EXECUTION COPY
This REGISTRATION RIGHTS AGREEMENT (the
"Agreement"), is made as of February 28, 2000, by and among
ICG Communications, Inc., a Delaware corporation (the
"Company"), and Quadrangle Investments, Inc., a Delaware
corporation ("Buyer").
WHEREAS, Buyer and an affiliate of the Company entered into a Share
Exchange Agreement dated February 28, 2000 (the "Share Exchange Agreement");
WHEREAS, it is a condition precedent to the closing of the
transactions contemplated in the Share Exchange Agreement that the parties
hereto execute and deliver this Agreement;
NOW THEREFORE, in consideration of the premises, mutual promises and
covenants contained in this Agreement and intending to be legally bound, the
parties hereto hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Terms defined in the Share Exchange
Agreement are used herein as therein defined. In addition, the following
terms, as used herein, have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Demand Registration" means a registration under the Securities Act
requested in accordance with Section 2.01.
"Holders" means Buyer and any direct or indirect transferee of any
Registrable Securities held by Buyer.
"Piggyback Registration" has the meaning set forth in Section 2.02.
"Registrable Securities" means the ICG Stock, plus any additional
shares of common stock of the Company issued or distributed in respect thereof
in connection with any stock split, stock dividend or similar event with respect
to the ICG Stock. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when (i) a registration statement with
respect to the sale
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of such securities shall have become effective under the Securities Act and such
securities shall have been disposed of under such registration statement, (ii)
such securities shall have been transferred pursuant to Rule 144, (iii) such
securities shall have been otherwise transferred or disposed of, and new
certificates therefor not bearing a legend restricting further transfer shall
have been delivered by the Company, and subsequent transfer or disposition of
them shall not require their registration or qualification under the Securities
Act or any similar state law then in force, or (iv) such securities shall have
ceased to be outstanding.
"Requesting Holders" means the Holders requesting a Demand
Registration, and shall include parties deemed "Requesting Holders" pursuant to
Section 2.01(a)(iii).
"Rule 144" means Rule 144 (or any successor rule of similar effect)
promulgated under the Securities Act.
"Selling Holder" means any Holder who is selling Registrable
Securities pursuant to a public offering registered hereunder.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
SECTION 1.02. 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 the Stock Exchange
Agreement.
ARTICLE II
Registration Rights
SECTION 2.01. Demand Registration. (a)(i) The Holders, taken
together, may make up to two written requests for a Demand Registration of all
or any part of the Registrable Securities held by such Holders; provided, that
(A) each such Demand Registration by the Holders must be in respect of
Registrable Securities with a fair market value of at least $25,000,000, and (B)
Holders shall not be entitled to a Demand Registration if, during the 120 days
preceding such request, either the Holders had requested a Demand Registration
(unless such Demand Registration was preempted pursuant to Section 2.01(e)), or
the Holders were given the opportunity to participate in a Piggyback
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Registration in accordance with Section 2.02 and either (1) failed to timely
notify the Company of a desire to participate in such Piggyback Registration or
(2) notified the Company of a desire to participate in such Piggyback
Registration and were able to sell in such Piggyback Registration at least 80%
of the Registrable Securities requested by the Holders to be included in such
Piggyback Registration.
(ii) Any request for a Demand Registration will specify the
aggregate number of shares of Registrable Securities proposed to be sold by the
Requesting Holders and will also specify the intended method of disposition
thereof. A registration will not count as a Demand Registration until it has
become effective. Should a Demand Registration not become effective due to the
failure of a Holder to perform its obligations under this Agreement or the
inability of the Requesting Holders to reach agreement with the Underwriters for
the proposed sale on price or other customary terms for such transaction, or in
the event the Requesting Holders withdraw or do not pursue the request for the
Demand Registration (in each of the foregoing cases, provided that at such time
the Company is in compliance in all material respects with its obligations under
this Agreement), then, subject to Section 2.01(b), such Demand Registration
shall be deemed to have been effected (provided that (i) if, the Demand
Registration does not become effective because a material adverse change has
occurred, or is reasonably likely to occur, in the condition (financial or
otherwise), business, assets or results of operations of the Company and its
subsidiaries taken as a whole subsequent to the date of the written request made
by the Holders or (ii) if, after the Demand Registration has become effective,
an offering of Registrable Securities pursuant to a registration is interfered
with by any stop order, injunction, or other order or requirement of the
Commission or other governmental agency or court then the Demand Registration
shall not be deemed to have been effected and will not count as a Demand
Registration).
