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EXHIBIT 10.7
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of this ____ day of _______, 1997 by and between SCIENCE
APPLICATIONS INTERNATIONAL CORPORATION, a Delaware corporation ("SAIC" or the
"Holder") and NETWORK SOLUTIONS, INC., a Delaware corporation (the "Company").
RECITALS
A. The Holder. SAIC is an existing corporation duly organized
and in good standing under the laws of the State of Delaware with its principal
executive offices located in San Diego, California.
B. The Company. The Company is an existing corporation, formed
under the laws of the State of Delaware, with its principal executive offices
located in Herndon, Virginia. All of the outstanding Common Stock of the
Company is currently owned by SAIC.
C. Corporate Approvals. Each of the parties to this Agreement
has obtained all necessary corporate approvals for the execution and delivery
of this Agreement.
D. Arm's Length Relationship. The parties to this Agreement
intend to conduct their relationships hereunder on an arm's length basis.
E. The Offering. SAIC currently owns 100% of the outstanding
common stock of the Company. The Company is contemplating the issuance of
shares of the Company's Class A common stock, $.001 par value per share (the
"Class A Common Stock"), in an initial public offering pursuant to a
Registration Statement on Form S-1 (Registration No. 333-30705) (the
"Offering") and following the Offering, SAIC will be the beneficial and record
owner of 12,500,000 shares of the Company's Class B common stock, $.001 par
value per share (the "Class B Common Stock"), convertible into 12,500,000
shares of the Class A Common Stock.
F. Registration Rights. In conjunction with the Offering, the
Holder and the Company desire to enter into this Agreement to provide the
Holder with certain registration rights as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for other good and valuable consideration had
and received, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have
the following respective meanings:
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"Affiliate" shall mean any Person that directly or
indirectly controls, is controlled by, or is under common control
with such Person. A Person shall be deemed to control another Person
if such Person owns 50% or more of any equity interest in the
"controlled" Person or possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock or partnership
interests, by contract, agreement or understanding (whether oral or
written), or otherwise.
"Class A Common Stock" shall have the meaning set forth in
Recital E of this Agreement.
"Class B Common Stock" shall have the meaning set forth in
Recital E of this Agreement.
"Designated Transferee" shall have the meaning set forth in
Section 10 hereof.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Holders" shall mean SAIC, any Affiliate of SAIC (other than
the Company) and any Designated Transferees who are holders of record
of any Registrable Shares, and any combination of one or more such
Holders.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Other Holders" shall mean Persons who are holders of record
of equity securities of the Company who subsequent to the date hereof
acquire more than 5% of the outstanding shares of Class A Common
Stock pursuant to a transaction with the Company and to whom the
Company grants registration rights pursuant to a written agreement in
connection with such transaction.
"Person" shall mean any individual, corporation,
association, partnership, group (as defined in Section 13(d)(3) of
the Exchange Act), limited liability company, joint venture, business
trust or unincorporated organization, or a government or any agency
or political subdivision thereof.
"Registrable Shares" shall mean (i) the 12,500,000 shares of
Class A Common Stock which would result upon the conversion of the
12,500,000 shares of Class B Common Stock owned by the Holder on the
date of this Agreement, and (ii) any shares of Class A Common Stock
acquired by a Holder directly or upon exercise of conversion of any
equity securities of the Company issued or distributed after the date
of this Agreement to a Holder in
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respect of Registrable Shares by way of any stock dividend, stock
split or other distribution or any recapitalization or
reclassification. As to any particular Registrable Share, such
Registrable Share shall cease to be a Registrable Share when (w) it
shall have been sold, transferred or otherwise disposed of or
exchanged pursuant to a registration statement under the Securities
Act; (x) it shall have been distributed to the public pursuant to
Rule 144 (or any successor provision) under the Securities Act; (y)
it shall have been sold or transferred to a Person other than a
Designated Transferee in a private transaction effected other than
pursuant to a registration statement; or (z) it shall have been sold,
transferred or otherwise disposed of in violation of this Agreement.
"Registration Expenses" shall have the meaning set forth in
Section 7(a) hereof.
