Exhibit 10.10
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and entered
into this 1st day of December, 1997, by and between Citizens Utilities Company,
a Delaware corporation ("Citizens"), and Electric Lightwave Inc., a Delaware
corporation ("XXX").
RECITALS
A. Citizens owns all of the issued and outstanding Class B Common
Stock, par value $0.01 per share, of XXX ("Class B Common Stock").
B. XXX is effecting an initial public offering (the "Initial Public
Offering") of its shares of Class A Common Stock, par value $.01 per share
("Class A Common Stock").
C. Upon completion of the Initial Public Offering, XXX will cease to be
a wholly-owned subsidiary of Citizens.
D. The parties desire to enter into this Agreement to set forth their
agreement regarding (i) certain registration rights with respect to Class A
Common Stock and Class B Common Stock (and any other securities issued in
respect thereof or in exchange therefor); and (ii) certain representations,
warranties, covenants and agreements applicable to XXX and Citizens.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, Citizens and XXX, for themselves, their successors and assigns, hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, the following
terms will have the following meanings, applicable both to the singular and
the plural forms of the terms described:
"AFFILIATE" means, with respect to any Person, any Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the possession, directly or indirectly, of the power
to vote a majority of the securities having voting power for the election of
directors of such Person or otherwise to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that for the purposes
of this Agreement, XXX shall not be deemed to be an Affiliate of Citizens, and
Citizens and its subsidiaries (other than XXX) shall not be deemed to be an
Affiliate of XXX.
"AGREEMENT" has the meaning ascribed hereto in the preamble, as such
agreement may be amended and supplemented from time to time in accordance with
its terms.
"CITIZENS" has the meaning ascribed thereto in the preamble hereto.
"CITIZENS TRANSFEREE" has the meaning ascribed thereto in Section 2.9.
"CLASS A COMMON STOCK" has the meaning ascribed thereto in the recitals
to this Agreement.
"CLASS B COMMON STOCK" has the meaning ascribed thereto in the recitals
to this Agreement.
"COMMON STOCK" means the Class B Common Stock, the Class A Common
Stock, any other class of XXX capital stock having the right to vote generally
for the election of directors.
"COMPANY SECURITIES" has the meaning ascribed thereto in
Section 2.2(b).
"DISADVANTAGEOUS CONDITION" has the meaning ascribed thereto in
Section 1.1(a).
"XXX" has the meaning ascribed thereto in the preamble hereto.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor statute.
"HOLDER" means Citizens and any Transferee.
"HOLDER SECURITIES" has the meaning ascribed thereto in Section 2.2(b).
"INITIAL PUBLIC OFFERING" has the meaning ascribed thereto in the
recitals to this Agreement.
"INITIAL PUBLIC OFFERING DATE" means the date of completion of the sale
of Class A Common Stock in the Initial Public Offering.
"OTHER HOLDERS" has the meaning ascribed thereto in Section 2.2(c).
"OTHER SECURITIES" has the meaning ascribed thereto in Section 2.2.
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"PERSON" means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization, government (and
any department or agency thereof) or other entity.
"REGISTRABLE SECURITIES" means Class A Common Stock, Class B Common
Stock, and any stock or other securities into which or for which such Class A
Common Stock or Class B Common Stock may hereafter be changed, converted or
exchanged and any other shares or securities issued to Holders of such Class A
Common Stock or Class B Common Stock (or such shares or other securities into
which or for which such shares are so changed, converted or exchanged) upon any
reclassification, share combination, share subdivision, share dividend, share
exchange, merger, consolidation or similar transaction or event. As to any
particular Registrable Securities, such Registrable Securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale by the Holder thereof shall have been declared effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement; (ii) they shall have been distributed to the
public in accordance with Rule 144; (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by XXX and subsequent disposition of them
shall not require registration or qualification of them under the Securities Act
or any state securities or blue sky law then in effect; or (iv) they shall have
ceased to be outstanding.
"REGISTRATION EXPENSES" means any and all expenses incident to
performance of or compliance with any registration of securities pursuant to
Article II, including, without limitation: (i) the fees, disbursements and
expenses of ELI's counsel and accountants and the reasonable fees and expenses
of counsel selected by the Holders in accordance with this Agreement in
connection with the registration of the securities to be disposed of; (ii) all
expenses, including filing fees, in connection with the preparation, printing
and filing of the registration statement, any preliminary prospectus or final
prospectus, any other offering document and amendments and supplements thereto
and the mailing and delivering of copies thereof to any underwriters and
dealers; (iii) the cost of printing or producing any agreements among
underwriters, underwriting agreements, and blue sky or legal investment
memoranda, any selling agreements and any other documents in connection with the
offering, sale or delivery of the securities to be disposed of; (iv) all
expenses in connection with the qualification of the securities to be disposed
of for offering and sale under state securities laws, including the fees and
disbursements of counsel for the underwriters or the Holders of securities in
connection with such qualification and in connection with any blue sky and legal
investment surveys; (v) the filing fees incident to securing any required review
of the terms of the sale of the securities to be disposed of by each securities
exchange and automated inter-dealer quotation system which a class of common
equity securities of XXX is listed; (vi) transfer agents' and registrars' fees
and expenses and the fees and expenses of any other agent or trustee appointed
in connection with such offering; (vii) all security engraving and security
printing expenses; (viii) all fees and expenses payable in connection with the
listing of the securities on any securities exchange or automated inter-dealer
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quotation system or the rating of such securities; (ix) any other fees and
disbursements of underwriters customarily paid by the issuers of securities, but
excluding underwriting discounts and commissions and transfer taxes, if any; and
(x) other reasonable out-of-pocket expenses of Holders other than legal fees and
expenses referred to in clause (i) and (iv) above.
