnished in writing by such holder to the Company expressly
for use in
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such Registration Statement or Prospectus and was relied upon by the Company in
the preparation of such Registration Statement, Prospectus or preliminary
prospectus. In no event will the liability of any selling holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the proceeds
(net of payment of all expenses and underwriter's discounts and commissions)
received by such holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
5.3 Conduct of Indemnification Proceedings. If any person shall become
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party from which such indemnity is sought (the
"indemnifying party") of any claim or of the commencement of any action or
proceeding with respect to which such indemnified party seeks indemnification or
contribution pursuant hereto; provided, however, that the failure to so notify
the indemnifying party will not relieve the indemnifying party from any
obligation or liability except to the extent that the indemnifying party has
been prejudiced materially by such failure. All fees and expenses (including any
fees and expenses incurred in connection with investigating or preparing to
defend such action or proceeding) will be paid to the indemnified party, as
incurred, within five calendar days of written notice thereof to the
indemnifying party (regardless of whether it is ultimately determined that an
indemnified party is not entitled to indemnification hereunder). The
indemnifying party will not consent to entry of any judgment or enter into any
settlement or otherwise seek to terminate any action or proceeding in which any
indemnified party is or could be a party and as to which indemnification or
contribution could be sought by such indemnified party under this Article V,
unless such judgment, settlement or other termination includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance satisfactory to the
indemnified party, from all liability in respect of such claim or litigation for
which such indemnified party would be entitled to indemnification hereunder.
5.4 Contribution. If the indemnification provided for herein is
unavailable to an indemnified party under Section 5.1 or 5.2 hereof in respect
of any Losses or is insufficient to hold such indemnified party harmless, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, will, jointly and severally, contribute to the amount paid or payable by
such indemnified party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or
indemnifying parties, on the one hand, and such indemnified party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party or indemnifying parties, on the one hand, and
such indemnified party, on the other hand, will 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 of a
material fact, has been taken or made by, or related to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
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such action, statement or omission. The amount paid or payable by a party as a
result of any Losses will be deemed to include any legal or other fees or
expenses incurred by such party in connection with any action or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.4 were determined by pro rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Section, an indemnifying party that is a
selling holder of Registrable Securities will not be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Securities sold by such indemnifying party and distributed to the public exceeds
the amount of any damages which such indemnifying party has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 1l(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The provisions of this Article V will survive so long as Registrable
Securities remain outstanding, notwithstanding any transfer of the Registrable
Securities by any holder thereof or any termination of this Agreement.
VI. MISCELLANEOUS
6.1 No Inconsistent Agreements. The Company has not, as of the date
hereof, and will not, on or after the date hereof, enter into any agreement with
respect to its securities which is inconsistent with the rights granted to the
holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof.
6.2 Amendments and Waivers; Several Obligations.
(a) The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of holders of at least 80% of the
then-outstanding Registrable Securities. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other holders of Registrable
Securities may be given by holders of a majority of the Registrable Securities
being sold by such holders; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.
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(b) The execution of this Agreement by the Company and any Investor
shall bind Investor and the Company, regardless of whether or how many other
Investors have executed this Agreement. The execution of this Agreement by
additional Investors from time to time until all of the Investors have executed
this Agreement shall not be deemed an amendment to which Section 6.2(a) applies.
6.3 Owner of Registrable Securities. The Company will maintain, or will
cause its registrar and transfer agent to maintain, a stock book with respect to
the Common Stock, in which all transfers of Registrable Securities of which the
Company has received notice will be recorded. The Company may deem and treat the
person in whose name Registrable Securities are registered in the stock book of
the Company as the owner thereof for all purposes, including without limitation
the giving of notices under this Agreement.
6.4 Fees. 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 prevailing party, as determined by the court, will be entitled to
recover reasonable attorneys' fees in addition to any other available remedy.
6.5 Assignment. Each holder of the Registrable Securities may assign
all or any part of its rights under this Agreement; but only to any person to
whom such Holder sells, transfers, assigns or pledges such Registrable
Securities; provided that, except as to transfers to Affiliates and to the
partners of a Holder that is a limited partnership, the transferee shall receive
the benefit of the assignment of rights under this Agreement only if the
transferee receives at least 100,000 shares of Registrable Securities (or the
equivalent thereof, if Series D Preferred or Warrants are transferred). In the
event that such holder shall assign its rights pursuant to this Agreement in
connection with the transfer of less than all its Registrable Securities, the
Holder shall also retain its rights with respect to its remaining Registrable
Securities.
6.6 Remedies. In the event of a breach by the Company of its
obligations under this Agreement, each holder of Registrable Securities, 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 any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it will waive
the defense that a remedy at law would be adequate.
6.7 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing and will be deemed given (i) when
made, if made by hand delivery, (ii) upon confirmation, if made by fax, or (iii)
one business day after being deposited with a reputable next-day courier,
postage prepaid if to the Company, at the address set forth on the signature
page hereto, and if to any holder of Registrable
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Securities, at the most current address given by such holder to the Company in
accordance with the provisions of this Section 6.7.
6.8 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed will be deemed to be an original and all of which taken
together will constitute one and the same instrument.
6.9 Headings. The headings in this Agreement are for convenience of
reference only and will not limit or otherwise affect the meaning hereof.
6.10 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of laws principles of such state.
6.11 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein will remain in full force and effect and will in
no way be affected, impaired or invalidated, and the parties hereto will use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared the remaining
terms, provisions, covenants and restrictions without including any of such
which may be hereafter declared invalid, void or unenforceable.
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IN WITNESS WHEREOF, the undersigned have executed this Registration
Rights Agreement as of the day and year first written above.
Z-TEL TECHNOLOGIES, INC.
By: /s/ D. ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
D. ▇▇▇▇▇▇▇ ▇▇▇▇▇
President and Chief Executive
Officer
SEWANEE Z-TEL PARTNERS, L.P. RICHLAND VENTURES III, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
----------------------------------- ---------------------------------
Title: President of General Partner Title: Partner
GRAMERCY Z-TEL L.P. FULMEAD VENTURES LIMITED
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Title: Managing Director By: /s/ Denis ▇.▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇ VENTURE FUND II,
LIMITED PARTNERSHIP
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Venture
Partners II, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------- ---------------------------------
Signature W. ▇▇▇▇▇ ▇▇▇▇▇▇, Managing
Director
(continued)
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(signature pages for Registration Rights Agreement, continued)
Falcon Global Fund, ▇.▇. ▇▇▇▇▇▇ Partners Limited Partnership
By: /s/ Van Cushny By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ III
----------------------------------- ---------------------------------
Print Name: Van Cushny Print Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ III
----------------------- ---------------------
Title: Attorney-in-Fact Title: Managing General Partner
---------------------------- --------------------------
Woodmont Capital, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Manager and President
(continued)
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(signature pages for Registration Rights Agreement, continued)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, attorney in
---------------------------------------- ------------------------------------
Signature fact for ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Signature
CMB Capital L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Title: President & CEO
-----------------------------
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