"SEC" shall mean the Securities and Exchange Commission or
any successor agency thereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
2. Incidental Registrations
(a) Right to Include Registrable Shares. Each time the Company
shall determine to file a registration statement under the Securities Act in
connection with a proposed offer and sale for cash of any equity securities
(other than an offering of debt securities which are convertible into equity
securities or an offering of equity securities in an amount not in excess of 5%
of the number of shares of Class A Common Stock outstanding at such time)
either by it or by any holders of its outstanding equity securities, the
Company will give prompt written notice of its determination to each Holder and
of such Holder's rights under this Section 2, at least 60 days prior to the
anticipated filing date of such registration statement. Upon the written
request of each Holder made within 30 days after the receipt of any such notice
from the Company, (which request shall specify the Registrable Shares intended
to be disposed of by such Holder), the Company will use its best efforts to
effect the registration under the Securities Act of all Registrable Shares
which the Company has been so requested to register by the Holders thereof, to
the extent required to permit the disposition of the Registrable Shares so to
be registered; provided, however, that (i) if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to proceed with the proposed
registration of the securities to be sold by it, the Company may, at its
election, give written notice of such determination to each Holder of
Registrable Shares and thereupon shall be relieved of its obligation to
register any Registrable Shares in connection with such registration (but not
from its obligation to pay the Registration Expenses in connection therewith),
and (ii) if such registration involves an underwritten offering, all Holders of
Registrable Shares requesting to be included in the Company's registration must
sell their Registrable Shares to the underwriters on the same terms and
conditions as apply to the Company, with such
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differences, including any with respect to indemnification and liability
insurance, as may be customary or appropriate in combined primary and secondary
offerings. If a registration requested pursuant to this Section 2(a) involves
an underwritten public offering, any Holder of Registrable Shares requesting to
be included in such registration may elect, in writing prior to the effective
date of the registration statement filed in connection with such registration,
not to register such securities in connection with such registration. No
registration effected under this Section 2 shall relieve the Company of its
obligations to effect registrations upon request under Section 4 hereof.
(b) Priority in Incidental Registration. If a registration
pursuant to this Section 2 involves an underwritten offering and the managing
underwriter(s) in good faith advise(s) the Company in writing that, in its
opinion, the number of securities which the Company, the Holders and any other
Persons intend to include in such registration exceeds the largest number of
securities which can be sold in such offering without having an adverse effect
on such offering (including the price at which such securities can be sold),
then the Company will include in such registration (i) first, if the
registration pursuant to this Section 2 was initiated by Other Holders
exercising demand registration rights, 100% of the securities such Other
Holders propose to sell (except to the extent the terms of such Other Holders'
registration rights provide otherwise); (ii) second, 100% of the securities the
Company proposes to sell for its own account; (iii) third, to the extent that
the number of securities which such Other Holders exercising demand
registration rights and the Company propose to sell is less than the number of
securities which the Company has been advised can be sold in such offering
without having the adverse effect referred to above, such number of Registrable
Shares which the Holders have requested to be included in such registration
pursuant to Section 2(a) hereof and which, in the opinion of such managing
underwriter(s), can be sold without having the adverse effect referred to
above; and (iv) fourth, to the extent that the number of securities which are
to be included in such registration pursuant to clauses (i), (ii) and (iii) is,
in the aggregate, less than the number of securities which the Company has been
advised can be sold in such offering without having the adverse effect referred
to above, such number of other securities requested to be included in the
offering for the account of any Other Holders which, in the opinion of such
managing underwriter(s), can be sold without having the adverse effect referred
to above.
3. Holdback Agreements.
(a) If any registration of Registrable Shares shall be in
connection with an underwritten public offering, the Holders shall not effect
any public sale or distribution (except in connection with such public
offering), of any equity securities of the Company, or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (in each case, other than as part of such underwritten public
offering), during the 180-day period (or such lesser period as the managing
underwriter(s) beginning on the effective date of such registration, if, and to
the extent, the managing underwriter(s) of any such offering determine(s) such
action is necessary or desirable to effect such offering; provided, however,
that each Holder has received the written notice required by Section 2(a)
hereof; provided, however, that each Holder shall not be obligated to comply
with such
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restrictions arising as a result of an underwritten public offering subject to
Section 2 hereof more than once in any 12-month period.
