EXHIBIT 4.2
BANC OF AMERICA SECURITIES LLC
$125,000,000 AGGREGATE PRINCIPAL AMOUNT
COVAD COMMUNICATIONS GROUP, INC.
3% CONVERTIBLE SENIOR DEBENTURES
DUE 2024
RESALE REGISTRATION RIGHTS AGREEMENT
DATED MARCH 10, 2004
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RESALE REGISTRATION RIGHTS AGREEMENT, dated as of March 10, 2004,
between Covad Communications Group, Inc., a Delaware corporation (together with
any successor entity, herein referred to as the "COMPANY"), and Banc of America
Securities LLC, as representative of the several initial purchasers (the
"INITIAL PURCHASERS") under the Purchase Agreement (as defined below).
Pursuant to the Purchase Agreement, dated as of March 4, 2004, between
the Company and Banc of America Securities LLC, as representative of the Initial
Purchasers (the "PURCHASE AGREEMENT"), the Initial Purchasers have agreed to
purchase from the Company $100,000,000 ($125,000,000 if the Initial Purchasers
exercise their option in full) in aggregate principal amount at maturity of 3%
Convertible Senior Debentures due 2024 (the "DEBENTURES"). The Debentures will
be convertible into fully paid, nonassessable shares of common stock, par value
$0.001 per share, of the Company together with the rights (the "RIGHTS")
evidenced by such common stock to the extent provided in the Stockholder
Protection Rights Agreement dated as of February 13, 2000 between the Company
and BankBoston, N.A., as Rights Agent (collectively, the "COMMON STOCK"). The
Debentures will be convertible on the terms, and subject to the conditions, set
forth in the Indenture (as defined herein). To induce the Initial Purchasers to
purchase the Debentures, the Company has agreed to provide the registration
rights set forth in this Agreement pursuant to Section 1 of the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions. Capitalized terms used in this Agreement without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized terms shall have
the following meanings:
"AFFILIATE" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control of
a person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGREEMENT": This Resale Registration Rights Agreement.
"AMENDMENT EFFECTIVENESS DEADLINE DATE": As defined in Section 2(e)
hereof.
"BLUE SKY APPLICATION": As defined in Section 6(a)(i) hereof.
"BUSINESS DAY": As defined in the Indenture.
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"COMMISSION": Securities and Exchange Commission.
"COMMON STOCK": As defined in the preamble hereto.
"COMPANY": As defined in the preamble hereto.
"DEBENTURES": As defined in the preamble hereto.
"EFFECTIVENESS PERIOD": As defined in Section 2(a)(iii) hereof.
"EFFECTIVENESS TARGET DATE": As defined in Section 2(a)(ii) hereof.
"EXCHANGE ACT": Securities Exchange Act of 1934, as amended.
"HOLDER": A Person who owns, beneficially or otherwise, Transfer
Restricted Securities.
"INDEMNIFIED HOLDER": As defined in Section 6(a) hereof.
"INDENTURE": The Indenture, dated as of March 10, 2004 between the
Company and The Bank of New York, as trustee (the "TRUSTEE"), pursuant to which
the Securities are to be issued, as such Indenture is amended, modified or
supplemented from time to time in accordance with the terms thereof.
"INITIAL PURCHASERS": As defined in the preamble hereto.
"LIQUIDATED DAMAGES": As defined in Section 3(b) hereof.
"LIQUIDATED DAMAGES PAYMENT DATE": Each March 15 and September 15.
"MAJORITY OF HOLDERS": Holders holding over 50% of the aggregate
principal amount of Debentures outstanding; provided that, for the purpose of
this definition, a holder of shares of Common Stock which constitute Transfer
Restricted Securities shall be deemed to hold an aggregate principal amount at
maturity of Debentures (in addition to the principal amount at maturity of
Debentures held by such holder) equal to the product of (A) the quotient of (x)
the number of such shares of Common Stock held by such holder and (y) the
conversion rate (as expressed in the number of shares issuable per $1,000
principal amount of Debentures) in effect at the time of the conversion of
Debentures into such shares of Common Stock as determined in accordance with the
Indenture and (B) $1,000.
"NASD": National Association of Securities Dealers, Inc.
"NOTICE AND QUESTIONNAIRE": A written notice executed by the respective
Holder and delivered to the Company containing substantially the information
called for by the Selling Securityholder Notice and Questionnaire attached as
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Annex A to the Offering Memorandum of the Company issued March 4, 2004 relating
to the Debentures.
"NOTICE HOLDER": On any date, any Holder that has delivered a Notice
and Questionnaire to the Company on or prior to such date.
"PERSON": An individual, partnership, corporation, company,
unincorporated organization, trust, joint venture or a government or agency or
political subdivision thereof.