"RULE 144" means Rule 144 (or any successor rule to similar effect)
promulgated under the Securities Act.
"RULE 415 OFFERING" means an offering on a delayed or continuous basis
pursuant to Rule 415 (or any successor rule to similar effect) promulgated under
the Securities Act.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor statute.
"SELLING HOLDER" has the meaning ascribed thereto in Section 2.4(e).
"TRANSFEREE" has the meaning ascribed thereto in Section 2.9.
Section 1.2 INTERNAL REFERENCES. Unless the context indicates
otherwise, references to articles, sections and paragraphs shall refer
to the corresponding articles, sections and paragraphs in this Agreement, and
references to the parties shall mean the parties to this Agreement.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 DEMAND REGISTRATION/REGISTRABLE SECURITIES.
(a) Upon written notice provided at any time after the Initial
Public Offering Date from any Holder of Registrable Securities requesting that
XXX effect the registration under the Securities Act of any or all of the
Registrable Securities held by such Holder, which notice shall specify the
intended method or methods of disposition of such Registrable Securities, XXX
shall use its best efforts to effect the registration under the Securities Act
and applicable state securities laws of such Registrable Securities for
disposition in accordance with the intended method or methods of disposition
stated in such request (including in a Rule 415 Offering, if XXX is then
eligible to register such Registrable Securities on Form S-3 (or a successor
form) for such offering); provided that:
(i) (With respect to any registration statement filed, or
to be filed, pursuant to this Section 2.1, if XXX shall furnish to the
Holders of Registrable Securities that have made such request a
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certified resolution of the board of directors of XXX (adopted by the
affirmative vote of a majority of the directors) stating that in the
board of directors' good faith judgment it would, because of the
existence of, or in anticipation of, any acquisition or financing
activity, or the unavailability for reasons beyond ELI's reasonable
control of any required financial statements, or any other event or
condition of similar significance to XXX, be significantly
disadvantageous (a "Disadvantageous Condition") to XXX for such a
registration statement to be maintained effective, or to be filed and
become effective, and setting forth the general reasons for such
judgment, XXX shall be entitled to cause such registration statement
not to be filed or to be withdrawn and the effectiveness of such
registration statement terminated. In the event no registration
statement has yet been filed, XXX shall be entitled not to file any
such registration statement, until such Disadvantageous Condition no
longer exists (notice of which XXX shall promptly deliver to such
Holders). Upon receipt of any such notice of a Disadvantageous
Condition, such Holders shall forthwith discontinue use of the
prospectus contained in such registration statement and, if so directed
by XXX, each such Holder will deliver to XXX all copies, other than
permanent file copies then in such Holder's possession, of the
prospectus then covering such Registrable Securities current at the
time of receipt of such notice; provided, that the filing of any such
registration statement may not be delayed for a period in excess of two
(2) months due to the occurrence of any particular Disadvantageous
Condition;
(ii) After Citizens ceases to beneficially own (within
the meaning of Rule 13d-3 of the Exchange Act or any successor
provision) less than 40% of the outstanding Common Stock, the
Holders of Registrable Securities may collectively exercise their
rights under this Section 2.1 on not more than three (3) occasions
(it being acknowledged that prior thereto there shall be no limit to
the number of occasions on which such Holders (other than any of the
Citizens Transferees and their Affiliates (and any subsequent direct or
indirect Transferees of Registrable Securities from such Citizens
Transferee and any of its Affiliates) may exercise such rights);
(iii) The Holders of Registrable Securities shall not
have the right to exercise registration rights pursuant to this Section
2.1 in any six-month period following the registration and sale of
Registrable Securities effected pursuant to a prior exercise of the
registration rights provided in this Section 2.1; and
(iv) XXX shall be under no obligation to include any
Registrable Securities in a registration statement unless XXX shall
have received from the Holders of Registrable Securities a request for
inclusion of not less than 75,000 Registrable Securities.
(b) Notwithstanding any other provision of this Agreement to
the contrary, a registration requested by a Holder of Registrable Securities
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pursuant to this Section 2.1 shall not be deemed to have been effected (and,
therefore, not requested for purposes of paragraph (a), above): (i) unless it
has become effective; (ii) if after it has become effective such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason other than a
misrepresentation or an omission by such Holder and, as a result thereof, the
Registrable Securities requested to be registered cannot be completely
distributed in accordance with the plan of distribution set forth in the related
registration statement; or (iii) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection with
such registration are not satisfied or waived other than by reason of some act
or omission by such Holder of Registrable Securities.