(b) If any registration of Registrable Shares shall be in
connection with any underwritten public offering, the Company shall not effect
any public sale or distribution (except in connection with such public
offering) of any of its equity securities or of any security convertible into
or exchangeable or exercisable for any of its equity securities (in each case
other than as part of such underwritten public offering) during the 180-day
period (or such lesser period as the managing underwriter(s) may permit)
beginning on the effective date of such registration, and the Company shall use
its best efforts to cause each member of the management of the Company who
holds any equity security and each other holder of 5% or more of the
outstanding shares of any equity security, or of any security convertible into
or exchangeable or exercisable for any equity security, of the Company
purchased from the Company (at any time other than in a public offering) to so
agree.
4. Registration on Request.
(a) Request by Holders. Upon the written request of the Holders
of at least 10% of the Registrable Shares (calculated on the based on the
number in clause (i) of its definition) that the Company effect the
registration under the Securities Act of all or part of such Holders'
Registrable Shares, and specifying the amount (which shall not be less than 10%
of the Registrable Shares (calculated on the based on the number in clause (i)
of its definition) in the aggregate) and the intended method of disposition
thereof, the Company will promptly give notice of such requested registration
to all other Holders of Registrable Shares and, as expeditiously as possible,
use its best efforts to effect the registration under the Securities Act of:
(i) the Registrable Shares which the Company has been so requested to register
by Holders of at least 10% of the Registrable Shares; and (ii) all other
Registrable Shares which the Company has been requested to register by any
other Holder thereof by written request received by the Company within 30 days
after the giving of such written notice by the Company (which request shall
specify the intended method of disposition of such Registrable Shares);
provided, however, that the Company shall not be required to effect more than
two registrations pursuant to this Section 4; provided, further, that the
Company shall not be obligated to file a registration statement relating to a
registration request under this Section 4 (x) if the registration request is
delivered after delivery of a notice by the Company of an intended registration
and prior to the effective date of the registration statement referred to in
such notice, or (y) within a period of 90 days after the effective date of any
other registration statement of the Company requested by a Holder pursuant to
this Section 4 or pursuant to which the Holders included Registrable Shares.
The Holders initially requesting a registration pursuant to this Section 4 may,
at any time prior to the effective date of the registration statement relating
to such registration, revoke such request by providing a written notice to the
Company revoking such request; provided, however, that, in the event the
Holders shall have made a written request for a demand registration (I) which
is subsequently withdrawn by the Holders after the Company has filed a
registration statement with the SEC in connection therewith but prior to such
demand registration being declared effective by the SEC or (II) which is not
declared effective solely as a result of the failure of Holders to take all
actions reasonably required in order to have
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the registration and the related registration statement declared effective by
the SEC, then, in any such event, such demand registration shall be counted as
a demand registration for purposes of this Section 4(a). Promptly after the
expiration of the 30-day period referred to in clause (ii) above, the Company
will notify all the Holders to be included in the registration of the other
Holders and the number of shares of Registrable Shares requested to be included
therein.
(b) Registration Statement Form. If any registration requested
pursuant to this Section 4 which is proposed by the Company to be effected by
the filing of a registration statement on Form S-3 (or any successor or similar
short-form registration statement) shall be in connection with an underwritten
public offering, and if the managing underwriter(s) shall advise the Company in
writing that, in its opinion, the use of another form of registration statement
is of material importance to the success of such proposed offering, then such
registration shall be effected on such other form.
(c) Effective Registration Statement. A registration requested
pursuant to this Section 4 will not be deemed to have been effected unless it
has become effective under the Securities Act and has remained effective for
270 days or such shorter period as all the Registrable Shares included in such
registration have actually been sold thereunder. In addition, if within 180
days after it has become effective, the offering of Registrable Shares pursuant
to such registration is interfered with by any stop order, injunction or other
order or requirement of the SEC or other governmental agency or court, such
registration will be deemed not to have been effected for purposes of this
Section 4.