"PURCHASE AGREEMENT": As defined in the preamble hereto.
"PROSPECTUS": The prospectus included in a Shelf Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such prospectus.
"RECORD HOLDER": With respect to any Liquidated Damages Payment Date,
each Person who is a Holder on the 15th day preceding the relevant Liquidated
Damages Payment Date, including a Holder that owns shares of Common Stock that
are Transfer Restricted Securities on the 15th day preceding the relevant
Liquidated Damages Payment Date.
"REGISTRATION DEFAULT": As defined in Section 3(a) hereof.
"SECURITIES ACT": Securities Act of 1933, as amended.
"SHELF FILING DEADLINE": As defined in Section 2(a)(i) hereof.
"SHELF REGISTRATION STATEMENT": As defined in Section 2(a)(i) hereof.
"SUBSEQUENT SHELF REGISTRATION STATEMENT": As defined in Section 2(c)
hereof.
"SUSPENSION NOTICE": As defined in Section 4(c) hereof.
"SUSPENSION PERIOD": As defined in Section 4(b)(i) hereof.
"TIA": Trust Indenture Act of 1939, as amended, and the rules and
regulations of the Commission thereunder, in each case, as in effect on the date
the Indenture is qualified under the TIA.
"TRANSFER RESTRICTED SECURITIES": Each Debenture and each share of
Common Stock issued upon conversion of Debentures until the earlier of:
(i) the date on which such Debenture or such
share of Common Stock issued upon conversion has been
effectively
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registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement;
(ii) the date on which such Debenture or such
share of Common Stock issued upon conversion is transferred in
compliance with Rule 144 under the Securities Act or may be
sold or transferred by a person who is not an affiliate of the
Company pursuant to Rule 144(k) under the Securities Act (or
any other similar provision then in effect); or
(iii) the date on which such Debenture or such
share of Common Stock issued upon conversion ceases to be
outstanding (whether as a result of redemption, repurchase and
cancellation, conversion or otherwise).
"UNDERWRITTEN REGISTRATION": A registration in which Debentures of the
Company are sold to an underwriter for reoffering to the public.
Unless the context otherwise requires, the singular includes the
plural, and words in the plural include the singular.
2. Shelf Registration.
(a) The Company shall:
(i) not later than 90 days after the date hereof
(the "SHELF FILING DEADLINE"), cause to be filed a
registration statement pursuant to Rule 415 under the
Securities Act (the "SHELF REGISTRATION STATEMENT"), which
Shelf Registration Statement shall provide for resales of all
Transfer Restricted Securities held by Holders that have
provided the information required pursuant to the terms of
Section 2(e) hereof;
(ii) use its reasonable best efforts to cause the
Shelf Registration Statement to be declared effective by the
Commission not later than 210 days after the date hereof (the
"EFFECTIVENESS TARGET DATE"); and
(iii) use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective,
supplemented and amended as required by the provisions of
Section 4(b) hereof to the extent necessary to ensure that (A)
it is available for resales by the Holders entitled to the
benefit of this Agreement and (B) conforms with the
requirements of this Agreement and the Securities Act and the
rules and regulations of the Commission promulgated thereunder
as announced from time to time, for a period (the
"EFFECTIVENESS PERIOD") until the earliest of:
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(1) the date when the Holders are able
to sell all such Transfer Restricted Securities
immediately without restriction pursuant to the
volume limitation provisions of Rule 144 under the
Securities Act; or
(2) the date when all of the Transfer
Restricted Securities are disposed of pursuant to the
Shelf Registration Statement or Rule 144 under the
Securities Act or any similar provision then in
effect.
(b) With the exception of America Online, Inc., AT&T
Corp. and SBC Communications, Inc., none of the Company's security
holders other than the Holders shall have the right to include any of
the Company's securities in the Shelf Registration Statement.
(c) If the Shelf Registration Statement or any Subsequent
Shelf Registration Statement ceases to be effective for any reason at
any time during the Effectiveness Period (other than because all
Transfer Restricted Securities registered thereunder shall have been
resold pursuant thereto or shall have otherwise ceased to be Transfer
Restricted Securities), the Company shall use its best efforts to
obtain the prompt withdrawal of any order suspending the effectiveness
thereof, and in any event shall within thirty (30) days of such
cessation of effectiveness amend the Shelf Registration Statement in a
manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional Shelf
Registration Statement covering all of the securities that as of the
date of such filing are Transfer Restricted Securities (a "SUBSEQUENT
SHELF REGISTRATION STATEMENT"). If a Subsequent Shelf Registration
Statement is filed, the Company shall use its reasonable best efforts
to cause the Subsequent Shelf Registration Statement to become
effective as promptly as is practicable after such filing and to keep
such Registration Statement (or subsequent Shelf Registration
Statement) continuously effective until the end of the Effectiveness
Period.