(iii) Upon receipt of any request for a Demand Registration by
holders of a majority of the Registrable Securities, the Company shall promptly
(but in any event within ten (10) days) give written notice of such proposed
Demand Registration to all other Holders, and all such Holders shall have the
right, exercisable by written notice to the Company within twenty (20) days of
their receipt of the Company's notice, to elect to include in such Demand
Registration such portion of their Registrable Securities as they may request.
All such Holders requesting to have their Registrable Securities included in a
Demand Registration in
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accordance with the preceding sentence shall be deemed to be "Requesting
Holders" for purposes of this Section 2.01.
(b) In the event that the Requesting Holders withdraw or do not
pursue a request for a Demand Registration and, pursuant to Section 2.01(a)
hereof, such Demand Registration is deemed to have been effected, the Holders
may reacquire such Demand Registration (such that the withdrawal or failure to
pursue a request will not count as a Demand Registration hereunder) if the
Selling Holders reimburse the Company for any and all Registration Expenses
incurred by the Company in connection with such request for a Demand
Registration.
(c) If the Requesting Holders so elect, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the form
of a "firm commitment" underwritten offering. A majority in interest of the
Requesting Holders shall have the right to select the managing Underwriters and
any additional investment bankers and managers to be used in connection with any
offering under this Section 2.01, subject to the Company's approval, which
approval shall not be unreasonably withheld.
(d) The Requesting Holders will inform the Company of the time and
manner of any disposition of Registrable Common Stock, and agree to reasonably
cooperate with the Company in effecting the disposition of the Registrable
Common Stock in a manner that does not unreasonably disrupt the public trading
market for the Common Stock.
(e) The Company will have the right to preempt any Demand
Registration with a primary registration by delivering written notice (within
seven business days after the Company has received a request for such Demand
Registration) of such intention to the Selling Holder indicating that the
Company has identified a specific business need and use for the proceeds of the
sale of such securities and the Company shall use commercially reasonable
efforts to effect a primary registration within 90 days of such notice. In the
ensuing primary registration, the Holders will have such piggyback registration
rights as are set forth in Section 2.02 hereof. Upon the Company's preemption of
a requested Demand Registration, such requested registration will not count as
the Holders' Demand Registration; provided that a Demand Registration will not
be deemed preempted if the Holders are permitted to sell all requested
securities in connection with the ensuing primary offering by exercising their
piggyback registration rights as set forth in Section 2.02. The Company may
exercise the right to preempt only twice in any 360-day period; provided
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that during any 360-day period the Company shall use its reasonable best efforts
to permit a period of at least 120 consecutive days during which the Selling
Holders may effect a Demand Registration.
(f) Priority on Demand Registrations. No securities to be sold for
the account of any Person (including the Company) other than a Requesting Holder
shall be included in a Demand Registration unless the managing Underwriter or
Underwriters shall advise the Company and the Requesting Holders in writing that
the inclusion of such securities will not materially and adversely affect the
price of the offering (a "Pricing Material Adverse Effect"). Furthermore, in the
event the managing Underwriter or Underwriters shall advise the Company or the
Requesting Holders that even after exclusion of all securities of other Persons
(including the Company) pursuant to the immediately preceding sentence, the
amount of Registrable Securities proposed to be included in such Demand
Registration by the Requesting Holders is sufficiently large to cause a Pricing
Material Adverse Effect, the Registrable Securities of the Requesting Holders to
be included in such Demand Registration shall equal the number of shares which
the Company and the Requesting Holders are so advised can be sold in such
offering without a Pricing Material Adverse Effect and such shares shall be
allocated pro rata among the Requesting Holders on the basis of the number of
Registrable Securities requested to be included in such registration by each
such Requesting Holder; provided, however, that if any Registrable Securities
requested to be registered pursuant to a Demand Registration under Section 2.01
are excluded from registration hereunder, then the Holder(s) having shares
excluded ("Excluded Holders") shall have the right to withdraw all, or any part,
of their shares from such registration.
SECTION 2.02. Piggyback Registration. (a) If the Company proposes to
file a registration statement under the Securities Act with respect to an
offering of Common Stock for its own account or for the account of another
Person (other than a registration statement on Form S-4 or S-8 (or any
substitute form or rule, respectively, that may be adopted by the Commission)),
the Company shall give written notice of such proposed filing to the Holders at
the address set forth in the share register of the Company as soon as reasonably
practicable (but in no event less than 15 days before the anticipated filing
date), undertaking to provide each Holder the opportunity to register on the
same terms and conditions such number of shares of Registrable Securities as
such Holder may request (a "Piggyback Registration"). Each Holder will have
seven business days
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after receipt of any such notice to notify the Company as to whether it wishes
to participate in a Piggyback Registration (which notice shall not be deemed to
be a request for a Demand Registration); provided that should a Holder fail to
provide timely notice to the Company, such Holder will forfeit any rights to
participate in the Piggyback Registration with respect to such proposed offering
other than as described in Section 2.01(a)(iii). In the event that the
registration statement is filed on behalf of a Person other than the Company,
the Company will use its best efforts to have the shares of Registrable
Securities that the Holders wish to sell included in the registration statement.
If the Company or the Person for whose account such offering is being made shall
determine in its sole discretion not to register or to delay the proposed
offering, the Company may, at its election, provide written notice of such
determination to the Holders and (i) in the case of a determination not to
effect the proposed offering, shall thereupon be relieved of the obligation to
register such Registrable Securities in connection therewith, and (ii) in the
case of a determination to delay a proposed offering, shall thereupon be
permitted to delay registering such Registrable Securities for the same period
as the delay in respect of the proposed offering. As between the Company and the
Selling Holders, the Company shall be entitled to select the Underwriters in
connection with any Piggyback Registration.
(b) Priority on Piggyback Registrations. If the Registrable
Securities requested to be included in the Piggyback Registration by any Holder
differ from the type of securities proposed to be registered by the Company and
the managing Underwriter advises the Company that due to such differences the
inclusion of such Registrable Securities would cause a Pricing Material Adverse
Effect, then (i) the number of such Holders' Registrable Securities to be
included in the Piggyback Registration shall be reduced to an amount which, in
the opinion of the managing Underwriter, would eliminate such Pricing Material
Adverse Effect or (ii) if no such reduction would, in the opinion of the
managing Underwriter, eliminate such Pricing Material Adverse Effect, then the
Company shall have the right to exclude all such Registrable Securities from
such Piggyback Registration, provided, that no other securities of such type are
included and offered for the account of any other Person in such Piggyback
Registration. Any partial reduction in number of Registrable Securities of any
Holder to be included in the Piggyback Registration pursuant to clause (i) of
the immediately preceding sentence shall be effected pro rata based on the ratio
which such Holder's requested shares bears to the total number of shares
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requested to be included in such Piggyback Registration by all Persons other
than the Company who have the contractual right to request that their shares be
included in such registration statement and who have requested that their shares
be included. If the Registrable Securities requested to be included in the
registration statement are of the same type as the securities being registered
by the Company and the managing Underwriter advises the Company that the
inclusion of such Registrable Securities would cause a Pricing Material Adverse
Effect, the Company will be obligated to include in such registration statement,
as to each Holder only a portion of the shares such Holder has requested be
registered equal to the ratio which such Holder's requested shares bears to the
total number of shares requested to be included in such registration statement
by all Persons (other than the Person or Persons initiating such registration
request) who have the contractual right to request that their shares be included
in such registration statement and who have requested their shares be included.
If the Company initiated the registration, then the Company may include all of
its securities in such registration statement before any such Holder's requested
shares are included. If another security holder initiated the registration, then
the Company may not include any of its securities in such registration statement
unless all Registrable Securities requested to be included in the registration
statement by all Holders are included in such registration statement. If as a
result of the provisions of this Section 2.02(b) any Holder shall not be
entitled to include all Registrable Securities in a registration that such
Holder has requested to be so included, such Holder may withdraw such Holder's
request to include Registrable Securities in such registration statement prior
to its effectiveness.
ARTICLE III
Registration Procedures
SECTION 3.01. Filings; Information. In connection with the
registration of Registrable Securities pursuant to Section 2.01, Section 2.02
and Section 2.03 hereof, the Company will use its reasonable best efforts to
effect the registration of such Registrable Securities as promptly as is
reasonably practicable, and in connection with any such request:
(a) The Company will expeditiously prepare and file with the
Commission a registration statement on any form for which the Company then
qualifies and which counsel
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for the Company shall deem appropriate and available for the sale of the
Registrable Securities to be registered thereunder in accordance with the
intended method of distribution thereof, and use its reasonable best efforts to
cause such filed registration statement to become and remain effective with
respect to any Demand Registration or Piggyback Registration, for such period,
not to exceed 60 days, as may be reasonably necessary to effect the sale of such
securities; provided that if the Company shall furnish to the Selling Holder a
certificate signed by the Company's Chairman, President or any Vice-President
stating that the Company's Board of Directors has determined in good faith that
it would be detrimental or otherwise disadvantageous to the Company or its
shareholders for such a registration statement to be filed as expeditiously as
possible because the sale of Registrable Securities covered by such Registration
Statement or the disclosure of information in any related prospectus or
prospectus supplement would materially interfere with any acquisition, financing
or other material event or transaction which is then intended or the public
disclosure of which at the time would be materially prejudicial to the Company,
the Company may postpone the filing or effectiveness of a registration statement
for a period of not more than 120 days; provided that during any 360-day period
the Company shall use its reasonable best efforts to permit a period of at least
120 consecutive days during which the Company can make a registration statement
available under this Agreement; and provided further that if (i) the effective
date of any registration statement filed pursuant to a Demand Registration would
otherwise be at least 45 calendar days, but fewer than 90 calendar days, after
the end of the Company's fiscal year, and (ii) the Securities Act requires the
Company to include audited financials as of the end of such fiscal year, the
Company may delay the effectiveness of such registration statement for such
period as is reasonably necessary to include therein its audited financial
statements for such fiscal year.
(b) The Company will, if requested, prior to filing such
registration statement or any amendment or supplement thereto, furnish to the
Selling Holders, and each applicable managing Underwriter, if any, copies
thereof, and thereafter furnish to the Selling Holders and each such
Underwriter, if any, such number of copies of such registration statement,
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein) and the prospectus included in
such registration statement (including each preliminary prospectus) as the
Selling Holders or each such Underwriter may reasonably request in order to
facilitate
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the sale of the Registrable Securities by the Selling Holders.
(c) After the filing of the registration statement, the Company will
promptly notify the Selling Holders of any stop order issued or, to the
Company's knowledge, threatened to be issued by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
(d) The Company will use its commercially reasonable efforts to
qualify the Registrable Securities for offer and sale under such other
securities or blue sky laws of such jurisdictions in the United States as the
Selling Holders reasonably request; keep each such registration or qualification
(or exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each Selling
Holder to consummate the disposition of the Registrable Securities owned by such
Selling Holder in such jurisdictions; provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph 3.01(d), (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction.
(e) The Company will as promptly as is practicable notify the
Selling Holders, at any time when a prospectus relating to the sale of the
Registrable Securities is required by law to be delivered in connection with
sales by an Underwriter or dealer, of the occurrence of any event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and promptly make available to the Selling Holders and to
the Underwriters any such supplement or amendment. Upon receipt of any notice of
the occurrence of any event of the kind described in the preceding sentence,
Selling Holders will forthwith discontinue the offer and sale of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until receipt by the Selling Holders and the Underwriters of the
copies of such supplemented or amended prospectus and, if so directed by the
Company, the Selling Holders will deliver to the Company all copies, other than
permanent file
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copies then in the possession of Selling Holders, of the most recent prospectus
covering such Registrable Securities at the time of receipt of such notice. In
the event the Company shall give such notice, the Company shall extend the
period during which such registration statement shall be maintained effective as
provided in Section 3.01(a) hereof by the number of days during the period from
and including the date of the giving of such notice to the date when the Company
shall make available to the Selling Holders such supplemented or amended
prospectus.
(f) The Company will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
required in order to expedite or facilitate the sale of such Registrable
Securities.
(g) At the request of any Underwriter in connection with an
underwritten offering the Company will furnish (i) an opinion of counsel,
addressed to the Underwriters, covering such customary matters as the managing
Underwriter may reasonably request and (ii) a comfort letter or comfort letters
from the Company's independent public accountants covering such customary
matters as the managing Underwriter may reasonably request.
(h) If requested by the managing Underwriter or any Selling Holder,
the Company shall promptly incorporate in a prospectus supplement or post
effective amendment such information as the managing Underwriter or any Selling
Holder reasonably requests to be included therein, including without limitation,
with respect to the Registrable Securities being sold by such Selling Holder,
the purchase price being paid therefor by the Underwriters and with respect to
any other terms of the underwritten offering of the Registrable Securities to be
sold in such offering, and promptly make all required filings of such prospectus
supplement or post effective amendment.