(d) Priority in Requested Registrations. If a requested
registration pursuant to this Section 4 involves an underwritten offering and
the managing underwriter(s) in good faith advise(s) the Company in writing
that, in its opinion, the number of securities requested to be included in such
registration (including securities of the Company which are not Registrable
Shares) exceeds the largest number of securities which can be sold in such
offering without having an adverse effect on such offering (including the price
at which such securities can be sold), then the Company will include in such
registration (i) first, 100% of the Registrable Shares requested to be
registered pursuant to Section 4(a) hereof (provided that if the number of
Registrable Shares requested to be registered pursuant to Section 4(a) hereof
exceeds the number which the Company has been advised can be sold in such
offering without having the adverse effect referred to above, the number of
such Registrable Shares to be included in such registration by the Holders
shall be allocated pro rata among such Holders on the basis of the relative
number of Registrable Shares each such Holder has requested to be included in
such registration); (ii) second, to the extent that the number of Registrable
Shares requested to be registered pursuant to Section 4(a) hereof is less than
the number of securities which the Company has been advised can be sold in such
offering without having the adverse effect referred to above, such number of
shares of equity securities the Company requests to be included in such
registration, and (iii) third, to the extent that the number of Registrable
Shares requested to be included in such registration pursuant to Section 4(a)
hereof and the securities which the Company proposes to sell for its own
account are, in the aggregate, less than the number of equity securities which
the Company has been advised can be sold in such offering without having the
adverse effect
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referred to above, such number of other securities proposed to be sold by any
Other Holder which, in the opinion of such managing underwriter(s), can be sold
without having the adverse effect referred to above (provided that if the
number of such securities of such Other Holder requested to be registered
exceeds the number which the Company has been advised can be sold in such
offering without having the adverse effect referred to above, the number of
such securities to be included in such registration pursuant to this Section
4(d) shall be allocated pro rata among all such Other Holders on the basis of
the relative number of securities each such Other Holder has requested to be
included in such registration).
(e) Additional Rights. If the Company at any time grants to any
other holders of equity securities of the Company any rights to request the
Company to effect the registration of any such shares of equity securities on
terms more favorable to such holders than the terms set forth in this Section 4
and in Section 5 hereof, the terms of this Section 4 and of Section 5 hereof
shall be deemed amended or supplemented to the extent necessary to provide the
Holders such more favorable rights and benefits. In no event shall the Company
grant to any person any rights to request the Company to effect the
registration of any shares of equity securities of the Company on terms which
are adverse to rights of the Holders set forth in Section 2 and this Section 4.
5. Registration Procedures.
(a) If and whenever the Company is required by the provisions of
Section 2 or 4 hereof to use its best efforts to effect or cause the
registration of Registrable Shares, the Company shall as expeditiously as
possible:
(i) prepare and, in any event within 60 days after the end
of the 30-day period within which a request for registration may be
given to the Company as specified in Sections 2(a) and 4(a) hereof,
file with the SEC a registration statement with respect to such
Registrable Shares and use its best efforts to cause such
registration statement to become effective;
(ii) 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 for a period not in excess of 270 days and to
comply with the provisions of the Securities Act, the Exchange Act,
and the rules and regulations promulgated thereunder with respect to
the disposition of all the securities covered by such registration
statement during such period in accordance with the intended methods
of disposition by the Holders thereof set forth in such registration
statement; provided, however, that (A) before filing a registration
statement (including an initial filing) or prospectus, or any
amendments or supplements thereto, the Company will furnish to one
counsel selected by the Holders of a majority of the Registrable
Shares covered by such registration statement copies of all documents
proposed to be filed, which documents will be subject to the review
and comment of such counsel, and (B) the Company will notify each
Holder of Registrable Shares covered by such registration statement
of any
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stop order issued or threatened by the SEC, any other order
suspending the use of any preliminary prospectus or of the suspension
of the qualification of the registration statement for offering or
sale in any jurisdiction, and take all reasonable actions required to
prevent the entry of such stop order, other order or suspension or to
remove it if entered;
(iii) furnish to each Holder and each underwriter, if
applicable, of Registrable Shares covered by such registration
statement such number of copies of the registration statement and of
each amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and
summary prospectus), in conformity with the requirements of the
Securities Act, and such other documents as each Holder of
Registrable Shares covered by such registration statement may
reasonably request in order to facilitate the disposition of the
Registrable Shares by such Holder;
(iv) use its best efforts to register or qualify such
Registrable Shares covered by such registration statement under the
state securities or blue sky laws of such jurisdictions as each
Holder of Registrable Shares covered by such registration statement
and, if applicable, each underwriter, may reasonably request, and do
any and all other acts and things which may be reasonably necessary
to consummate the disposition in such jurisdictions of the
Registrable Shares owned by such Holder, except that the Company
shall not for any purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction where, but for
