REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of February 27, 1998, by and among RCN Corporation, a
Delaware corporation (together with its permitted successors and assigns, the
"Company"), and the persons whose signatures appear on the execution pages of
this Agreement (the "Stockholders").
This Agreement is made pursuant to the Agreement and Plan of
Merger by and among the Company, UltraNet Acquisition Corporation and UltraNet
Communications, Inc. dated as of January 21, 1998 and amended as of February
27, 1998 (the "Merger Agreement"), pursuant to which the Stockholders will
receive shares of Common Stock (as defined below) of the Company.
The parties hereto, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, intending to be
bound hereby, agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have
the following meanings:
Affiliate means, with respect to any specified person, any
other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person. For the
purposes of this definition, "control" when used with respect to any specified
person means the power to direct the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
Business Day means any day that is not a Saturday, a Sunday
or a legal holiday on which banking institutions in the State of New York are
not required to be open.
Common Stock means the Common Stock, par value $1.00 per
share, of the Company, or any other shares of capital stock of the Company
into which such stock shall be reclassified or changed (by operation of law or
otherwise). If the Common Stock has been so reclassified or changed, or if
the Company pays a dividend or makes a distribution on its Common Stock in
shares of capital stock, or subdivides (or combines) its outstanding shares
of Common Stock into a greater (or smaller) number of shares of Common Stock,
a share of Common Stock shall be deemed to be such number of shares of capital
stock and amount of other securities to which a holder of a share of Common
Stock outstanding immediately prior to such reclassification, exchange,
dividend, distribution, subdivision or combination would be entitled.
Delay Period: See Section 2(b) hereof.
holder means a Stockholder who continues to hold Registrable
Shares.
person means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
Prospectus means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Shares covered by such Registration Statement and
all other amendments and supplements to the prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
Registrable Shares means the shares of Common Stock issued
to the Stockholders pursuant to the Merger Agreement, until in the case of any
such share (i) it has been effectively registered under Section 5 of the
Securities Act and disposed of pursuant to an effective registration statement
under the Securities Act, (ii) it has been transferred other than pursuant to
Rule "4(1-1/2)" (or any similar private transfer exemption) under the
Securities Act or (iii) it may be transferred by a holder without registration
pursuant to Rule 144 under the Securities Act or any successor rule without
regard to the volume limitation contained in such rule. Notwithstanding the
foregoing, the shares of Common Stock set forth under the signature line for a
Stockholder as "Lockup Shares" shall not become Registrable Shares (i) in the
case of Xxxxxxxx Xxxxxxx or Xxxxxx X. Xxxxxxxxx until the first anniversary of
the Effective Time (as defined in the Merger Agreement) and (ii) in the case of
all other Stockholders until the earlier of the first anniversary of the
Effective Time or, with respect to registration under Section 4, the date the
Company receives an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP that
final regulations which are applicable to the Merger and the Merger
Consideration have been issued which eliminate any concern that disposition of
shares registrable pursuant hereto could have any effect on the qualification
of the Merger under Section 368(a) of the Code.
Registration Statement means any registration statement of
the Company that covers any of the Registrable Shares pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective
amendments, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended.
Shelf Registration: See Section 2(a) hereof.
Stockholders: See the introductory clauses hereof.
Underwritten registration or underwritten offering means a
registration in which securities of the Company are resold to or through one
or more underwriters for reoffering or sale to the public.
2. Shelf Registration.
(a) The Company, within 60 days of the Effective Time,
shall file with, and shall use its reasonable best efforts to cause to be
declared effective by the SEC, a Registration Statement under the Securities
Act relating to the Registrable Shares, which Registration Statement shall
provide for the sale by the holders thereof of the Registrable Shares
(including, without limitation, "Lockup Shares" which are not as of the date
of this Agreement Registrable Shares, but which later become Registrable
Shares) from time to time on a delayed or continuous basis pursuant to Rule
415 under the Securities Act (a "Shelf Registration").
(b) The Company agrees to use its best efforts to keep the
Registration Statement filed pursuant to this Section 2 continuously effective
and usable for the resale of Registrable Shares (including, without
limitation, "Lockup Shares" which are not as of the date of this Agreement
Registrable Shares, but which later become Registrable Shares) for a period
ending on the earlier of (i) three years from the Effective Time and (ii) the
first date on which all the Registrable Shares covered by such Shelf
Registration (including, without limitation, "Lockup Shares" which are not as
of the date of this Agreement Registrable Shares, but which later become
Registrable Shares) have been sold pursuant to such Registration Statement.