(d) The Company shall supplement and amend the Shelf
Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used by the Company
for such Shelf Registration Statement, if required by the Securities
Act or as reasonably requested by the Initial Purchasers or by the
Trustee on behalf of the Holders covered by such Shelf Registration
Statement.
(e) Each Holder agrees that if such Holder wishes to sell
Transfer Restricted Securities pursuant to a Shelf Registration
Statement and related Prospectus, it will do so only in accordance with
this Section 2(e) and Section 4(b). Each Holder wishing to sell
Transfer Restricted Securities pursuant to a Shelf Registration
Statement and related Prospectus must deliver a Notice and
Questionnaire to the Company. In
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order to be named as a selling securityholder in the Prospectus at the
time of effectiveness of the Shelf Registration Statement, the Notice
and Questionnaire must be delivered at least five (5) Business Days
prior to the effectiveness of the Shelf Registration Statement. From
and after the date the Shelf Registration Statement is declared
effective, the Company shall, as promptly as practicable after the date
a Notice and Questionnaire is delivered, and in any event upon the
later of (x) fifteen (15) Business Days after such date or (y) fifteen
(15) Business Days after the expiration of any Suspension Period in
effect when the Notice and Questionnaire is delivered or put into
effect within fifteen (15) Business Days of such delivery date:
(i) if required by applicable law, file with the
SEC a post-effective amendment to the Shelf Registration
Statement or prepare and, if required by applicable law, file
a supplement to the related Prospectus or a supplement or
amendment to any document incorporated therein by reference or
file any other required document so that the Holder delivering
such Notice and Questionnaire is named as a selling
securityholder in the Shelf Registration Statement and the
related Prospectus in such a manner as to permit such Holder
to deliver such Prospectus to purchasers of the Transfer
Restricted Securities in accordance with applicable law and,
if the Company shall file a post-effective amendment to the
Shelf Registration Statement, use its reasonable best efforts
to cause such post-effective amendment to be declared
effective under the Securities Act as promptly as is
practicable, but in any event by the date (the "AMENDMENT
EFFECTIVENESS DEADLINE DATE") that is forty-five (45) days
after the date such post effective amendment is required by
this clause to be filed;
(ii) provide such Holder copies of any documents
filed pursuant to Section 2(e)(i); and
(iii) notify such Holder as promptly as
practicable after the effectiveness under the Securities Act
of any post-effective amendment filed pursuant to Section
2(e)(i);
provided that if such Notice and Questionnaire are delivered during a Suspension
Period, the Company shall so inform the Holder delivering such Notice and
Questionnaire and shall take the actions set forth in clauses (i), (ii) and
(iii) above upon expiration of the Suspension Period in accordance with Section
4(b). Notwithstanding anything contained herein to the contrary, (i) the Company
shall be under no obligation to name any Holder that is not a Notice Holder as a
selling securityholder in any Registration Statement or related Prospectus and
(ii) the Amendment Effectiveness Deadline Date shall be extended by up to five
(5) Business Days after the expiration of a Suspension Period (and the Company
shall incur no obligation to pay Liquidated Damages during such extension) if
such
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Suspension Period shall be in effect on the Amendment Effectiveness Deadline
Date.
3. Liquidated Damages.
(a) Each event referred to in the following clauses (i)
through (vi), is a "REGISTRATION DEFAULT":
(i) the Shelf Registration Statement is not
filed with the Commission prior to or on the Shelf Filing
Deadline;
(ii) the Shelf Registration Statement has not
been declared effective by the Commission prior to or on the
Effectiveness Target Date;
(iii) except as provided in Section 4(b)(i)
hereof, the Shelf Registration Statement is filed and declared
effective but, during the Effectiveness Period, shall
thereafter cease to be effective or fail to be usable for its
intended purpose without being succeeded within five (5)
Business Days by a post-effective amendment to the Shelf
Registration Statement, a supplement to the Prospectus or a
report filed with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act that cures such failure
and, in the case of a post-effective amendment, is itself
immediately declared effective; or
(iv) (A) prior to or on the 45th or 60th day, as
the case may be, of any Suspension Period, such suspension has
not been terminated or (B) Suspension Periods exceed an
aggregate of 90 days in any 360 day period.