the requirements of this clause (iv), it would not be obligated to be
so qualified;
(v) use its best efforts to cause such Registrable Shares
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the Holders thereof to consummate the disposition
of such Registrable Shares;
(vi) if at any time when a prospectus relating to the
Registrable Shares is required to be delivered under the Securities
Act, any event shall have occurred as the result of which any such
prospectus as then in effect would include an 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, immediately give written notice thereof to each Holder
and the managing underwriter or underwriters, if any, of such
Registrable Shares and prepare and furnish to each such Holder a
reasonable number of copies of an amended or supplemental prospectus
as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Shares, such prospectus shall not
include an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
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(vii) use its best efforts to list any portion of such
Registrable Shares not already listed on any securities exchange on
which similar securities of the Company are then listed, and enter
into customary agreements including a listing application and
indemnification agreement in customary form, provided that the
applicable listing requirements are satisfied, and provide a transfer
agent and registrar for such Registrable Shares covered by such
registration statement not later than the effective date of such
registration statement;
(viii) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions
as each Holder of Registrable Shares being sold or the underwriter or
underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Shares, including
customary indemnification and opinions;
(ix) use its best efforts to obtain a "cold comfort" letter
or letters from the Company's independent public accountants in
customary form and covering matters of the type customarily covered
by "cold comfort" letters as the Holders of the Registrable Shares
being sold or the underwriters retained by such Holders shall
reasonably request;
(x) make available for inspection by representatives of any
Holder of Registrable Shares covered by such registration statement,
by any underwriter participating in any disposition to be effected
pursuant to such registration statement and by any attorney,
accountant or other agent retained by such Holders or any such
underwriter, all financial and other records pertinent corporate
documents and properties of the Company and its subsidiaries'
officers, directors and employees to supply all information and
respond to all inquiries reasonably requested by such Holders or any
such representative, underwriter, attorney, accountant or agent in
connection with such registration statement;
(xi) promptly prior to the filing of any document which is
to be incorporated by reference into the registration statement or
the prospectus (after initial filing of the registration statement),
provide copies of such document to counsel to the Holders of
Registrable Shares covered by such registration statement and to the
managing underwriter(s), if any, make the Company's representatives
available for discussion of such document and make such changes in
such document prior to the filing thereof as counsel for such Holders
or underwriter(s) may reasonably request;
(xii) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to
its security holders, as soon as reasonably practicable after the
effective date of the registration statement, an earning statement
which shall satisfy the provisions of Section 11(a) of the Securities
Act and the rules and regulations promulgated thereunder;
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(xiii) not later than the effective date of the applicable
registration statement, use its best efforts to provide a CUSIP
number for any portion of such Registrable Shares not already
included in a CUSIP number for similar securities of the Company, and
provide the applicable transfer agents with printed certificates for
the Registrable Shares which are in a form eligible for deposit with
the Depository Trust Company;
(xiv) notify counsel for the Holders of Registrable Shares
included in such registration statement and the managing underwriter
or underwriters, if any, immediately and confirm the notice in
writing, (A) when the registration statement, or any post-effective
amendment to the registration statement, shall have become effective,
or any supplement or amendment to the prospectus shall have been
filed, (B) of the receipt of any comments from the SEC and (C) of any
request of the SEC to amend the registration statement or amend or
supplement the prospectus or for additional information; and
(xv) cooperate with each seller of Registrable Shares and
each underwriter, if any, participating in the disposition of such
Registrable Shares and their respective counsel in connection with
any filings required to be made with the NASD.
(b) Each Holder of Registrable Shares hereby agrees that, upon
receipt of any notice from the Company of the happening of any event of the
type described in Section 5(a)(vi) hereof, such Holder shall forthwith
discontinue disposition of such Registrable Shares covered by such registration
statement or related prospectus until such Holder's receipt of the copies of
the supplemental or amended prospectus contemplated by Section 5(a)(vi) hereof,
and, if so directed by the Company, such Holder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in
such Holder's possession, of the prospectus covering such Registrable Shares at
the time of receipt of such notice. In the event the Company shall give any
such notice, the period mentioned in Section 5(a)(ii) hereof shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 5(a)(vi) hereof and including the
date when such Holder shall have received the copies of the supplemental or
amended prospectus contemplated by Section 5(a)(vi) hereof. If for any other
reason the effectiveness of any registration statement filed pursuant to
Section 4 hereof is suspended or interrupted prior to the expiration of the
time period regarding the maintenance of the effectiveness of such Registration
Statement required by Section 5(a)(ii) hereof so that Registrable Shares may
not be sold pursuant thereto, the applicable time period shall be extended by
the number of days equal to the number of days during the period beginning with
the date of such suspension or interruption to and ending with the date when
the sale of Registrable Shares pursuant to such registration statement may be
recommenced.