The foregoing notwithstanding, the Company shall have the right in its sole
discretion, based on any valid business purpose (including without limitation
to avoid the disclosure of any corporate development that the Company is not
otherwise obligated to disclose or to coordinate such distribution with other
shareholders that have registration rights with respect to any securities of
the Company or with other distributions of the Company (whether for the
account of the Company or otherwise)), to suspend the use of the Registration
Statement for a reasonable length of time (a "Delay Period") and from time to
time; provided, that (i) the aggregate number of days in all Delay Periods
occurring in any period of twelve consecutive months shall not exceed 90 and
(ii) the Company shall not have the right to commence any Delay Period prior
to the 30th day after the date on which the Registration Statement described in
Section 2(a) above is declared effective by the SEC. The Company shall
provide written notice to each holder of Registrable Shares covered by each
Shelf Registration of the beginning and end of each Delay Period and such
holders shall cease all disposition efforts with respect to Registrable Shares
held by them immediately upon receipt of notice of the beginning of any Delay
Period. The three year time period for which the Company is required to
maintain the effectiveness of the Registration Statement shall be extended by
the aggregate number of days of all Delay Periods and such three year period or
the extension thereof required by the preceding sentence is hereafter referred
to as the "Effectiveness Period."
(c) The Company may, in its sole discretion, include other
securities in such Shelf Registration (whether for the account of the Company
or otherwise, including without limitation any securities of the Company held
by security holders, if any, who have piggyback registration rights with
respect thereto) or otherwise combine the offering of the Registrable Shares
with any offering of other securities of the Company (whether for the account
of the Company or otherwise).
3. Hold-Back Agreement.
Each holder of Registrable Shares agrees, if such holder is
requested by an underwriter in an underwritten offering for the Company
(whether for the account of the Company or otherwise), not to effect any public
sale or distribution of any of the Company's equity securities, including a
sale pursuant to Rule 144 (except as part of such underwritten registration),
during the 10-day period prior to, and during the 80-day period beginning on,
the closing date of such underwritten offering; provided, that neither the
Company nor any underwriter may request a holder not to effect any such sales
or distributions prior to the 30th day after the date on which the
Registration Statement described in Section 2(a) above is declared effective
by the SEC.
4. Piggy-back Registration.
4.1 Request for Registration. If at any time
the Company proposes to register under the Securities Act an offering of
Common Stock or any other class of its equity securities, then, as promptly as
possible (but in no event later than twenty Business Days prior to the filing
of the registration statement relating to such offering), the Company shall
give to the Stockholders a written notice describing in detail the proposed
registration (including the intended method of distribution and the
jurisdictions in which registration under the securities or blue sky laws is
intended). Within fifteen Business Days after receipt of such notice, a
Stockholder shall notify the Company of the number of Registrable Shares, if
any, that such Stockholder wishes to have included in such registration
statement. The Company will use its reasonable best efforts to effect the
registration under the Securities Act of the number of Registrable Shares that
shall have requested, to the extent required to permit the disposition of such
Registrable Shares upon the same terms (including the method of distribution),
as any other shares of Common Stock to be included in such offering. The
registration of the Registrable Shares so effected by the Company pursuant to
this Section 4.1 is referred to herein as a "Piggy-back Registration."
4.2 Underwritten Offerings. If the securities
proposed to be registered by the Company pursuant to Section 4.1 are to be
disposed of in an underwritten public offering, the notice of the Company's
intention to effect such registration shall designate the proposed managing
underwriters of such offering (which shall be one or more underwriting
firms of recognized national standing) and shall contain the Company's
agreement to use its best efforts to arrange for such underwriters to
include in such underwriting any Registrable Shares that the Stockholders
request the Company to register pursuant to Section 4.1. Notwithstanding
the foregoing, if the managing underwriter of the offering delivers a
written statement to the Stockholders that the total amount of securities
that the Company, the Stockholders and any other person intend to include
in such offering is sufficiently large so as materially and adversely to
affect the distribution thereof, then the managing underwriter of such
offering shall limit the amount of securities included in the offering so
as to eliminate such material and adverse effect by reducing (prior to any
reduction in the number of Shares to be offered by the Company) on a pro-
rata basis (measured by the number of shares of Common Stock that each of
the Stockholders and any other person intended to be included in the
registration statement) the number of shares that each of the Stockholders
and any other person shall have the right to include in such offering. In
the event that the underwriters for the offering do not or will not agree
to purchase the Registrable Shares that the Stockholders seek to sell, the
Stockholders may procure additional underwriters to purchase such
Registrable Shares, provided that the additional underwriters are
reasonably acceptable to the Company and the other underwriters.