For purposes of this Agreement, each Registration Default set forth
above shall begin and be cured on the dates set forth in the table below:
Type of
Registration Default Beginning Cure
by Clause Date Date
-------------------- ------------------------------- -------------------------------
(i) Shelf Filing Deadline the date the Shelf Registration
Statement is filed
(ii) Effectiveness Target Date the date the Shelf Registration
Statement is declared effective
by the Commission
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Type of
Registration Default Beginning Cure
by Clause Date Date
-------------------- ------------------------------- -------------------------------
(iii) the date five Business Days the date any post-effective
following the date that the amendment is declared effective
Shelf Registration Statement by the Commission or any
ceases to be effective or fails supplement to the Prospectus or
to be usable report is filed that makes the
Shelf Registration Statement
usable
(iv) the date on which a Suspension termination of the applicable
Period, or the aggregate Suspension Period
duration of Suspension Periods
in any period, exceeds the
permitted number of days
(b)
(A) in respect of the Debentures, to
each holder of Debentures, if a Registration Default
occurs, other than a Registration Default relating to
a failure to file or have an effective Shelf
Registration Statement with respect to shares of
Common Stock issuable upon conversion of the
Debentures that are Transfer Restricted Securities,
the Company hereby agrees to pay interest
("LIQUIDATED DAMAGES") with respect to the Debentures
that are Transfer Restricted Securities from and
including the day following the beginning of the
Registration Default to but excluding the earlier of
(1) the day on which the Registration Default has
been cured and (2) the date the Shelf Registration
Statement is no longer required to be kept effective,
accruing at a rate (x) with respect to the first
90-day period during which a Registration Default
shall have occurred and be continuing, equal to 0.25%
per annum of the aggregate principal amount of the
Debentures, and (y) with respect to the period
commencing on the 91st day following the day the
Registration Default shall have occurred and be
continuing, equal to 0.50% per annum of the aggregate
principal amount of the Debentures; provided that in
no event shall Liquidated Damages accrue at a rate
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per year exceeding 0.50% of the aggregate principal
amount of the Debentures; and
(B) in respect of any shares of Common
Stock, to each holder of shares of Common Stock
issued upon conversion of the Debentures, no
Liquidated Damages on such Common Stock will be
payable, but the holder of shares of Common Stock
shall be entitled to receive additional Common Stock
upon conversion (except to the extent that the
Company elects to deliver cash upon conversion).
(c) All accrued Liquidated Damages shall be paid in
arrears to Record Holders by the Company on each Liquidated Damages
Payment Date. Upon the cure of all Registration Defaults relating to
any particular Debenture or share of Common Stock, the accrual of
Liquidated Damages with respect to such Debenture or share of Common
Stock will cease.
(d) All obligations of the Company set forth in this
Section 3 that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted
Security shall survive until such time as all such obligations with
respect to such Transfer Restricted Security shall have been satisfied
in full.
The Liquidated Damages set forth above shall be the exclusive monetary
remedy available to the Holders for each Registration Default.
4. Registration Procedures.
(a) In connection with the Shelf Registration Statement,
the Company shall comply with all the provisions of Section 4(b) hereof
and shall use its best efforts to effect such registration to permit
the sale of the Transfer Restricted Securities, and pursuant thereto,
shall as expeditiously as possible prepare and file with the Commission
a Shelf Registration Statement relating to the registration on any
appropriate form under the Securities Act.
(b) In connection with the Shelf Registration Statement
and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities, the Company shall:
(i) Subject to any notice by the Company in
accordance with this Section 4(b) of the existence of any fact
or event of the kind described in Section 4(b)(iii)(D), use
its best efforts to keep the Shelf Registration Statement
continuously effective during the Effectiveness Period; upon
the occurrence of any event that would cause the Shelf
Registration Statement or the Prospectus contained
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therein (A) to contain a material misstatement or omission or
(B) not to be effective and usable for resale of Transfer
Restricted Securities during the Effectiveness Period, the
Company shall file promptly an appropriate amendment to the
Shelf Registration Statement, a supplement to the Prospectus
or a report filed with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, in the case of
clause (A), correcting any such misstatement or omission, and,
in the case of either clause (A) or (B), use its best efforts
to cause such amendment to be declared effective and the Shelf
Registration Statement and the related Prospectus to become
usable for their intended purposes as soon as practicable
thereafter. Notwithstanding the foregoing, the Company may
suspend the effectiveness of the Shelf Registration Statement
by written notice to the Holders for a period not to exceed an
aggregate of 45 days in any 90-day period (each such period, a
"SUSPENSION PERIOD") if:
(x) an event occurs and is continuing as a
result of which the Shelf Registration Statement, the
Prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein would, in the
Company's judgment, contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading; and
(y) the Company determines in good faith
that the disclosure of such event at such time would be
seriously detrimental to the Company and its subsidiaries;
provided that, in the event the disclosure relates to a previously
undisclosed proposed or pending material business transaction, the
disclosure of which the Company determines in good faith would be
reasonably likely to impede the Company's ability to consummate such
transaction, the Company may extend a Suspension Period from 45 days to
60 days; provided, however, that Suspension Periods shall not exceed an
aggregate of 90 days in any 360-day period. The Company shall not be
required to specify in the written notice to the Holders the nature of
the event giving rise to the Suspension Period.