(i) The Company shall promptly make available for inspection by any
Selling Holder or Underwriter participating in any disposition pursuant to any
registration statement, and any attorney, accountant or other agent or
representative retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information requested by any such Inspector in connection with such
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registration statement; provided, however, that unless the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in the
registration statement or the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, the Company
shall not be required to provide any information under this subparagraph (j) if
(A) the Company believes, after consultation with counsel for the Company, that
to do so would cause the Company to forfeit an attorney-client privilege that
was applicable to such information or (B) if either (1) the Company has
requested and been granted from the Commission confidential treatment of such
information contained in any filing with the Commission or documents provided
supplementally or otherwise or (2) the Company reasonably determines in good
faith that such Records are confidential and so notifies the Inspectors in
writing unless prior to furnishing any such information with respect to (A) or
(B) such Holder of Registrable Securities requesting such information agrees to
enter into a confidentiality agreement in customary form and subject to
customary exceptions; provided further, however, that each Holder of Registrable
Securities agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action and to
prevent disclosure of the Records deemed confidential.
(j) The Company shall cause the Registrable Securities included in
any registration statement to be (A) listed on each securities exchange, if any,
on which similar securities issued by the Company are then listed, or (B)
authorized to be quoted and/or listed (to the extent applicable) on the Nasdaq
National Market if the Registrable Securities so qualify.
(k) The Company shall provide a CUSIP number for the Registrable
Securities included in any registration statement not later than the effective
date of such registration statement.
(l) The Company shall cooperate with each Selling Holder and each
Underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc.
(m) The Company shall during the period when the prospectus is
required to be delivered under the Securities Act, promptly file all documents
required to be filed with
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the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act.
(n) The Company will make generally available to its security
holders, as soon as reasonably practicable, an earnings statement covering a
period of 12 months, beginning within three months after the effective date of
the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and regulations
of the Commission thereunder.
The Company may require Selling Holders promptly to furnish in
writing to the Company such information regarding such Selling Holders, the plan
of distribution of the Registrable Securities and other information as the
Company may from time to time reasonably request or as may be legally required
in connection with such registration.
SECTION 3.02. Registration Expenses. In connection with any
Registration effected hereunder, the Company shall pay the following expenses
incurred in connection with such registration (the "Registration Expenses"): (i)
registration and filing fees with the Commission and the National Association of
Securities Dealers, Inc., (ii) fees and expenses of compliance with securities
or blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities), (iii)
printing expenses, (iv) fees and expenses incurred in connection with the
listing or quotation of the Registrable Securities, (v) fees and expenses of
counsel to the Company and the reasonable fees and expenses of independent
certified public accountants for the Company (including fees and expenses
associated with the special audits or the delivery of comfort letters), (vi) the
reasonable fees and expenses of any additional experts retained by the Company
in connection with such registration and (vii) all roadshow costs and expenses
not paid by the Underwriters.
ARTICLE IV
Representations and Covenants
SECTION 4.01. Representations and Warranties. The Company
hereby represents and warrants to Buyer on the date hereof and on the Closing
Date as follows:
(a) Capital Stock. Each share of ICG Stock will be duly authorized
and validly issued and fully paid and
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nonassessable, and the issuance thereof will not have been subject to any
preemptive rights or made in violation of any Applicable Law.
(b) Authorization; Enforceability. The Company has the corporate
power and authority to execute, deliver and perform its obligations hereunder
and under the Operating Agreement, and has taken all action necessary to
authorize the execution, delivery and performance by it of each of such
documents. No other corporate or other stockholder action on the part of the
Company is necessary for such authorization, execution, delivery and
consummation. The Company has duly executed and delivered this Agreement and the
Operating Agreement. Each of this Agreement and the Operating Agreement
constitutes a legal, valid and binding obligation of the Company.
(c) Commission Filings; Financial Statements. (i) The Company has
filed all reports, registration statements and other filings, together with any
amendments or supplements required to be made with respect thereto, that it has
been required to file with the Commission under the Securities Act and the
Exchange Act. As of the respective dates of their filing with the Commission,
all reports, registration statements and other filings filed by the Company with
the Commission together with all notes, exhibits and schedules thereto and
documents incorporated by reference therein (the "Commission Filings") complied
in all material respects with the applicable provisions of the Securities Act
and the Exchange Act and did not contain any 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 were
made, not misleading.
(ii) Each of the historical consolidated financial statements of the
Company (including any related notes or schedules) included in the Commission
Filings was prepared in accordance with GAAP (except as may be disclosed
therein), and complied in all material respects with the rules and regulations
of the Commission. Such financial statements fairly present the consolidated
financial position of the Company and its subsidiaries as of the dates thereof
and the consolidated results of operations, cash flows and changes in
stockholders' equity for the periods then ended (subject, in the case of the
unaudited interim financial statements, to normal, recurring year-end audit
adjustments). Except as set forth or reflected in the Commission Filings filed
prior to the date hereof, the Company does not have any liabilities or
obligations of any nature (whether accrued, absolute, contingent, unasserted or
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otherwise) that individually or in the aggregate would reasonably be expected to
have a Pricing Material Adverse Effect.
(d) Material Adverse Change. Except as disclosed in the Commission
Filings, since September 30, 1999, there has not been any event, occurrence or
development of a state of circumstances or facts that has had, or could have
reasonably be expected to have, (i) a Material Adverse Effect or (ii) a material
adverse effect on the ability of the Company to perform its obligations under
this Agreement.
SECTION 4.02. Operating Agreement. The Company intends to negotiate
in good faith a definitive Operating Agreement with the parent of Buyer on the
terms set forth in Schedule 1 hereto and such other terms as the parties thereto
may mutually agree.
ARTICLE V
Indemnification and Contribution
SECTION 5.01. Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Selling Holder and their respective officers,
directors, partners, stockholders, members, employees, agents and
representatives and each Person (if any) which controls a Selling Holder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities,
costs and expenses (including reasonable attorneys' fees) caused by, arising out
of, resulting from or related to any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus relating to the Registrable Securities (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by or based upon any information furnished in
writing to the Company by or on behalf of such Selling Holder expressly for use
therein or by the Selling Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished the Selling Holder with copies of the same; provided,
however, that the Company shall have no obligation to indemnify under this
sentence to the extent any such losses, claims, damages or liabilities
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have been finally and non-appealably determined by a court to have resulted from
such Selling Holder's willful misconduct or gross negligence. The Company also
agrees to indemnify any Underwriters of the Registrable Securities, their
officers and directors and each person who controls such Underwriters on
substantially the same basis as that of the indemnification of the Selling
Holders provided in this Section 5.01, except insofar as such losses, claims,
damages or liabilities are caused by or based upon any information furnished in
writing to the Company by or on behalf of such Underwriter expressly for use
therein or by the Underwriter's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished the Underwriter with copies of the same; provided,
however, that the Company shall have no obligation to indemnify under this
sentence to the extent any such losses, claims, damages or liabilities have been
finally and non-appealably determined by a court to have resulted from any such
Underwriter's willful misconduct or gross negligence.
SECTION 5.02. Indemnification by Selling Holders. Each Selling
Holder agrees to indemnify and hold harmless the Company, its officers and
directors, and each Person, if any, which controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Company to each
Selling Holder, but only with reference to information furnished in writing by
or on behalf of such Selling Holder expressly for use in any registration
statement or prospectus relating to the Registrable Securities, or any amendment
or supplement thereto, or any preliminary prospectus. Each Selling Holder also
agrees to indemnify and hold harmless any Underwriters of the Registrable
Securities, their officers and directors and each person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Company provided in this Section 5.02, but only with reference to
information furnished in writing by or on behalf of such Selling Holder
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. Each such Selling Holder's liability under this Section
5.02 shall be limited to an amount equal to the net proceeds (after deducting
the underwriting discount and expenses) received by such Selling Holder from the
sale of such Registrable Securities by such Selling Holder.
SECTION 5.03. Conduct of Indemnification Proceedings. In case any
proceeding (including any govern-
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mental investigation) shall be instituted involving any Person in respect of
which indemnity may be sought pursuant to Section 5.01 or Section 5.02, such
Person (the "Indemnified Party") shall promptly notify the Person against whom
such indemnity may be sought (the "Indemnifying Party") in writing and the
Indemnifying Party, upon the request of the Indemnified Party, shall retain
counsel reasonably satisfactory to such Indemnified Party to represent such
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any Indemnified Party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnified Party and the Indemnifying Party
and, in the written opinion of counsel for the Indemnified Party, representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all such Indemnified Parties, and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Indemnified Parties, such firm shall be designated in writing by the
Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent (not to be unreasonably withheld), or if there be a
final judgment for the plaintiff, the Indemnifying Party shall indemnify and
hold harmless such Indemnified Parties from and against any loss or liability
(to the extent stated above) by reason of such settlement or judgment.
SECTION 5.04. Contribution. If the indemnification provided for in
this Article V is unavailable to an Indemnified Party in respect of any losses,
claims, damages or liabilities in respect of which indemnity is to be provided
hereunder, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall to the fullest extent permitted by law contribute to
the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of
17
such party in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company, a Selling Holder and the
Underwriters 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.
The Company and each Selling Holder agrees that it would not be just
and equitable if contribution pursuant to this Section 5.04 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 that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Article V, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and each Selling
Holder shall not be required to contribute any amount in excess of the amount by
which the net proceeds of the offering (before deducting expenses) received by
such Selling Holder 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. 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.
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ARTICLE VI
Miscellaneous
SECTION 6.01. Participation in Underwritten Registrations. No Person
may participate in any underwritten registered offering contemplated hereunder
unless such Person (a) agrees to sell its securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements, (b) completes and executes all questionnaires, powers
of attorney, custody arrangements, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and this Agreement and (c) furnishes in writing to the Company such
information regarding such Person, the plan of distribution of the Registrable
Securities and other information as the Company may from time to time request or
as may be legally required in connection with such registration; provided,
however, that no such Person shall be required to make any representations or
warranties in connection with any such registration other than representations
and warranties as to (i) such Person's ownership of his or its Registrable
Securities to be sold or transferred free and clear of all liens, claims and
encumbrances, (ii) such Person's power and authority to effect such transfer and
(iii) such matters pertaining to compliance with securities laws as may be
reasonably requested; provided further, however, that the obligation of such
Person to indemnify pursuant to any such underwriting agreements shall be
several, not joint and several, among such Persons selling Registrable
Securities, and the liability of each such Person will be in proportion to, and
provided further that such liability will be limited to, the net amount received
by such Person from the sale of such Person's Registrable Securities pursuant to
such registration.
SECTION 6.02. Rule 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such further action as the Holders may reasonably request
to the extent required from time to time to enable the Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any Holder, the Company
will deliver to such Holder a written statement as to whether it has complied
with such reporting requirements.
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SECTION 6.03. Holdback Agreements. Each Holder agrees, in the event
of an underwritten offering for the Company (whether for the account of the
Company or otherwise) not to offer, sell, contract to sell or otherwise dispose
of any Registrable Securities, or any securities convertible into or
exchangeable or exercisable for such securities, including any sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
offering), during the 14 days prior to, and during the 120-day period (or such
lesser period as the lead or managing underwriters may require) beginning on,
the effective date of the registration statement for such underwritten offering.
SECTION 6.04. Termination. This Agreement will terminate (i) upon
termination of the Share Exchange Agreement pursuant to Section 6.4 thereof or
(ii) at such time as there shall no longer be any Registrable Securities.
SECTION 6.05. Amendments, Waivers, Etc. This Agreement may not
be amended, waived or otherwise modified or terminated except by an instrument
in writing signed by the Company and Buyer.
SECTION 6.06. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement.
Each party need not sign the same counterpart.
SECTION 6.07. Entire Agreement. This Agreement (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
SECTION 6.08. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York regardless
of the laws that might otherwise govern under applicable principles of conflicts
of law thereof.
SECTION 6.09. Assignment of Registration Rights. Each Holder of the
Registrable Securities may assign all or any part of its rights under this
Agreement to any person to whom such Holder sells, transfers or assigns such
Registrable Securities. In the event that Buyer shall assign its rights pursuant
to this Agreement in connection with the transfer of less than all its
Registrable Securities, Buyer shall also retain his rights with respect to its
remaining Registrable Securities.
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IN WITNESS WHEREOF, the Company and Buyer have caused this Agreement
to be signed on its behalf by its officer thereunto duly authorized as of the
date first written above.
ICG COMMUNICATIONS, INC.,
by /s/ H. Xxx Xxxxxx
-------------------------
Name: H. Xxx Xxxxxx
Title: Executive Vice President,
General Counsel and Secretary
QUADRANGLE INVESTMENTS, INC.,
by /s/ Xxxxx Xxxxxxx
-------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President and Treasurer