4.3 Exceptions. Notwithstanding the provisions
of Section 4.1, the Company (i) shall not be required to give notice or
effect a Piggy-back Registration if the Company's proposed registration is
(a) a registration of an employee stock ownership, stock option, stock
purchase or other employee incentive plan or arrangement adopted in the
ordinary course of business on Form S-8 (or any successor form) or (b) a
registration of securities on Form S-4 (or any successor form) proposed to
be issued in exchange for securities or assets of, or in connection with a
merger or consolidation with, another corporation; or (ii) may withdraw,
without the consent of the Stockholders, a registration statement that the
Company had filed as contemplated by Section 4.1 and abandon the proposed
offering in which the Stockholders had requested to participate.
4.4 Effect of Piggy-back Registration. No Piggy-back
Registration effected by the Company shall relieve the Company from its
obligations to effect any Shelf Registration.
5. General Provisions.
5.1 Registration Procedures. If and whenever the
Company is required to effect a Shelf Registration or a Piggy-back
Registration, the Company shall:
(i) (a) promptly (but in no
event later than thirty days following the
Effective Time or delivery of the request for
Piggy-back Registration, as the case may be,
prepare and file with the Commission a
registration statement with respect to such
Registrable Shares and use its best efforts
to cause such registration statement to
become effective; and (b) furnish to the
Stockholders prior to the filing of such
registration statement copies of drafts and
final conformed versions of such registration
statement as is proposed to be filed;
(ii) (a) promptly prepare
and file with the Commission such amendments,
post-effective amendments and supplements to
such registration statement and the prospectus
used in connection therewith as may be
necessary to keep such registration statement
effective and to comply with the rules,
regulations or instructions of the
registration form utilized by the Company, the
Securities Act and the rules and regulations
thereunder with respect to the disposition of
all Registrable Shares and other securities
covered by such registration statement, in
the case of a Shelf Registration, as set
forth in Section 2(b), and, in the case of a
Piggy-back Registration, until the earlier of
the 180th day following the date on which
such registration statement becomes effective
or such time as the Shareholders shall have
disposed of all such Registrable Shares in
accordance with the intended methods of
disposition; provided, however,
notwithstanding the foregoing of this Section
5.1(ii)(a), in all events the Company shall
keep the registration statement effective as
required by the Securities Act; (b) promptly
furnish to the Stockholders prior to the
filing thereof a copy of any amendment,
post-effective amendment or supplement to such
registration statement or prospectus; and (c)
not file any such amendment, post-effective
amendment or supplement to which the
Stockholders shall have reasonably objected
on the grounds that such amendment or
supplement does not comply in all material
respects with the requirements of the
Securities Act or of the rules and regulations
thereunder;
(iii) promptly prior to the
filing of any document that is to be
incorporated by reference into the
registration statement or the prospectus
(after initial filing of the registration
statement), provide copies of such
documents to counsel for the Stockholders,
make the Company's representatives
available for discussion of such document
and in good faith consider such changes in
such document prior to the filing thereof
as counsel for the Stockholders may
reasonably request;
(iv) immediately notify the
Stockholders and confirm such advice in
writing (a) when or if the prospectus or any
prospectus supplement or post-effective
amendment has been filed, and with respect to
the registration statement or any
post-effective amendment, when the same has
become effective; (b) of any request by the
Commission for amendments or supplements to
the registration statement or the prospectus
or for additional information; (c) of the
issuance by the Commission of any stop order
suspending the effectiveness of the
registration statement or the initiation of
any proceedings for that purpose; (d) of the
receipt by the Company of any notification
with respect to the suspension of the
qualification of Registrable Shares for sale
in any jurisdiction or the initiation or
threat of any proceeding for such purpose;
and (e) of the existence of any fact that
makes any statement made in the registration
statement, the prospectus or any document
incorporated therein by reference untrue or
that requires the making of any changes in
the registration statement, the prospectus or
any document incorporated therein by
reference to make the statements therein not
misleading;
(v) if any fact contemplated
by clause (iv)(e) above shall exist, promptly
(a) prepare and file a supplement or
post-effective amendment to the registration
statement or the related prospectus or any
document incorporated therein by reference or
(b) file any required document so that, as
thereafter delivered to the purchasers of