(ii) Prepare and file with the Commission such
amendments and post-effective amendments to the Shelf
Registration Statement as may be necessary to keep the Shelf
Registration Statement effective during the Effectiveness
Period; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act, and to
comply fully with the applicable provisions of Rules 424 and
430A under the
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Securities Act in a timely manner; and comply with the
provisions of the Securities Act applicable to it with respect
to the disposition of all Debentures covered by the Shelf
Registration Statement during the applicable period in
accordance with the intended method or methods of distribution
by the sellers thereof set forth in the Shelf Registration
Statement or supplement to the Prospectus.
(iii) Advise the selling Holders promptly and, if
requested by such selling Holders, to confirm such advice in
writing, except as provided in clause (D) below:
(A) when the Prospectus or any
Prospectus supplement or post-effective amendment has
been filed, and, with respect to the Shelf
Registration Statement or any post-effective
amendment thereto, when the same has become
effective,
(B) of any request by the Commission
for amendments to the Shelf Registration Statement or
amendments or supplements to the Prospectus or for
additional information relating thereto,
(C) of the issuance by the Commission
of any stop order suspending the effectiveness of the
Shelf Registration Statement under the Securities Act
or of the suspension by any state securities
commission of the qualification of the Transfer
Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for
any of the preceding purposes, or
(D) of the existence of any fact or the
happening of any event, during the Effectiveness
Period, that makes any statement of a material fact
made in the Shelf Registration Statement, the
Prospectus, any amendment or supplement thereto, or
any document incorporated by reference therein
untrue, or that requires the making of any additions
to or changes in the Shelf Registration Statement or
the Prospectus in order to make the statements
therein not misleading.
If at any time the Commission shall issue any stop order suspending the
effectiveness of the Shelf Registration Statement, or any state
securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under state securities or Blue Sky
laws, the Company shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time and will provide
to each Holder who is named in
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the Shelf Registration Statement prompt notice of the withdrawal of any
such order.
(iv) Make available at reasonable times for
inspection by one or more representatives of the selling
Holders, designated in writing by a Majority of Holders whose
Transfer Restricted Securities are included in the Shelf
Registration Statement, and any attorney or accountant
retained by such selling Holders, all financial and other
records, pertinent corporate documents and properties of the
Company as shall be reasonably necessary to enable them to
conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act, and cause the Company's
officers, directors, managers and employees to supply all
information reasonably requested by any such representative or
representatives of the selling Holders, attorney or accountant
in connection therewith; provided, however, that the Company
shall have no obligation to deliver information to any selling
Holder or representative pursuant to this Section 4(b)(iv)
unless such selling Holder or representative shall have
executed and delivered a confidentiality agreement in a form
acceptable to the Company relating to such information.
(v) If requested by any selling Holders,
promptly incorporate in the Shelf Registration Statement or
Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling
Holders may reasonably request to have included therein,
including, without limitation, information relating to the
"PLAN OF DISTRIBUTION" of the Transfer Restricted Securities.
(vi) Furnish to each selling Holder upon their
request, without charge, at least one copy of the Shelf
Registration Statement, as first filed with the Commission,
and of each amendment thereto (and any documents incorporated
by reference therein or exhibits thereto (or exhibits
incorporated in such exhibits by reference) as such Person may
request).
(vii) Deliver to each selling Holder, without
charge, as many copies of the Prospectus (including each
preliminary Prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; subject to any
notice by the Company in accordance with this Section 4(b) of
the existence of any fact or event of the kind described in
Section 4(b)(iii)(D), the Company hereby consents to the use
of the Prospectus and any amendment or supplement thereto by
each of the selling Holders in connection with the offering
and the sale of the Transfer Restricted Securities
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covered by the Prospectus or any amendment or supplement
thereto.
(viii) Before any public offering of Transfer
Restricted Securities, cooperate with the selling Holders and
their counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions in the
United States as the selling Holders may reasonably request
and do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of the
Transfer Restricted Securities covered by the Shelf
Registration Statement; provided, however, that the Company
shall not be required (A) to register or qualify as a foreign
corporation or a dealer of securities where it is not now so
qualified or to take any action that would subject it to the
service of process in any jurisdiction where it is not now so
subject or (B) to subject itself to general or unlimited
service of process or to taxation in any such jurisdiction if
they are not now so subject.