(c) Each Holder hereby agrees to provide the Company, upon
receipt of its request, with such information about such Holder to enable the
Company to comply with the requirements of the Securities Act and to execute
such certificates as the Company may
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reasonably request in connection with such information and otherwise to satisfy
any requirements of law.
6. Underwritten Registrations. Subject to the provisions of
Sections 2, 3 and 4 hereof, any of the Registrable Shares covered by a
registration statement may be sold in an underwritten offering at the
discretion of the Holder thereof. In the case of an underwritten offering
pursuant to Section 2 hereof, the managing underwriter(s) that will administer
the offering shall be selected by the Company; provided, however, that such
managing underwriter(s) shall be reasonably satisfactory to the Holders of a
majority of the Registrable Shares to be registered. In the case of any
underwritten offering pursuant to Section 4 hereof, the managing underwriter(s)
that will administer the offering shall be selected by the Holders of a
majority of the Registrable Shares to be registered; provided, however, that
such underwriter(s) shall be reasonably satisfactory to the Company.
7. Expenses.
(a) Subject to Section 7(b), the Company shall pay all fees,
costs and expenses of all registrations pursuant to Section 2 hereof and the
first registration pursuant to Section 4 hereof, including all SEC and stock
exchange or NASD registration and filing fees and expenses, reasonable fees and
expenses of any "qualified independent underwriter" and its counsel as may be
required by the rules of the NASD, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel for the underwriters, if any, in connection with blue sky
qualifications of the Registrable Shares), rating agency fees, printing
expenses (including expenses of printing certificates for Registrable Shares
and prospectuses), messenger, telephone and delivery expenses, the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange or national market system on which
similar securities issued by the Company are then listed, fees and
disbursements of counsel for the Company and all independent certified public
accountants (including the expenses of any annual audit, special audit and
"cold comfort" letters required by or incident to such performance and
compliance), the fees and disbursements of the underwriters customarily paid by
issuers or sellers of securities (including expenses relating to "road shows"
and other marketing activities), the reasonable fees and expenses of special
experts required to be retained by the Company in connection with such
registration, and the reasonable fees and expenses of other Persons required to
be retained by the Company (collectively, "Registration Expenses"); provided,
however, that Registration Expenses shall not include (i) any allocation of the
overhead of the Company, including any allocation of the compensation or
benefits of employees of the Company that assist in a registration, (ii) any
other expense to the extent it would have been incurred by the Company in the
absence of any sale of securities in connection with a registration pursuant to
this Agreement (including the cost of the Company's annual audit), or (iii) any
expenses for any registration proceeding begun pursuant to Section 4 hereof and
subsequently withdrawn by the Holder requesting such registration.
(b) The Holders shall pay the following: (i) all fees, costs and
expenses of all registrations except the first registration effected pursuant
to Section 4 hereof including all
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Registration Expenses, (ii) any underwriting discounts or commissions or
transfer taxes, if any, attributable to the sale of Registrable Shares by the
Holders pursuant to this Agreement, (iii) all fees, costs and expenses of
counsel to the Holders pursuant to this Agreement in connection with any
registration pursuant to this Agreement, and (iv) all fees, costs and expenses
for any registration proceeding begun pursuant to Section 4 hereto and
subsequently withdrawn by the Holders requesting such registration.
8. Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act pursuant
to Section 2 or 4 hereof, the Company will, and it hereby does, indemnify and
hold harmless, to the extent permitted by law, each of the Holders of any
Registrable Shares covered by such registration statement, each Affiliate of
such Holder (other than the Company) and their respective directors and
officers, each other Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who controls such
Holder or any such underwriter within the meaning of the Securities Act
(collectively, the "Indemnified Parties"), against any and all losses, claims,
damages or liabilities, joint or several, and expenses (including any amounts
paid in any settlement effected with the Company's consent, which consent shall
not be unreasonably withheld) to which any Indemnified Party may become subject
under the Securities Act, state securities or blue sky laws, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof, whether or not such Indemnified Party is a
party thereto) or expenses arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary, final or summary prospectus contained therein,
or any amendment or supplement thereof, (ii) 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 or (iii) any violation by the
Company of any federal, state or common law rule or regulation applicable to
the Company and relating to action required of or inaction by the Company in
connection with any such registration, and the Company will reimburse such
Indemnified Party for any legal or any other expenses reasonably incurred by it
in connection with investigating or defending any such loss, claim, liability,
action or proceeding; provided, however, that the Company shall not be liable
to any Indemnified Party in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement
or amendment or supplement thereof or in any such preliminary, final or summary
prospectus in reliance upon and in conformity with written information with
respect to such Holder furnished to the Company by such Holder specifically for
use in the preparation thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Holder or
any Indemnified Party and shall survive the transfer of such securities by such
Holder.
(b) Indemnification by the Holders and the Underwriters. The
Company may require, as a condition to including any Registrable Shares in any
registration statement filed
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in accordance with Section 2 or 4 hereof, that the Company shall have received
an undertaking reasonably satisfactory to it from the Holders of such
Registrable Shares or any underwriter to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 8(a) hereof) the
Company with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information with respect to the
Holders of the Registrable Shares being registered or such underwriter
furnished to the Company by such Holders or such underwriter specifically for
use in the preparation of such registration statement, preliminary, final or
summary prospectus or amendment or supplement, or a document incorporated by
reference into any of the foregoing; provided, however, that no such Holder
shall be liable for any indemnity claims in excess of the amount of the net
proceeds received by such Holder from the sale of Registrable Shares. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any of the Holders, or any of their
respective Affiliates (other than the Company), directors, officers or
controlling Persons, and shall survive the transfer of such securities by such
Holder.
(c) Notices of Claims, Etc. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 8, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, however, that the failure
of the indemnified party to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Section 8, except to the
extent that the indemnifying party is actually materially prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that the indemnified party shall have the right, at the sole cost and
expense of the indemnifying party, to employ counsel to represent the
indemnified party and its respective controlling persons, directors, officers,
employees or agents who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified party against such
indemnifying party under this Section 8 if (i) the employment of such counsel
shall have been authorized in writing by such indemnifying party in connection
with the defense of such action, (ii) the indemnifying party shall not have
promptly employed counsel reasonably satisfactory to the indemnified party to
assume the defense of such action or counsel, or (iii) any indemnified party
shall have reasonably concluded that there may be defenses available to such
indemnified party or its respective controlling persons, directors, officers,
employees or agents which are in conflict with or in addition to those
available to an indemnifying party; provided, further, that the indemnifying
party shall not be obligated to pay for more than the expenses of one firm of
separate
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counsel for the indemnified party (in addition to the reasonable fees and
expenses of one firm serving as local counsel). No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(d) If the indemnification provided for in this Section 8 shall
for any reason be unavailable to any indemnified party under Section 8(a) or
8(b) hereof or is insufficient to hold it harmless in respect of any loss,
claim, damage or liability, or any action in respect of any loss, claim, damage
or liability, or any action in respect thereof referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the indemnified party and
indemnifying party or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) but also the
relative fault of the indemnified party and indemnifying party with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. Notwithstanding any other provision of this Section
8(d), no Holder of Registrable Shares shall be required to contribute an amount
greater than the dollar amount of the proceeds received by such Holder with
respect to the sale of any such Registrable Shares. 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.
(e) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section 8 (with appropriate
modifications) shall be given by the Company and each Holder of Registrable
Shares with respect of any required registration or other qualification of
securities under any federal or state law or regulation other than the
Securities Act.
(f) Non-Exclusivity. The obligations of the parties under this
Section 8 shall be in addition to any liability which any party may otherwise
have to any other party.
9. Rule 144. The Company covenants that it will file in a
timely manner the reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations promulgated thereunder (or,
if the Company is not required to file such reports, it will, upon the request
of any Holder of Registrable Shares, make publicly available such information),
and it will take such further action as any Holder of Registrable Shares may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Shares without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder of Registrable Shares, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
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10. Assignability. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except as provided herein, no party may
assign any of its rights or delegate any of its duties under this Agreement
without the express consent of the other parties hereto. In addition, and
whether or not any express assignment shall have been made, the provisions of
this Agreement which are for the benefit of the parties hereto other than the
Company shall also be for the benefit of and enforceable by any subsequent
Holder of any Registrable Shares, subject to the provisions contained herein.