Registrable Shares, the prospectus will not
contain an untrue statement of a material
fact or omit to state any material fact
necessary to make the statements therein not
misleading;
(vi) use its reasonable best
efforts to obtain the withdrawal of any order
suspending the effectiveness of the
registration statement at the earliest
possible moment;
(vii) otherwise use its
best efforts to comply with all applicable
rules and regulations of the Commission
and make available to its securities
holders, as soon as reasonably
practicable, an earnings statement that
satisfies the provisions of Section 11(a)
of the Securities Act and covers the
period beginning with the first month of
the first fiscal quarter after the
effective date of the registration
statement and ending between twelve months
and eighteen months thereafter;
(viii) cooperate with the
selling holders of Registrable Securities
and the underwriters, if any, to
facilitate the timely preparation and
delivery of certificates representing
Registrable Securities to be sold and not
bearing any restrictive legends; and
enable such Registrable Securities to be
in such denominations and registered in
such names as the underwriters may
reasonably request at least two (2)
Business Days prior to any sale of
Registrable Securities to the
underwriters;
(ix) not later than the
effective date of the Registration Statement,
provide a CUSIP number for all Registrable
Securities and provide the applicable
transfer agent with printed certificates or
instruments for the Registrable Securities
which are in a form eligible for deposit with
Depositary Trust Company and otherwise
meeting the requirements of any securities
exchange on which such Registrable Securities
are listed; and
(x) cooperate and assist in
any filings required to be made with the NASD
and in the performance of any due diligence
investigation by any underwriter (including
any "qualified independent underwriter" that
is required to be retained in accordance with
the rules and regulations of the NASD).
In determining any time period hereunder, any day for which
a stop order is in effect or has been initiated as contemplated by clause
(iv)(c) above or any day on which any fact contemplated by clause (iv)(e)
above exists shall not be counted, and the period shall correspondingly be
extended by the number of such noncounted days.
5.2 Blue Sky Qualification. The Company shall use
its best efforts to cause the Registrable Shares that are the subject of a
Shelf Registration or a Piggy-back Registration to be qualified for sale
under the securities or blue sky laws of such jurisdictions as the
Stockholders may reasonably request and shall cause such registration or
qualification to remain in effect in such jurisdictions during the time
periods set forth in Section 5.1(ii)(a). The Company shall do any and all
other acts and things that may be necessary or advisable to enable the
Stockholders to consummate the disposition of Registrable Shares in such
jurisdictions, provided that the Company shall not be required to qualify
to do business in any state by reason of this Section 5.2.
5.3 Copies Provided. The Company shall furnish
to the Stockholders the number of copies of the applicable registration
statement and of each amendment and supplement thereto (in each case,
including all exhibits), the number of copies of the prospectus contained
in such registration statement (including each preliminary prospectus) in
conformity with the requirements of the Securities Act, such documents, if
any, incorporated by reference in such registration statement or prospectus
and any other documents that the Stockholders may reasonably request to
facilitate the disposition of the Registrable Shares.
5.4 Requested Information. The registration
rights granted to the Stockholders by this Agreement are subject to the
condition that the Stockholders shall provide the Company with information
about the Registrable Shares to be sold including the plans for the proposed
disposition thereof, and other information that is necessary, in the
reasonable opinion of counsel for the Company, to enable the Company to
include in a registration statement all material facts required to be
disclosed with respect to the offering.
5.5 Opinion of Counsel; Comfort Letter. If
the Company files a registration statement pursuant to Section 2 or 4 herein,
the Company shall furnish the Stockholders with (a) an opinion of the
Company's counsel to the effect that the registration statement complies as to
form with the Securities Act and any other securities or blue sky laws that
the Stockholders requests pursuant to Section 5.2 hereof and that such counsel
has no knowledge or reason to know of any material misstatement or omission in
the registration statement and (b) a "comfort" letter signed by the independent
public accountants that have certified the Company's financial statements
included in such registration statement covering substantially the same
matters with respect to such registration statement (and the prospectus
included therein) and with respect to events subsequent to the date of such
financial statements, as are customarily covered in accountants' letters
delivered to underwriters in underwritten public offerings of securities.