(ix) Cooperate with the selling Holders to
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends (unless required by applicable
securities laws); and enable such Transfer Restricted
Securities to be in such denominations and registered in such
names as the Holders may request at least two Business Days
before any sale of Transfer Restricted Securities.
(x) Use its reasonable best efforts to cause the
Transfer Restricted Securities covered by the Shelf
Registration Statement to be registered with or approved by
such other U.S. governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted
Securities.
(xi) Subject to Section 4(b)(i) hereof, if any
fact or event contemplated by Section 4(b)(iii)(D) hereof
shall exist or have occurred, use its best efforts to prepare
a supplement or post-effective amendment to the Shelf
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of
Transfer Restricted Securities, the 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 light of the
circumstances in which they are made, not misleading.
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(xii) Provide CUSIP numbers for all Transfer
Restricted Securities not later than the effective date of the
Shelf Registration Statement and provide the Trustee under the
Indenture with certificates for the Debentures that are in a
form eligible for deposit with The Depository Trust Company.
(xiii) 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 that is required to
be retained in accordance with the rules and regulations of
the NASD.
(xiv) Otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission
and all reporting requirements under the rules and regulations
of the Exchange Act.
(xv) Cause the Indenture to be qualified under
the TIA not later than the effective date of the Shelf
Registration Statement required by this Agreement, and, in
connection therewith, cooperate with the Trustee and the
holders of Debentures to effect such changes to the Indenture
as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its
best efforts to cause the Trustee thereunder to execute all
documents that may be required to effect such changes and all
other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a
timely manner.
(xvi) Cause all Common Stock covered by the Shelf
Registration Statement to be listed or quoted, as the case may
be, on each securities exchange or automated quotation system
on which Common Stock is then listed or quoted.
(xvii) Provide to each Holder upon written request
each document filed with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange Act
after the effective date of the Shelf Registration Statement,
unless such document is available through the Commission's
XXXXX system.
(c) Each Holder agrees by acquisition of a Transfer
Restricted Security that, upon receipt of any notice (a "SUSPENSION
NOTICE") from the Company of the existence of any fact of the kind
described in Section 4(b)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to
the Shelf Registration Statement until:
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(i) such Holder has received copies of the
supplemented or amended Prospectus contemplated by Section
4(b)(xi) hereof; or
(ii) such Holder is advised in writing by the
Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus.
If so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such Suspension Notice.
(d) Each Holder agrees by acquisition of a Transfer
Restricted Security, that no Holder shall be entitled to sell any of
such Transfer Restricted Securities pursuant to a Registration
Statement; or to receive a Prospectus relating thereto, unless such
Holder has furnished the Company with a Notice and Questionnaire as
required pursuant to Section 2(e) hereof (including the information
required to be included in such Notice and Questionnaire) and the
information set forth in the next sentence. Each Notice Holder agrees
promptly to furnish to the Company all information required to be
disclosed in order to make the information previously furnished to the
Company by such Notice Holder not misleading and any other information
regarding such Notice Holder and the distribution of such Transfer
Restricted Securities as the Company may from time to time reasonably
request in writing. Any sale of any Transfer Restricted Securities by
any Holder shall constitute a representation and warranty by such
Holder that the information relating to such Holder and its plan of
distribution is as set forth in the Prospectus delivered by such Holder
in connection with such disposition, that such Prospectus does not as
of the time of such sale contain any untrue statement of a material
fact relating to or provided by such Holder to its plan of distribution
and that such Prospectus does not as of the time of such sale omit to
state any material fact relating to or provided by such Holder or its
plan of distribution necessary to make the statements in such
Prospectus, in the light of the circumstances under which they were
made not misleading.
5. Registration Expenses.
All expenses incident to the Company's performance of or compliance
with this Agreement shall be borne by the Company regardless of whether a Shelf
Registration Statement becomes effective, including, without limitation:
(i) all registration and filing fees and
expenses (including filings made with the NASD);
16
(ii) all fees and expenses of compliance with
federal securities and state Blue Sky or securities laws;
(iii) all expenses of printing (including printing
of Prospectuses and certificates for the Common Stock to be
issued upon conversion of the Debentures) and the Company's
expenses for messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel to the
Company;
(v) all application and filing fees in
connection with listing (or authorizing for quotation) the
Common Stock on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent
certified public accountants of the Company.
The Company shall bear its internal expenses (including, without
limitation, all salaries and expenses of their officers and employees performing
legal, accounting or other duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
6. Indemnification And Contribution.
(a) The Company agrees to indemnify and hold harmless
each Holder by the Shelf Registration Statement (including each Initial
Purchaser), its directors, officers, and employees and each person, if
any, who controls any such Holder within the meaning of the Securities
Act or the Exchange Act (each, an "INDEMNIFIED HOLDER"), against any
loss, claim, damage, liability or expense, joint or several, or any
action in respect thereof (including, but not limited to, any loss,
claim, damage, liability or action relating to resales of the Transfer
Restricted Securities), to which such Indemnified Holder may become
subject, insofar as any such loss, claim, damage, liability or action
arises out of, or is based upon:
(i) any untrue statement or alleged untrue
statement of a material fact contained in (A) the Shelf
Registration Statement as originally filed or in any amendment
thereof, in any Prospectus, or in any amendment or supplement
thereto or (B) any blue sky application or other document or
any amendment or supplement thereto prepared or executed by
the Company (or based upon written information furnished by or
on behalf of the Company expressly for use in such blue sky
application or other document or amendment on supplement)
filed in any jurisdiction specifically for the purpose of
qualifying any or all of the Transfer Restricted Securities
under the securities law of any state or other jurisdiction
17
(such application or document being hereinafter called a "BLUE
SKY APPLICATION"); or
(ii) the omission or alleged omission to state
therein 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 agrees to reimburse each Indemnified Holder promptly upon demand for any
legal or other expenses reasonably incurred by such Indemnified Holder in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of a Holder (or its related Indemnified Holder)
specifically for use therein. The foregoing indemnity agreement is in addition
to any liability which the Company may otherwise have.
(b) Each Holder, severally and not jointly, agrees to
indemnify and hold harmless the Company, its directors, officers and
employees and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act to the same extent as
the foregoing indemnity from the Company to each such Holder, but only
with reference to written information relating to such Holder furnished
to the Company by or on behalf of such Holder specifically for
inclusion in the documents referred to in the foregoing indemnity. The
indemnity agreement set forth in this Section shall be in addition to
any liabilities which any such Holder may otherwise have. In no event
shall any Holder, its directors, officers or any person who controls
such Holder be liable or responsible for any amount in excess of the
amount by which the total amount received by such Holder with respect
to its sale of Transfer Restricted Securities pursuant to a Shelf
Registration Statement exceeds (i) the amount paid by such Holder for
such Transfer Restricted Securities and (ii) the amount of any damages
that such Holder, its directors, officers or any person who controls
such Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission.
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under this Section 6, notify
the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have under this Section 6 except to the extent it has been materially
prejudiced by such failure and, provided,
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further, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 6. If any such claim or action shall
be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under
this Section 6 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that the Holders
shall have the right to employ a single counsel to represent jointly
the Holders and their directors, officers, employees and controlling
persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Holders against the
Company under this Section 6 if the Holders seeking indemnification
shall have been advised by legal counsel that there may be one or more
legal defenses available to such Holders and their respective officers,
employees and controlling persons that are different from or additional
to those available to the Company, and in that event, the fees and
expenses of such separate counsel shall be paid by the Company. No
indemnifying party shall:
(i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably
withheld) settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such
claim or action), unless such settlement, compromise or
consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action,
suit or proceeding, or
(ii) be liable for any settlement of any such
action effected without its written consent (which consent
shall not be unreasonably withheld).
(d) The indemnifying party under this Section shall not
be liable for any settlement of any proceeding effected without its
written consent, which shall not be withheld unreasonably, but if
settled with such consent or if there is a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified
party against any loss, claim, damage, liability or expense by reason
of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified
19
party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by
Section 6(c) hereof, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise
or consent (x) includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
action, suit or proceeding and (y) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on
behalf of any indemnified party.
(e) If the indemnification provided for in this Section 6
shall for any reason be unavailable or insufficient to hold harmless an
indemnified party under Section 6(a) or 6(b) in respect of any loss,
claim, damage or liability (or action in respect thereof) referred to
therein, each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability
(or action in respect thereof):
(i) in such proportion as is appropriate to
reflect the relative benefits received by the Company from the
offering and sale of the Transfer Restricted Securities on the
one hand and a Holder with respect to the sale by such Holder
of the Transfer Restricted Securities on the other, or
(ii) if the allocation provided by Section
6(e)(i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits
referred to in Section 6(e)(i) but also the relative fault of
the Company on the one hand and the Holders on the other in
connection with the statements or omissions or alleged
statements or alleged omissions that resulted in such loss,
claim, damage or liability (or action in respect thereof), as
well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and a Holder on
the other with respect to such offering and such sale shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Debentures purchased under the Purchase Agreement (before deducting expenses)
received by the Company, on the one hand, bear to the total proceeds received by
such
20
Holder with respect to its sale of Transfer Restricted Securities on the
other. The relative fault of the parties shall be determined by reference to
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 the Company on the one hand or the Holders on the other, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
each Holder agree that it would not be just and equitable if the amount of
contribution pursuant to this Section 6(e) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(e).