(c) In the event that any registration pursuant to this Section
2.1 shall involve, in whole or in part, an underwritten offering, the Holders of
a majority of the Registrable Securities to be registered shall have the right
to designate an underwriter or underwriters, reasonably acceptable to XXX, as
the lead or managing underwriters of such underwritten offering and, in
connection with each registration pursuant to this Section 2.1, such Holders may
select one legal counsel to represent all such Holders.
(d) XXX shall have the right to cause the registration of
additional equity securities for sale for the account of any Person (including,
without limitation, XXX and any existing or former directors, officers or
employees of XXX) in any registration of Registrable Securities requested by the
Holders pursuant to paragraph (a), above; provided, that if such Holders are
advised in writing (with a copy to XXX) by a nationally recognized investment
banking firm selected by such Holders reasonably acceptable to XXX (which shall
be the lead underwriter or a managing underwriter in the case of an underwritten
offering) that, in such firm's good faith view, all or a part of such additional
equity securities cannot be sold and the inclusion of such additional equity
securities in such registration would be likely to have an adverse effect on the
price, timing or distribution of the offering and sale of the Registrable
Securities then contemplated by any Holder, the registration of such additional
equity securities or part thereof shall not be permitted. The Holders of the
Registrable Securities to be offered may require that any such additional equity
securities be included in the offering proposed by such Holders on the same
conditions as the Registrable Securities that are included therein. In the event
that the number of Registrable Securities requested to be included in a
registration statement by the Holders thereof exceeds the number which, in the
good faith view of such investment banking firm, can be sold without adversely
affecting the price, timing, distribution or sale of securities in the offering,
the number shall be allocated pro rata among the requesting Holders on the basis
of the relative number of Registrable Securities then held by each such Holder
(provided that any number in excess of a Holder's request may be reallocated
among the remaining requesting Holders in a like manner).
Section 2.2 PIGGYBACK REGISTRATION. In the event that XXX at any time
after the Initial Public Offering Date proposes to register any of its Common
Stock, any other of its equity securities or securities convertible into or
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exchangeable for its equity securities (collectively, including Common Stock,
"Other Securities") under the Securities Act, whether or not for sale for its
own account, in a manner that would permit registration of Registrable
Securities for sale for cash to the public under the Securities Act, it shall at
each such time give prompt written notice to each Holder of Registrable
Securities of its intention to do so and of the rights of such Holder under this
Section 2.2. Subject to the terms and conditions hereof, such notice shall offer
each such Holder the opportunity to include in such registration statement such
number of Registrable Securities as such Holder may request. Upon the written
request of any such Holder made within 15 days after the receipt of ELI's notice
(which request shall specify the number of Registrable Securities intended to be
disposed of and the intended method of disposition thereof), XXX shall use its
best efforts to effect, in connection with the registration of the Other
Securities, the registration under the Securities Act of all Registrable
Securities which XXX has been so requested to register, to the extent required
to permit the disposition (in accordance with such intended methods thereof) of
the Registrable Securities so requested to be registered; provided, that:
(a) If, at any time after giving such written notice of its
intention to register any Other Securities and prior to the effective date of
the registration statement filed in connection with such registration, XXX shall
determine for any reason not to register the Other Securities, XXX may, at its
election, give written notice of such determination to such Holders and
thereupon XXX shall be relieved of its obligation to register such Registrable
Securities in connection with the registration of such Other Securities, without
prejudice, however, to the rights of the Holders of Registrable Securities
immediately to request that such registration be effected as a registration
under Section 2.1 to the extent permitted thereunder;
(b) If the registration referred to in the first sentence of
this Section 2.2 is to be an underwritten registration on behalf of XXX, and a
nationally recognized investment banking firm selected by XXX advises XXX in
writing that, in such firm's good faith view, the inclusion of all or a part of
such Registrable Securities in such registration would be likely to have an
adverse effect upon the price, timing or distribution of the offering and sale
of the Other Securities then contemplated, XXX shall include in such
registration:
(i) first, all Other Securities which XXX proposes to sell
for its own account ("Company Securities");
(ii) second, up to the full number of Registrable
Securities held by Citizens or its Affiliates that are requested to be
included in such registration (Registrable Securities that are so held
being sometimes referred to herein as "Holder Securities") in excess of
the number of Company Securities to be sold in such offering which, in
the good faith view of such investment banking firm, can be sold
without adversely affecting such offering and the sale of the Other
Securities then contemplated (and (x) if such number is less than the
full number of such Holder Securities, such number shall be allocated
by Citizens or (y) in the event that such investment banking firm
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advises that less than all of such Holder Securities may be included
in such offering, Citizens and its Affiliates may withdraw its or
their request for registration of their Registrable Securities under
this Section 2.2 and 90 days subsequent to the effective date of the
registration statement for the registration of such Other Securities
request that such registration be effected as a registration under
Section 2.1 to the extent permitted thereunder);
(iii) third, up to the full number of the Other Securities
(other than Company Securities), if any, in excess of the number of
Company Securities and Registrable Securities to be sold in such
offering which, in the good faith view of such investment banking firm,
can be so sold without so adversely affecting such offering (and, if
such number is less than the full number of such Other Securities, such
number shall be allocated pro rata among the holders of such Other
Securities (other than Company Securities) on the basis of the number
of securities requested to be included therein by each such holder);
(c) If the registration referred to in the first sentence of
this Section 2.2 is to be an underwritten secondary registration on behalf of
holders of Other Securities (the "Other Holders"), and the lead underwriter or
managing underwriter advises XXX in writing that in their good faith view, all
or a part of such additional securities cannot be sold and the inclusion of such
additional securities in such registration would be likely to have an adverse
effect on the price, timing or distribution of the offering and sale of the
Other Securities then contemplated, XXX shall include in such registration the
number of securities (including Registrable Securities) that such underwriters
advise can be so sold without adversely affecting such offering, allocated pro
rata among the Other Holders and the Holders of Registrable Securities on the
basis of the number of securities (including Registrable Securities) requested
to be included therein by each Other Holder and each Holder of Registrable
Securities; provided, that if such registration statement is to be filed at any
time after Citizens ceases to beneficially own less than 40% of the outstanding
Common Stock, and if such Other Holders have requested that such registration
statement be filed pursuant to demand registration rights granted to them by
ELI, ELI shall include in such registration:
(i) first, Other Securities sought to be included therein
by the Other Holders pursuant to the exercise of such demand
registration rights; and
(ii) second, the number of Holder Securities sought to be
included in such registration in excess of the number of Other
Securities sought to be included in such registration by the Other
Holders which in the good faith view of such investment banking firm,
can be so sold without so adversely affecting such offering (and (x) if
such number is less than the full number of such Holder Securities,
such number shall be allocated by Citizens or (y) in the event that
such investment banking firm advises that less than all of such Holder
Securities may be included in such offering, Citizens and its
Affiliates may withdraw its or their request for registration of
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their Registrable Securities under this Section 2.2 and 90 days
subsequent to the effective date of the registration statement for the
registration of such Other Securities request that such registration be
effected as a registration under Section 2.1 to the extent permitted
thereunder).
(d) XXX shall not be required to effect any registration of
Registrable Securities under this Section 2.2 incidental to the
registration of any of its securities in connection with mergers,
acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or stock option or other executive or employee
benefit or compensation plans;
(e) XXX shall be under no obligation to include any
Registrable Securities in a registration statement unless XXX shall
have received from the Holders of Registrable Securities a request for
inclusion of not less than 75,000 Registrable Securities; and
(f) No registration of Registrable Securities effected under
this Section 2.2 shall relieve XXX of its obligation to effect a
registration of Registrable Securities pursuant to Section 2.1.
Section 2.3 EXPENSES. Except as provided herein, XXX shall pay all
Registration Expenses with respect to a particular offering (or proposed
offering). Notwithstanding the foregoing, each Holder and XXX shall be
responsible for its own internal administrative and similar costs, which shall
not constitute Registration Expenses.
Section 2.4 REGISTRATION AND QUALIFICATION. If and whenever XXX is
required to effect the registration of any Registrable Securities under the
Securities Act as provided in Section 2.1 or 2.2, and subject to Section 2.1(a)
(i), as applicable, XXX shall as promptly as practicable:
(a) Prepare, file and use its best efforts to cause to become
effective a registration statement under the Securities Act relating to the
Registrable Securities to be offered;
(b) Prepare and file with the SEC such amendments and supple-
ments to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities until the earlier of: (A) such
time as all of such Registrable Securities have been disposed of in accordance
with the intended methods of disposition set forth in such registration
statement; (B) the expiration of six-months after such registration statement
becomes effective; provided, that such six-month period shall be extended for
such number of days that equals the number of days elapsing from (x) the date
the written notice contemplated by paragraph (f) below is given by XXX to (y)
the date on which XXX delivers to the Holders of Registrable Securities the
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supplement or amendment contemplated by paragraph (f) below;
(c) Furnish to the Holders of Registrable Securities and to
any underwriter of such Registrable Securities such number of conformed copies
of such registration statement and of each such 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 any summary prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such registration
statement or prospectus, and such other documents, as the Holders of Registrable
Securities or such underwriter may reasonably request, and a copy of any and all
transmittal letters or other correspondence to or received from, the SEC or any
other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to
such offering;
(d) Use its best efforts to register or qualify all
Registrable Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as the Holders of such
Registrable Securities or any underwriter of such Registrable Securities shall
request, and use its best efforts to obtain all appropriate registrations,
permits and consents in connection therewith, and do any and all other acts
and things which may be necessary or advisable to enable the Holders of
Registrable Securities or any such underwriter to consummate the disposition
in such jurisdictions of its Registrable Securities covered by such registration
statement; provided, that XXX shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any such
jurisdiction wherein it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) Use its best efforts to: (i) furnish to each Holder of
Registrable Securities included in such registration (each, a "Selling Holder")
and to any underwriter of such Registrable Securities an opinion of counsel for
XXX addressed to each Selling Holder and dated the date of the closing under the
underwriting agreement (if any) (or if such offering is not underwritten, dated
the effective date of the registration statement); and (ii) furnish to each
Selling Holder a "cold comfort" letter addressed to each Selling Holder and
signed by the independent public accountants who have audited the financial
statements of XXX included in such registration statement; in each such case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities and such other
matters as the Selling Holders may reasonably request and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements;
(f) As promptly as practicable, notify the Selling Holders in
writing: (i) at any time when a prospectus relating to a registration pursuant
to Section 2.1 and 2.2 is required to be delivered under the Securities Act of
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the happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and (ii) of any request by the SEC or any
other regulatory body or other body having jurisdiction for any amendment of or
supplement to any registration statement or other document relating to such
offering, and in either such case, at the request of the Selling Holders prepare
and furnish to the Selling Holders a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(g) If reasonably requested by the lead or managing under-
writers, use its best efforts to list all such Registrable Securities covered by
such registration on each securities exchange and automated inter-dealer
quotation system on which the Common Stock of XXX is then listed;
(h) To the extent reasonably requested by the lead or managing
underwriters, send appropriate officers of XXX to attend any "road shows"
scheduled in connection with any such registration, with all out-of-pocket costs
and expense incurred by XXX or such officers in connection with such attendance
to be paid by XXX;
(i) Furnish for delivery in connection with the closing of any
offering of Registrable Securities pursuant to a registration effected pursuant
to Section 2.1 or 2.2 unlegended certificates representing ownership of the
Registrable Securities being sold in such denominations as shall be requested by
the Selling Holders or the underwriters; and
(j) XXX may require each Selling Holder of Registrable
Securities as to which any registration is being effected to xxxxxxx XXX with
such information regarding such seller and pertinent to the disclosure
requirements relating to the registration and the distribution of such
securities as XXX may from time to time reasonably request in writing.
Section 2.5 CONVERSION OF OTHER SECURITIES, ETC. In the event that any
Holder offers any options, rights, warrants or other securities issued by it or
any other Person that are offered with, convertible into or exercisable or
exchangeable for any Registrable Securities, the Registrable Securities
underlying such options, rights, warrants or other securities shall continue to
be eligible for registration pursuant to Sections 2.1 and 2.2.
Section 2.6 UNDERWRITING; DUE DILIGENCE.
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(a) If requested by the underwriters for any underwritten
offering of Registrable Securities pursuant to a registration requested under
this Article II, XXX shall enter into an underwriting agreement with such
underwriters for such offering, which agreement will contain such
representations and warranties by XXX and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, indemnification and contribution
provisions substantially to the effect and to the extent provided in Section
2.7, and agreements as to the provision of opinions of counsel and accountants'
letters to the effect and to the extent provided in Section 2.4(e). The Selling
Holders on whose behalf the Registrable Securities are to be distributed by such
underwriters shall be parties to any such underwriting agreement and the
representations and warranties by, and the other agreements on the part of, XXX
to and for the benefit of such underwriters, shall also be made to and for the
benefit of such Selling Holders. Such underwriting agreement shall also contain
such representations and warranties by such Selling Holders and such other terms
and provisions as are customarily contained in underwriting agreements with
respect to secondary distributions, including, without limitation,
indemnification and contribution provisions substantially to the effect and to
the extent provided in Section 2.7.
(b) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act pursuant to this Article II, XXX shall give the Holders of such Registrable
Securities and the underwriters, if any, and their respective counsel and
accountants, such reasonable and customary access to its books and records and
such opportunities to discuss the business of XXX with its officers and the
independent public accountants who have certified the financial statements of
XXX as shall be necessary, in the opinion of such Holders and such underwriters
or their respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act; provided, that such Holders and the underwriters
and their respective counsel and accountants shall use their reasonable best
efforts to coordinate any such investigation of the books and records of XXX and
any such discussions with ELI's officers and accountants so that all such
investigations occur at the same time and all such discussions occur at the same
time.
Section 2.7 INDEMNIFICATION AND CONTRIBUTION. In the case of each
offering of Registrable Securities made pursuant to this Article II, XXX agrees
to indemnify and hold harmless, to the extent permitted by law, each Selling
Holder, each underwriter of Registrable Securities so offered and each Person,
if any, who controls any of the foregoing Persons within the meaning of the
Securities Act and the officers, directors, affiliates, employees and agents
of each of the foregoing, against any and all losses, liabilities, costs
(including reasonable attorney's fees and disbursements), claims and damages,
joint or several, to which they or any of them may become subject, under the
Securities Act or otherwise, including any amount paid in settlement of any
litigation commenced or threatened, insofar as such losses, liabilities, costs,
claims and damages (or actions or proceedings in respect thereof, whether or not
such indemnified Person is a party thereto) arise out of or are based upon any
untrue statement by XXX or alleged untrue statement by XXX of a material fact
12
contained in the registration statement (or in any preliminary or final
prospectus included therein) or in any offering memorandum or other offering
document relating to the offering and sale of such Registrable Securities
prepared by XXX or at its direction, or any amendment thereof or supplement
thereto, or in any document incorporated by reference therein, or any omission
by XXX or alleged omission by XXX to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, that XXX shall not be liable to any Person in any such case to the
extent that any such loss, liability, cost, claim or damage arises out of or
relates to any untrue statement or alleged untrue statement, or any omission, if
such statement or omission shall have been made in reliance upon and in
conformity with information relating to a Selling Holder or another holder of
securities included in such registration statement and furnished to XXX by or
on behalf of such Selling Holder, other holder or underwriter, as the case may
be, specifically for use in the registration statement (or in any preliminary
or final prospectus included therein), offering memorandum or other offering
document, or any amendment thereof or supplement thereto. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of any Selling Holder or any other holder and shall survive the transfer
of such securities. The foregoing indemnity agreement is in addition to any
liability that XXX may otherwise have to each Selling Holder, other holder or
underwriter of the Registrable Securities or any controllinG person of the
foregoing and the officers, directors, affiliates, employees and agents of each
of the foregoing; provided, further, that, in the case of an offering with
respect to which a Selling Holder has designated the lead or managing
underwriters (or a Selling Holder is offering Registrable Securities directly,
without an underwriter), this indemnity does not apply to any loss,
liability, cost, claim or damage arising out of or relating to any untrue
statement or alleged untrue statement or omission or alleged omission in any
preliminary prospectus or offering memorandum if a copy of a final prospectus or
offering memorandum was not sent or given by or on behalf of any underwriter (or
such Selling Holder or other holder, as the case may be) to such Person
asserting such loss, liability, cost, claim or damage at or prior to the written
confirmation of the sale of the Registrable Securities as required by the
Securities Act and such untrue statement or omission had been corrected in such
final prospectus or offering memorandum.
(b) In the case of each offering made pursuant to this
Agreement, each Selling Holder, by exercising its registration rights hereunder,
agrees to indemnify and hold harmless, and to cause each underwriter of
Registrable Securities included in such offering (in the same manner and to the
same extent as set forth in Section 2.7(a)) to agree to indemnify and hold
harmless as follows: (i) each Selling Holder agrees to indemnify and hold harm-
less XXX, each underwriter who participates in such offering, each other Selling
Holder or other holder with securities included in such offering; and, (ii) each
underwriter agrees to indemnify and hold harmless XXX, each Selling Holder or
other holder with securities included in such offering. The foregoing
indemnified parties shall include, and each Selling Holder and each underwriter
shall indemnify and hold harmless, each Person, if any, who controls any of the
foregoing within the meaning of the Securities Act and the officers, directors,
affiliates, employees and agents of each of the foregoing, against any and all
13
losses, liabilities, costs (including reasonable attorneys' fees and
disbursements), claims and damages to which they or any of them may become
subject, under the Securities Act or otherwise, including any amount paid in
settlement of any litigation commenced or threatened, insofar as such losses,
liabilities, costs, claims and damages (or actions or proceedings in respect
thereof, whether or not such indemnified Person is a party thereto) arise out of
or are based upon any untrue statement or alleged untrue statement by such
Selling Holder or underwriter, as the case may be, of a material fact contained
in the registration statement (or in any preliminary or final prospectus
included therein) or in any offering memorandum or other offering document
relating to the offering and sale of such Registrable Securities prepared by
XXX, or at its direction, or any amendment thereof or supplement thereto, or any
omission by such Selling Holder or underwriter, as the case may be, or alleged
omission by such Selling Holder or underwriter, as the case may be, of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement of a material fact is contained in, or such material fact is omitted
from, information relating to such Selling Holder or underwriter, as the case
may be, and was furnished to XXX by or on behalf of such Selling Holder or
underwriter, as the case may be, specifically for use in such registration
statement (or in any preliminary or final prospectus included therein), offering
memorandum or other offering document. The foregoing indemnity is in addition to
any liability which such Selling Holder or underwriter, as the case may be, may
otherwise have to XXX, or controlling persons or the officers, directors,
affiliates, employees, and agents of each of the foregoing; provided, that, in
the case of an offering made pursuant to the Agreement with respect to which XXX
has designated the lead or managing underwriters (or XXX is offering securities
directly, without an underwriter), this indemnity does not apply to any loss,
liability, cost, claim, or damage arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission in any
preliminary prospectus or offering memorandum if a copy of a final prospectus or
offering memorandum was not sent or given by or on behalf of any underwriter (or
XXX, as the case may be ) to such Person asserting such loss, liability, cost,
claim or damage at or prior to the written confirmation of the sale of the
Registrable Securities as required by the Securities Act and such untrue
statement or omission had been corrected in such final prospectus or offering
memorandum.
(c) Each party indemnified under paragraph (a) or (b), above,
shall, promptly after receipt of notice of a claim or action against such
indemnified party in respect of which indemnity may be sought hereunder, notify
the indemnifying party in writing of the claim or action; provided, that the
failure to notify the indemnifying party shall not relieve it from any liability
that it may have to an indemnified party on account of the indemnity agreement
contained in paragraph (a) or (b), above, except to the extent that the
indemnifying party was actually prejudiced by such failure, and in no event
shall such failure relieve the indemnifying party from any other liability that
it may have to such indemnified party. If any such claim or action shall be
brought against an indemnified party, and it shall have notified the
indemnifying party thereof, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified party and indemnifying
parties may exist in respect of such claim, the indemnifying party shall be
14
entitled to participate therein, and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 2.7 for any legal or other expenses of
the defense subsequently incurred by the indemnified party in connection with
the defense thereof other than (i) if a conflict of interest between the
indemnifying party and an indemnified party exists, in which case, the
indemnifying party shall pay the costs of one legal counsel to the indemnified
party and (ii) the reasonable costs of investigation. Any indemnifying party
against whom indemnity may be sought under this Section 2.7 shall not be liable
to indemnify an indemnified party if such indemnified party settles such claim
or action without the consent of the indemnifying party. The indemnifying party
may not agree to any settlement of any such claim or action, other than solely
for monetary damages for which the indemnifying party shall be responsible
hereunder, the result of which any remedy or relief shall be applied to or
against the indemnified party, without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld. In any
action hereunder as to which the indemnifying party has assumed the defense
thereof with counsel satisfactory to the indemnified party, the indemnified
party shall continue to be entitled to participate in the defense thereof, with
counsel of its own choice, but the indemnifying party shall not be obligated
hereunder to reimburse the indemnified party for the costs thereof.
(d) If the indemnification provided for in this Section 2.7
shall for any reason be unavailable (other than in accordance with its terms) to
an indemnified party in respect of any loss, liability, cost, claim or damage
referred to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, cost, claim or damage (i)
as between XXX and the Selling Holders on the one hand and the underwriters on
the other, in such proportion as shall be appropriate to reflect the relative
benefits received by XXX and the Selling Holders on the one hand and the
underwriters on the other hand or, if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits but also the relative fault of XXX and the Selling Holders on
the one had and the underwriters on the other with respect to the statements or
omissions which resulted in such loss, liability, cost, claim or damage as well
as any other relevant equitable considerations; and (ii) as between XXX on the
one hand and each Selling Holder on the other, in such proportion as is
appropriate to reflect the relative fault of XXX and of each Selling Holder in
connection with such statements or omissions as well as any other relevant
equitable considerations. The relative benefits received by XXX and the Selling
Holders on the one hand and the underwriters on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by XXX and the Selling Holders bear to the total underwriting discounts and
commissions received by the underwriters, in each case as set forth in the table
on the cover page of the prospectus. The relative fault of XXX and the Selling
Holders on the one hand and of the underwriters on the other shall be determined
15
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by XXX and the Selling Holders or by the underwriters. The
relative fault of XXX on the one hand and of each Selling Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission, but not by reference to any
indemnified party's stock ownership in XXX. The amount paid or payable by an
indemnified party as a result of the loss, cost, claim, damage or liability, or
action in respect thereof, referred to above in this paragraph (d) shall be
deemed to include, for purposes of this paragraph (d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. XXX and the Selling Holders
agree that it would not be just and equitable if contribution pursuant to this
Section 2.7 were determined by pro rata allocation (even if the underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this paragraph. Notwithstanding any other provision of this Section 2.7,
no Selling Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities of such
Selling Holder were offered to the public exceeds the amount of any damages
which such Selling Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. Each Selling
Holder's obligations to contribute pursuant to this Section 2.7 are several in
proportion to the proceeds of the offering received by such Selling Holder bears
to the total proceeds of the offering received by all the Selling Holders and
not joint. 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) Indemnification and contribution similar to that specified
in the preceding paragraphs of this Section 2.7 (with appropriate modifications)
shall be given by XXX, the Selling Holders and underwriters with respect to any
required registration or other qualification of securities under any state law
or regulation or governmental authority.
(f) The obligations of the parties under this Section 2.7
shall be in addition to any liability which any party may otherwise have to
any other party.
Section 2.8 RULE 144 AND FORM S-3. Commencing 90 days after the Initial
Public Offering Date, XXX shall use its best efforts to ensure that the
conditions to the availability of Rule 144 set forth in paragraph (c) thereof
shall be satisfied. Upon the request of any Holder of Registrable Securities,
XXX will deliver to such Holder a written statement as to whether it has
complied with such requirements. XXX further agrees to use its reasonable
efforts to cause all conditions to the availability of Form S-3 (or any
16
successor form) under the Securities Act for the filing of registration
statements under this Agreement to be met as soon as practicable after the
Initial Public Offering Date. Notwithstanding anything contained in this Section
2.8, XXX may deregister under Section 12 of the Exchange Act, if it then is
permitted to do so pursuant to the Exchange Act and the rules and regulations
thereunder.
Section 2.9 TRANSFER OF REGISTRATION RIGHTS. Any Holder may transfer,
sell or assign all or any portion of its registration rights under Article II to
any transferee of a number of Registrable Securities owned by such Holder
exceeding three percent (3%) of the outstanding class or series of such
securities at the time of transfer (each transferee that receives such minimum
number of Registrable Securities, a "Transferee"); provided, that each
Transferee of Registrable Securities to which Registrable Securities are
transferred, sold or assigned directly by Citizens or its Affiliates (such
Transferee, a "Citizens Transferee"), together with any Affiliate of such
Citizens Transferee (and any subsequent direct or indirect Transferees of
Registrable Securities from such Citizens Transferee and any of its Affiliates
(other than Citizens or its Affiliates) thereof), shall be entitled to request
the registration of Registrable Securities pursuant to Section 2.1 only once.
Any transfer of registration rights pursuant to this Section 2.9 shall be
effective upon receipt by XXX of (i) written notice from such Holder stating the
name and address of any Transferee and identifying the number of Registrable
Securities with respect to which the rights under this Agreement are being
transferred and the nature of the rights so transferred; and (ii) a written
agreement from such Transferee to be bound by the terms of this Article II and
Article IV of this Agreement as if an original party hereto. The Holders may
exercise their rights hereunder in such priority as they shall agree upon among
themselves.
Section 2.10 HOLDBACK AGREEMENT. If any registration pursuant to this
Article II shall be in connection with an underwritten public offering of
Registrable Securities, each Selling Holder agrees not to effect any public
sale or distribution, including any sale under rule 144, of any equity security
of XXX (otherwise than through the registered public offering then being made),
within seven (7) days prior to or 180 days (or such lesser period as the lead
or managing underwriters may permit)after the effective date of the registration
statement (or the commencement of the offering to the public of such
Registrable Securities in the case of Rule 415 offerings). XXX hereby also so
agrees and agrees to cause each other holder of equity securities or
securities convertible into or exchangeable or exercisable for such securities
(other than in the case of equity securities, under dividend reinvestment plans
or employee stock plans) purchased from XXX otherwise than in a public offering
to so agree.
ARTICLE III
CERTAIN COVENANTS AND AGREEMENTS
Section 3.1 NO VIOLATIONS.
17
(a) Until Citizens beneficially owns less than 40% of the
outstanding Common Stock, XXX covenants and agrees that it will not take any
action or enter into any commitment or agreement which may reasonably be
anticipated to result, with or without notice and with or without lapse of time
or otherwise, in a contravention or event of default by Citizens of: (i) any
provisions of applicable law or regulation, including but not limited to
provisions pertaining to the Internal Revenue Code of 1986, as amended, or the
Employee Retirement Income Security Act of 1974, as amended; (ii) any provision
of Citizens' Articles of Incorporation or By-Laws; (iii) any credit agreement or
other material instrument binding upon Citizens; or (iv) any judgment, order or
decree of any governmental body, agency or court having jurisdiction over
Citizens or any of its Affiliates or any of their respective assets.
(b) XXX and Citizens agree to provide to the other any
information and documentation requested by the other for the purpose of
evaluating and ensuring compliance with Section 3.1(a) hereof.
(c) Notwithstanding the foregoing Sections 3.1(a) and 3.1(b),
nothing in this Agreement is intended to limit or restrict in any way the
ability of Citizens to effect, restrict or limit any action or proposed action
of XXX, including, but not limited to, the incurrence by XXX of indebtedness,
based upon Citizens' internal policies or other factors.
ARTICLE IV
MISCELLANEOUS
Section 4.1 LIMITATION OF LIABILITY. Neither Citizens nor XXX shall be
liable to the other for any special, indirect, incidental or consequential
damages of the other arising in connection with this Agreement.
Section 4.2 AMENDMENTS. This Agreement may not be amended or termin-
ated orally, but only by a writing duly executed by or on behalf of the parties
hereto. Any such amendment shall be validly and sufficiently authorized for
purposes of this Agreement if it is signed on behalf of Citizens and XXX.
Section 4.3 TERM. This Agreement shall remain in effect until all
Registrable Securities held by Holders have been transferred by them to Persons
other than Transferees; provided, that the provisions of Section 2.7 shall
survive any such expiration.
Section 4.4 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement or such provision
of the application of such provision to such party or circumstances, other
than those to which it is so determined to be invalid, illegal or unenforceable,
shall remain in full force and effect to the fullest extent permitted by law
18
and shall not be affected thereby, unless such a construction would be
unreasonable.
Section 4.5 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed duly given upon actual
receipt, and shall be delivered: (a)in person; (b) by registered or certified
mail, postage prepaid, return receipt requested; or (c) by facsimile or other
generally accepted means of electronic transmission (provided that a copy of
any notice delivered pursuant to this clause (c) shall also be sent pursuant
to clause (b), addressed as follows:
(a) IF TO XXX:
Electric Lightwave, Inc.
0000 X.X. Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
(b) IF TO CITIZENS:
Citizens Utilities Company.
Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxx X. XxXxxxxx
Fax: (000) 000-0000
or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties.
Section 4.6 FURTHER ASSURANCES. Citizens and XXX shall execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments and take such other action as maY be necessary or advisable
to carry out their obligations under this Agreement and under any exhibit,
document or other instrument delivered pursuant hereto.
Section 4.7 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original instrument, but all
of which together shall constitute but one and the same agreement.
Section 4.8 GOVERNING LAW. This Agreement and the transactions
contemplated hereby shall be construed in accordance with, and governed by, the
laws of the State of New York without regard to the conflict of laws provisions
of any jurisdiction.
Section 4.9 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
19
Section 4.10 SUCCESSORS. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective succes-
sors and assigns. Nothing contained in this Agreement, express or implied, is
intended to confer upon any other person or entity any benefits, rights or
remedies.
Section 4.11 SPECIFIC PERFORMANCE. The parties hereto acknowledge and
agree that irreparable damage would occuR in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, it is agreed that
they shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction in the United States or
any state thereof, in addition to any other remedy to which they may be entitled
at law or equity.
20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
ELECTRIC LIGHTWAVE, INC.
By:/s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: President
CITIZENS UTILITIES COMPANY
By:/s/ Xxxxxx X. XxXxxxxx
-----------------------
Name: Xxxxxx X. XxXxxxxx
Title: Vice President and Treasurer
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