Each of the opinion of counsel and the "comfort" letter referred to above
shall be dated the effective date of the registration statement (and if such
registration includes an underwritten public offering, dated the date of the
closing under the underwriting agreement).
5.6 Participation in Underwritten Registration.
The Stockholders may not participate in any underwritten registration under
Section 4 of this Agreement unless the Stockholders (i) agrees to sell its
Registrable Shares on the basis provided in any underwriting arrangements
entered into by the Company and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such
underwriting arrangements.
5.7 Listing. The Company shall cause all Registrable
Shares covered by any registration statement to be listed on each
securities exchange on which similar securities issued by the Company are
listed.
6. Registration Expenses. The Company shall pay all
expenses arising from or incident to the performance of, or
compliance with, this Agreement, including without
limitation: (i) all registration, filing, listing and NASDAQ
fees; (ii) all fees and expenses incurred in complying with
securities or blue sky laws; (iii) all printing, messenger
and delivery expenses; (iv) all fees and disbursements of
counsel and accountants for the Company, including the
expenses of any "comfort" letters; and (v) all of the
internal expenses incurred by the Company, including,
without limitation, salaries and expenses of officers and
employees performing legal and accounting duties, expenses
of conducting the annual audit of the Company's financial
statements by its independent accountants, costs in
obtaining liability insurance on behalf of the Company, its
officers and directors, and the reasonable fees and expenses
of any special experts retained in connection with any
registration statement pursuant to the terms of this
Agreement, regardless of whether such registration statement
is declared effective, provided that the Stockholders will
be responsible for underwriters discounts, selling
commissions and fees and disbursements of counsel for the
Stockholders with respect to the Registrable Shares being
sold.
7. Indemnification and Contribution.
7.1 Indemnification by the Company. In connection
with each Shelf Registration or Piggy-back Registration effected by the
Company hereby, the Company will indemnify and hold harmless the
Stockholders, their officers and directors, each underwriter of the
securities registered, and each person who controls, within the meaning of
Section 15 of the Securities Act, the Stockholders or any underwriter
against any and all losses, claims, damages, liabilities or expenses to
which they or any of them may become subject under the Securities Act or
any other statute or common law, including any amount paid in settlement of
any commenced or threatened litigation (collectively, the "Damages"),
insofar as any such Damages arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus (as amended or supplemented) or any
preliminary prospectus or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made. The Company shall not be bound by the indemnification
provision of the preceding sentence with respect to the Stockholders or any
underwriter if such Damages arise solely out of or are based upon any
untrue statement or alleged untrue statement, or any omission or alleged
omission that was made in reliance upon and in conformity with information
furnished in writing to the Company by the Stockholders or such
underwriter, as the case may be, for use in connection with the preparation
of the registration statement, any preliminary prospectus, any prospectus
contained in the registration statement, or any such amendment thereof or
supplement thereto. In addition, the indemnification provided in this
Section 7.1 shall not inure to the benefit of any underwriter from whom the
person asserting any such Damages purchased the securities that are the
subject hereof (or to the benefit of any person controlling such
underwriter), if the underwriter failed to send or give a copy of the final
prospectus or any such amendment thereof or supplement thereto, whichever
is most recent, to such person at or prior to the written confirmation of
the sale of the securities to such person.
7.2 Indemnification by the Stockholders. In
connection with each Shelf Registration or Piggy-back Registration effected by
the Company hereby, each Stockholder on whose behalf Registrable Securities
shall have been registered agrees, to the extent permitted by applicable law,
severally and not jointly, to indemnify and hold harmless the Company, each
person, if any, who controls, within the meaning of Section 15 of the
Securities Act, the Company, its directors and its officers against all
Damages based upon or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus (as amended or supplemented) or any preliminary prospectus or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, only if such statement
or omission was made in reliance upon and in conformity with information
furnished in writing to the Company by such selling holder of Registrable
Securities for use in connection with the registration statement or any
posteffective amendment thereof or any preliminary prospectus or prospectus
contained in such registration statement or any such amendment thereof or
supplement thereto. Notwithstanding the foregoing, with respect to a
Piggy-back Registration, the indemnification provided in this Section 7.2 shall
not inure to the benefit of the Company, each person, if any, who controls,
within the meaning of Section 15 of the Securities Act, the Company, its
directors and its officers, if the person asserting any such Damages did not
receive from the Company or the underwriter or underwriters of the offering as
designated according to Section 4.2 herein (but not the underwriter selected
by the Stockholders as contemplated by the last sentence of Section 4.2) a
copy of the final prospectus or any such amendment thereof or supplement
thereto, whichever is most recent, at or prior to the written confirmation of
the sale of the securities by such underwriter or underwriters to such person.