The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section 6 shall be deemed to include, for purposes of this Section
6, any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim.
Notwithstanding the provisions of this Section 6, no Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Transfer Restricted Securities purchased by it were resold
exceeds the amount of any damages which such Holder has otherwise been required
to pay by reason of any 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. The Holders' obligations to contribute as provided in this
Section 6(e) are several and not joint.
(f) The provisions of this Section 6 shall remain in full
force and effect, regardless of any investigation made by or on behalf
of any Holder or the Company or any of the officers, directors or
controlling persons referred to in this Section 6 hereof, and will
survive the sale by a Holder of Transfer Restricted Securities.
7. Rule 144A and Rule 144. The Company agrees with each Holder,
for so long as any Transfer Restricted Securities remain outstanding and during
any period in which the Company (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder, to such Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Securities Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13
or 15 (d) of the Exchange Act, to make all filings required thereby in a timely
manner in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144.
21
8. No Participation In Underwritten Registrations. No Holder may
participate in any Underwritten Registration hereunder.
9. Miscellaneous.
(a) Remedies. The Company acknowledges and agrees that
any failure by the Company to comply with its obligations under Section
2 hereof may result in material irreparable injury to the Initial
Purchasers or the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries
precisely, and that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be required to
specifically enforce the Company's obligations under Section 2 hereof.
The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) Actions Affecting Transfer Restricted Securities. The
Company shall not, directly or indirectly, take any action with respect
to the Transfer Restricted Securities as a class that would adversely
affect the ability of the Holders to include such Transfer Restricted
Securities in a registration undertaken pursuant to this Agreement.
(c) No Inconsistent Agreements. The Company has not, as
of the date hereof, entered into, nor shall it, on or after the date
hereof, enter into, any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. In
addition, the Company shall not grant to any of its securityholders
(other than the Holders in such capacity) the right to include any of
its securities in the Shelf Registration Statement provided for in this
Agreement other than the Transfer Restricted Securities.
(d) Amendments and Waivers. This Agreement may not be
amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of a Majority of Holders;
provided, however, that with respect to any matter that directly or
indirectly adversely affects the rights of any Initial Purchaser
hereunder, the Company shall obtain the written consent of each such
Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the
foregoing (except the foregoing proviso), a waiver or consent to depart
from the provisions hereof, with respect to a matter, which relates
exclusively to the rights of Holders whose securities are being sold
pursuant to a Shelf Registration Statement and does not directly or
indirectly adversely affect the rights of other Holders, may be given
by the Majority Holders, determined on the basis of Debentures being
sold rather than registered under such Shelf Registration Statement.
22
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand
delivery, first class mail (registered or certified, return receipt
requested), telex, facsimile transmission, or air courier guaranteeing
overnight delivery:
(i) if to a Holder, at the address set forth on
the records of the registrar under the Indenture or the
transfer agent of the Common Stock, as the case may be; and
(ii) if to the Company, initially at its address
set forth in the Purchase Agreement,
With a copy to:
Fenwick & West LLP
Silicon Valley Center
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: 650-938-5200
Attention: Xxxxxx Xxxxxxx
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five (5) Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if transmitted by
facsimile; and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Any party hereto may change the address for receipt of communications
by giving written notice to the others.
(f) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each
of the parties, including without limitation and without the need for
an express assignment, subsequent Holders. The Company hereby agrees to
extend the benefit of this Agreement to any Holder and any such Holder
may specifically enforce the provisions of this Agreement as if an
original party hereto.
(g) 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.
(h) Debentures Held by the Company or Their Affiliates.
Whenever the consent or approval of Holders of a specified percentage
of Transfer Restricted Securities is required hereunder, Transfer
Restricted Securities held by the Company or its Affiliates (other than
subsequent
23
Holders if such subsequent Holders are deemed to be Affiliates solely
by reason of their holding of such Debentures) shall not be counted in
determining whether such consent or approval was given by the Holders
of such required percentage.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(j) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
(k) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby, it being intended that all of the rights and privileges of the
parties shall be enforceable to the fullest extent permitted by law.
(l) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be 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 with respect to the
registration rights granted by the Company with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject
matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COVAD COMMUNICATIONS GROUP, INC.
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
BANC OF AMERICA SECURITIES LLC
Acting as Representative of the several Initial Purchasers
named in Schedule A to the Purchase Agreement
BANC OF AMERICA SECURITIES LLC
By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Director
24