Any Holder may assign any of its rights or delegate any of its duties under
this Agreement, in whole or in part, without any prior consent of the Company
only to a Person (a "Designated Transferee") (a) who is an Affiliate of SAIC or
(b) who is a transferee of Registrable Shares (whether through purchase, share
exchange, bequest or otherwise) and who agrees to be bound by the terms of this
Agreement. Any purported assignment in violation of this Section 10 shall be
void.
11. Limitation on Subsequent Registration Rights. From and
after the date hereof, the Company shall not, without the prior written consent
of the Holders owning not less than 50% of the Registrable Shares, enter into
any agreement with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder to include such
securities in any registration of the Company.
12. Notices. Any and all notices, designations, consents,
offers, acceptances or any other communications shall be given in writing by
either (a) personal delivery to and receipted for by the addressee or by (b)
telecopy or registered or certified mail which shall be addressed, in the case
of the Company, to: Network Solutions, Inc., 000 Xxxxxxx Xxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, attention: Chief Financial Officer; in the case of Holders, to
the address or addresses thereof appearing on the books of the Company or of
the transfer agent and registrar for its Class A Common Stock. All such
notices and communications shall be deemed to have been duly given and
effective: when delivered by hand, if personally delivered; two business days
after being deposited in the mail, postage prepaid, if mailed; and when receipt
is acknowledged, if telecopied.
13. No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Holders in this Agreement.
14. Specific Performance. The Company acknowledges that the
rights granted to the Holders in this Agreement are of a special, unique and
extraordinary character, and that any breach of this Agreement by the Company
could not be compensated for by damages. Accordingly, if the Company breaches
its obligations under this Agreement, the Holders shall be entitled, in
addition to any other remedies that they may have, to enforcement of this
Agreement by a decree of specific performance requiring the Company to fulfill
its obligations under this Agreement.
15. Severability. If any provision of this Agreement or any
portion thereof is finally determined by a court of competent jurisdiction to
be unlawful or unenforceable, such provision or portion thereof shall in no way
affect any other provision of this Agreement,
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the application of any such provision and any other circumstances, and any
portion of such invalidated provision that is not invalidated by such a
determination shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which,
together, shall constitute one and the same instrument.
17. Defaults. A default by any party to this Agreement in such
party's compliance with any of the conditions or covenants hereof or
performance of any of the obligations of such party hereunder shall not
constitute a default by any other party.
18. Amendments, Waivers. This Agreement may not be amended,
modified or supplemented and no waivers of or consents to or departures from
the provisions hereof may be given unless consented to in writing by the
Company and the holders of a majority of the Registrable Shares; provided,
however, that no such amendment, supplement, modification or waiver shall
deprive any Holder of any rights under Section 2 or 4 hereof without the
consent of such Holder.
19. Construction. The captions contained in this Agreement are
for reference purposes only and shall not constitute a part of this Agreement.
Unless the context requires otherwise, the use of the masculine shall include
the feminine, and the use of the singular shall include the plural. The word
"including" shall mean "including, without limitation."
20. Attorneys' 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 successful party shall be entitled to
recover reasonable attorneys' fees in addition to any other available remedy.
21. Third Party Beneficiaries. Except as expressly provided in
this Agreement, the parties hereto intend that this Agreement shall not benefit
or create any right or cause of action in or on behalf of any person other than
the parties hereto.
22. Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the transactions
contemplated herein and understandings among the parties relating to the
subject matter hereof. Any and all previous agreements and understandings
between or among the parties hereto regarding the subject matter hereof are,
whether written or oral, superseded by this Agreement.
23. Governing Law. This Agreement is made pursuant to and shall
be construed in accordance with the laws of the State of Delaware without
regard to that state's conflicts
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of laws principles. The parties hereto submit to the non-exclusive
jurisdiction of the Courts of the State of Delaware in any action or proceeding
arising out of or relating to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized officers as of the date first
written above.
NETWORK SOLUTIONS, INC.
By
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Name:
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Title:
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
By
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Name:
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Title:
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