In no event shall the aggregate liability of any selling holder of Registrable
Securities for indemnification under this Section 7.2 and contribution under
Section 7.4 be greater in amount than the dollar amount of the proceeds
received by such holder upon the sale of the Registrable Securities giving rise
to such indemnification and contribution obligation.
7.3 Notice of Claim Triggering an Indemnity;
Waiver. Promptly after the receipt of notice of the commencement of any
action, proceeding, claim or investigation or other similar event against any
party entitled to indemnity under Section 7.1 or 7.2 (an "Indemnified Party")
in respect of which indemnity may be sought from any other party (an
"Indemnifying Party") on account of an indemnity agreement contained in Section
7.1 or 7.2 (an action triggering the liability under Section 7.1 or 7.2, an
"Action"), the Indemnified Party will notify the Indemnifying Party in writing
of the commencement thereof. The failure of any Indemnified Party to notify
an Indemnifying Party of any Action shall not relieve the Indemnifying Party
from any liability in respect of such Action, unless and to the extent the
failure to provide prompt notice materially prejudices the Indemnifying Party
in its ability to defend against or settle such Action. In addition, any
failure to give such notice shall not relieve the Indemnifying Party from any
other liability that it may have to the Indemnified Party. If any Action is
brought against any Indemnified Party and the Indemnified Party notifies an
Indemnifying Party of the commencement thereof, the Indemnifying Party will be
entitled to participate therein and to assume the defense of the Action (the
"Assumed Action") with counsel satisfactory to the Indemnified Party, provided
that the Indemnifying Party promptly notifies in writing the Indemnified Party
of its election to assume the defense of the Action and acknowledges in
writing that the claim in question is one for which the Indemnifying Party is
obligated to indemnify the Indemnified Party. Upon receipt by the Indemnified
Party of this written notice and acknowledgement, the Indemnifying Party will
not be liable to the Indemnified Party for any legal or other expenses that
the Indemnified Party subsequently incurs in connection with the Assumed
Action, other than reasonable costs of investigation; however, if the
Indemnified Party has a reasonable basis to believe and does in fact believe
that its interests in such Assumed Action conflict with those of the
Indemnifying Party, then the Indemnified Party may so notify the Indemnifying
Party and the Indemnifying Party will remain liable to the Indemnified Party
for all legal or other expenses that the Indemnified Party incurs in
connection with the Assumed Action. The Indemnifying Party may not compromise
or settle any Assumed Action without the prior written consent of the
Indemnified Party, unless such settlement or compromise releases and forever
holds harmless the Indemnified Party from all Damages and any culpability in
connection with or arising out of the Assumed Action. The Indemnified Party
may not compromise or settle any Action without the prior written consent of
the Indemnifying Party, which may not unreasonably withhold its consent.
7.4 Contribution. To provide for contribution in
circumstances in which the indemnification provided for in Section 7.1 or
7.2 is for any reason held to be unavailable from the Indemnifying Party,
after deducting any contribution received by either the Company or any
selling holder of Registrable Securities, including from persons who
control, within the meaning of Section 15 of the Securities Act, either of
the Company or any selling holder of Registrable Securities, officers of
the Company who signed the registration statement, and directors of either
of them who may also be liable for contribution, the Company and the
selling holders of Registrable Securities shall each contribute to the
aggregate Damages of the nature contemplated by the indemnification
provisions set forth in Sections 7.1 and 7.2 herein (including any
investigation, legal, and other expenses incurred in connection with and
any amount paid in settlement of any action, suit, proceeding or asserted
claims) to which either the Company or the selling holders of Registrable
Securities may be subject. The Company and the Stockholders each shall
contribute an amount that shall reflect the relative fault of the parties
in connection with the statement or omission that resulted in such Damages.
In no event shall the aggregate liability of any selling holder of
Registrable Securities for indemnification under Section 7.2 and
contribution under this Section 7.4 be greater in amount than the dollar
amount of the proceeds received by such holder upon the sale of the
Registrable Securities giving rise to such indemnification and contribution
obligation. The relative fault of a party shall be determined by reference
to whether any matter in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by,
such party. The amount paid or payable by a party as a result of the
Damages referred to above shall be deemed to include, subject to the
limitations set forth in Section 7.3 hereof, any legal or other fees or
expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined by pro
rata allocation or by any other method of allocation that does not take into
account the considerations referred to in the immediately preceding paragraph.
Notwithstanding the foregoing provisions of this Section 7.4, in accordance
with Section 11(f) of the Securities Act, no person guilty of fraudulent
misrepresentation shall be entitled to obtain contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7.4, each person, if any, who controls, within the meaning of Section
15 of the Securities Act, the Company or the selling holder of Registrable
Securities, each officer of the Company who shall have signed the registration
statement, and each director of the Company or the selling holder of
Registrable Securities shall have the same rights to contribution as the
Company or the selling holder of Registrable Securities, subject in each case
to the provisions of the preceding sentence.
8. Filing Requirements: Rule 144. The Company covenants
that it will file any reports required to be filed by it
under the Exchange Act, and the rules and regulations
adopted by the Commission thereunder and that it shall take
such further action as the Stockholders may reasonably
request, to the extent required from time to time to enable
the Stockholders to sell Registrable Shares without
registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the
Securities Act, as such rule may be amended from time to
time, or (ii) any similar rule or regulation hereafter
adopted by the Commission. Upon the Stockholder's request,
the Company shall deliver to the Stockholders a written
statement as to whether it has complied with such
requirements.
9. Representations and Warranties Relating to Registrable
Shares. Each Stockholder severally and not jointly,
represents and warrants as follows (provided that nothing
contained in this Section 9 shall affect in any way the
obligation of the Company pursuant hereto to file and
maintain the effectiveness of a registration statement with
respect to the Registrable Shares as provided herein):
(a) Investment Intent. The Stockholder is acquiring the
Registrable Shares for such Stockholder's own account, for investment and not
with a view to, nor for resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act.
(b) Shares Not Registered. Such Stockholder understands
and acknowledges that the sale of the Registrable Shares pursuant to the
Merger will not be registered under the Securities Act on the grounds that the
offering and sale of securities are exempt from registration under the
Securities Act, and that Company's reliance upon such exemptions is predicated
upon such Stockholder's representations set forth in this Agreement. Such
Stockholder acknowledges and understands that the Registrable Shares must be
held indefinitely unless such securities are registered under the Securities
Act or an exemption from such registration and such qualification is available.
(c) No Transfer. Such Stockholder covenants that in no
event will it dispose of any of the Registrable Shares (other than in
conjunction with an effective registration statement for the Registrable
Shares under the Securities Act or in compliance with Rule 144 promulgated
under the Securities Act) unless and until (i) such Stockholder shall have
notified the Company of the proposed disposition and shall have furnished the
Company with a statement of the circumstances surrounding the proposed
disposition, and (ii) if reasonably requested by the Company, such Stockholder
shall have furnished the Company with an opinion of counsel reasonably
satisfactory in form and substance to the Company to the effect that (x) such
disposition will not require registration under the Securities Act and (y)
appropriate action necessary for compliance with the Securities Act and any
other applicable state, local or foreign law has been taken. It is agreed
that the Company will not require opinions of counsel for transactions made
pursuant to Rule 144.
(d) Permitted Transfers. Notwithstanding the provisions of
subsection (c) above, no registration statement or opinion of counsel shall be
necessary for a transfer by a Stockholder to one or more partners or departing
partners of a Stockholder (in the case of a Stockholder that is a
partnership), or to one or more members or departing members of a Stockholder
(in the case of a Stockholder that is a limited liability company) or to an
affiliated corporation (in the case of a Stockholder that is a corporation),
or to one or more affiliated partnerships managed by such Stockholder, or to
the estate of any such partner or member or former partner or member, or the
transfer by gift, will or intestate succession of any partner or member or
former partner or member, or the transfer by gift, will or intestate
succession of any partner or member to his spouse or lineal descendants or
ancestors, if the transferee agrees in writing to be bound by the terms of this
Agreement to the same extent as if he were an original Stockholder hereunder.
(e) Knowledge and Experience. Such Stockholder (i) has
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its prospective investment in the
Registrable Shares; (ii) has the ability to bear the economic risks of such
Registrable Share's prospective investment; (iii) has been furnished with and
has had access to such information as it has considered necessary to make a
determination as to the purchase of the information supplied; (iv) has had all
questions which have been asked by it satisfactorily answered by the Company;
and (v) has not been offered the Registrable Shares by any form of
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio, or
any seminar or meeting to which persons in attendance have been invited by any
such media.
(f) Not Organized to Purchase. Such Stockholder has not
been organized for the purpose of purchasing the Registrable Shares.
(g) Holding Requirements. Such Stockholder understands
that if the Company does not have a registration statement covering the
securities with the SEC (or a filing pursuant to the exemption from
registration under Regulation A of the Securities Act covering the
Stockholder) under the Securities Act in effect when such Stockholder desires
to sell the securities, such Stockholder may be required to hold the
Registrable Shares for an indeterminate period. Such Stockholder also
understands that any sale of the Registrable Shares that might be made by such
Seller in reliance upon Rule 144 under the Securities Act may be made only in
limited amounts in accordance with the terms and conditions of that rule.
(h) Legends. Each certificate representing the Registrable
Shares may be endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE
ACT") AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144
PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR
OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN
CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR
(iii), WITH LIMITED EXCEPTIONS AGREED TO BY THE COMPANY, PURSUANT
TO AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SAID
SALE, OFFER OR DISTRIBUTION.
(i) Removal of Legend and Transfer Restrictions. Any
legend endorsed on a certificate pursuant to subsection (h) and the stop
transfer instructions with respect to such legended Registrable Shares shall be
removed, and the Company shall issue a certificate without such legend to the
holder if such Registrable Shares of such Registrable Shares are registered
under the Securities Act and a prospectus meeting the requirements of Section
10 of the Securities Act is available or if such holder satisfies the
requirements of Rule 144(k) and, where reasonably deemed necessary by the
Company, the holder of the Registrable Shares provides the Company with an
opinion of counsel for such holder, reasonably satisfactory to the Company, to
the effect that (i) such holder meets the requirements of Rule 144(k) or (ii) a
public sale, transfer or assignment of such Registrable Shares may be made
without registration.
(j) Rule 144. Such Stockholder is aware that the SEC has
adopted Rule 144, which was promulgated under the Securities Act and permits
limited public resales of securities acquired in a nonpublic offering, subject
to the satisfaction of certain conditions. Such Stockholder understands that
those conditions include, among other things: the availability of certain
current public information about the issuer and the resale occurring not less
than one (1) year after the party has purchased and paid for the securities to
be sold.
10. Miscellaneous.
10.1 No Inconsistent Agreements. The Company
shall not enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Stockholders in this Agreement.
10.2 Amendments and Waivers. Except as
otherwise provided herein, the provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof shall not have any legal effect, unless any of the above
is approved, agreed to or made in writing by a majority of the holders of
Registrable Securities and the Company.
10.3 Notices. Any notice or other
communication required or that may be given hereunder shall be in writing and
shall be deemed given (i) when delivered personally; (ii) if sent by telecopy
or like transmission, upon a receipt of transmittal confirmation; or (iii) if
sent by Federal Express, Express Mail, or similar overnight courier service to
the parties at the addresses set forth below, on the next business day.
Mailed notices should be addressed as follows:
(a) If to the Company, to:
RCN Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
(b) If to the Stockholder, at the most
current address given to the Company in accordance
with the provisions of this Section 8.3, which
address initially is with respect to each
Stockholder, the address set forth on the signature
papers hereto.
10.4 Successors and Assigns. The rights and
obligations created by this Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties. The
rights and obligations of the parties hereunder may not be assigned, except by
operation of law or as otherwise provided herein.
10.5 Counterparts. This Agreement may be
executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
10.6 Headings. The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
10.7 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed wholly within such State.
10.8 Severability. In the event that any one
or more of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained herein shall not
be in any way impaired thereby, it being intended that all of the rights and
privileges of the Stockholders shall be enforceable to the fullest extent
permitted by law.
10.9 Entire Agreement. This Agreement is
intended by the parties as a final expression of their agreement and
constitutes a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein. This Agreement supersedes
all prior agreements and understandings between the parties with respect to
such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
RCN CORPORATION
By
---------------------------------
Name:
Title:
STOCKHOLDER:
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Name:
Address for
Notice:
Number of
Shares:
Lockup
Shares:
