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EXHIBIT 4.9
This REGISTRATION RIGHTS AGREEMENT as modified, supplemented or amended from
time to time; (this "Agreement") is made and entered into as of 8 December,
1998 by and among Global TeleSystems Group, Inc., a Delaware corporation (the
"Company" or the "Registrant"), and certain persons listed on the signature
page hereto (the "Shareholders") that hold equity interests ("Equity
Interests") in Esprit Telecom Group plc ("Esprit") in the form of ordinary
shares, nominal value 1p each (the "Ordinary Shares") or American Depositary
Shares, which represent the right to receive seven Ordinary Shares.
Whereas the Company has proposed to make, subject to certain pre-conditions
(the "Pre-Conditions"), as set out in the joint press announcement dated 8
December, 1998 (the "Press Announcement"), an exchange offer (the "Offer") for
all of the outstanding share capital of Esprit;
Whereas as part of the Offer, the Company will offer the Shareholders as
consideration, shares (the "Shares") of common stock of the Company, par value
$0.10 per share ("Common Stock"), pursuant to a registration statement on Form
S-4 (the "S-4 Registration Statement");
Whereas in order to induce the Company to make the Offer, each Shareholder has
severally agreed to execute an irrevocable undertaking (an "Irrevocable") to
tender the Equity Interests held by such Shareholder if certain conditions are
satisfied and the Company makes the Offer;
Now, therefore in order to induce each Shareholder to enter into an
Irrevocable, the Company has agreed to provide the registration rights set
forth in this Agreement for the benefit of the Shareholders, and their direct
and indirect transferees and assigns. This Agreement has been entered into
simultaneously with the Irrevocable by each Shareholder.
The parties hereby agree as follows:
1. INTERPRETATION AND DEFINITIONS
"Business Day" means any day, other than a Saturday or Sunday, that is not a
day on which banking institutions in the Borough of Manhattan, the City of New
York, Wilmington, Delaware or London, United Kingdom are authorized or required
by law, regulation or executive order to close.
"Closing Date" means the date determined by the Registrant's independent
auditors as the date that the acquisition of Esprit is deemed consummated in
connection with determining whether such acquisition will receive "pooling of
interests" accounting treatment (for the avoidance of doubt, the first day of
the 30 day period of combined operations of the Company and Esprit contemplated
by Clause 2.1(A));
"Commission" means the U.S. Securities and Exchange Commission;
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"Deadline" as defined in Clause 2.1(A);
"Effectiveness End Date" means the earliest to occur of the date that is (i)
the date upon which Holders of Shares are able to sell all such Shares
immediately without restriction pursuant to Rule 144(k) or Rule 145(d) (if
applicable) under the Securities Act or otherwise or, if Rule 144(k) or Rule
145(d) (if applicable) is amended to provide a shorter restricted period, such
shorter period, (ii) the date on which the Company obtains written confirmation
from the Division of Corporate Finance of the Commission recommending that no
action be taken by the Commission in connection with the resale of Shares by
Shareholders without regard to volume or other restrictions under the
Securities Act upon resale (provided that on the Closing Date such Shareholders
receive an opinion of counsel to the effect that the Shares may be so sold); or
(iii) the date as of which all of the Shares are resold pursuant to the
Registration Statement;
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder;
"Holders" means the Shareholders and any direct or indirect transferee of a
Shareholder who agrees in writing to be bound by the provisions of this
Agreement;
"NASD" means the National Association of Securities Dealers, Inc.;
"Participant" as defined in Clause 5.1;
"Person" means an individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof;
"Prospectus" means the resale prospectus included in the Registration Statement
pursuant to which the Holders will be permitted to resell Shares, including any
preliminary prospectus, in each case as the same may be 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;
"Registrant" as defined in the preamble hereto;
"Registration Statement" means whichever of the S-4 Registration Statement or
the other registration statement referred to in Clause 2.1(B) that includes the
Prospectus, together with all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein;
"Securities Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder; and
"Underwritten Offering" means a sale or other transfer of Shares by a Holder to
an underwriter for re-offering to the public.
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2. PUBLICATION, REGISTRATION AND TRANSFER RESTRICTIONS
2.1 PUBLICATION AND REGISTRATION
The Registrant shall:
(A) as soon as practicable after the Closing Date, prepare, publish
and otherwise publicly disclose financials ("Financials") of the
Company which shall include a period of at least 30 days of
combined operations of the Company and Esprit in the form of a
quarterly earnings report, an effective registration statement
filed with the Commission, a report to the Commission on Form
10-K, 10-Q or 8-K, or any other public filing or announcement
which includes such combined results of operations (as required
by APB No. 16), provided that the date of publication of the
financials (the "Publication Date") shall in no event be later
than 20 days after the end of the calendar month that commences
immediately after the Closing Date (the "Deadline") and provided
further that the Registrant will immediately notify each Holder
in writing of such publication;
(B) before the Publication Date, either cause the S-4 Registration
Statement to include, or promptly file a new registration
statement with the Commission which will include, a Prospectus
which shall provide for resales of the Shares by Holders thereof
which have provided the information required pursuant to Clause
2.3 hereof; and
(C) use its reasonable best efforts to cause such Registration
Statement to be declared effective by the Commission as soon as
practicable, but in no event later than the Publication Date; and
use its reasonable best efforts to register or qualify the Shares
covered by such Registration Statement under such other
securities or blue sky laws of such jurisdiction within the
United States as shall be reasonably appropriate for the
distribution of the Shares covered by the Registration Statement;
provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business in or to file a general consent to service of process in
any jurisdiction wherein it would not but for the requirements of
this Clause 2.1(C) be obligated to do so; and provided, further,
that the Company shall not be required to qualify such Shares in
any jurisdiction in which the securities regulatory authority of
such jurisdiction requires that a Holder participating in such
registration submit any of its Shares to the terms, provisions
and restrictions of any escrow, lockup or similar agreement(s)
for consent to sell Shares in such jurisdiction unless such
Holder agrees to do so;
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(D) ensure that all of the Shares received by Shareholders in the
Offer will be fully registered, will include no legend thereon
restricting the transfer thereof, will be subject to no stop
order or other restriction on transfer except as provided in this
Agreement and will be approved for listing on the NASDAQ - NMS
and EASDAQ; and
(E) use its reasonable best efforts to keep such Registration
Statement continuously effective, supplemented and amended as
necessary to ensure that it is continuously available for resales
of Shares by the Holders entitled to the benefit of this
Agreement, to ensure that it conforms with the requirements of
this Agreement, the Securities Act and the policies of the
Commission as announced from time to time, through the period
ending on the Effectiveness End Date; provided, however, that for
30 days or less (whether or not consecutive) in any 12-month
period, the Company shall be permitted to suspend resales of the
Shares pursuant to the Registration Statement if the Registration
Statement is no longer effective or the Prospectus included
therein is no longer useable for resales due to certain
circumstances relating to pending corporate developments, public
filings with the Commission and similar events, or because such
Prospectus contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
provided, further, that in no event shall the Company be required
to keep the Registration Statement effective beyond the
Effectiveness End Date.
2.2 FAILURE TO KEEP REGISTRATION STATEMENT EFFECTIVE
If the Company shall fail to keep the Registration Statement
continuously effective or the Prospectus included therein useable for
resales in accordance with the proviso in Clause 2.1(E) or upon the
occurrence of an event contemplated by Clause 3.1(A) or 3.1(C)(iv), it
shall give Holders notice to suspend the resale of Shares pursuant to
the Registration Statement and will deduct from the 30-day period
referred to in Clause 2.1(E) the number of days during the period from
and including the date of the giving of notice to Holders of such
occurrence to and including the date when such Holders have received
copies of the supplemented or amended Prospectus necessary to permit
resales of Shares or to and including the date on which the Company has
given notice to Holders that the resale of the Shares pursuant to the
Registration Statement may be resumed, as the case may be.
2.3 PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
REGISTRATION STATEMENT
A Holder that proposes to sell Shares pursuant to the Prospectus and the
related Registration Statement shall be named as a selling security
holder in the Prospectus. Each Holder agrees to furnish promptly to the
Registrant such information as the Registrant may reasonably request for
use in connection with the Registration
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Statement or Prospectus included therein, as well as all information
required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
2.4 TRANSFER RESTRICTIONS
Each Shareholder agrees not to (i) sell, transfer or otherwise dispose
of, or execute any cashless exercise of stock options or warrants for
any nor (ii) enter into any arrangement to reduce such Shareholder's
risk relating to (x) any Equity Interests or (y) any Shares to be
received by such Shareholder in connection with the Offer for a period
commencing 30 days before the Closing Date and ending on the earliest of
(i) the Publication Date, (ii) the Deadline; and (iii) the date on which
the Offer ceases to qualify for "pooling of interests" accounting
treatment other than as a result of any action by such Shareholder;
provided that nothing in this Clause 2.4 shall prohibit the transfer of
Equity Interests contemplated by the Offer or the Irrevocable.
3. REGISTRATION PROCEDURES
3.1 GENERAL PROVISIONS
In connection with the Registration Statement and the Prospectus
required to be prepared by this Agreement, pursuant to the requirements
of Clause 2.1, the Registrant shall, subject to the provisions of Clause
2.3:
(A) upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (i) to
contain a material misstatement or omission, or (ii) not to be
effective and usable for resale of Shares during the period
required by this Agreement, the Registrant shall file promptly an
appropriate amendment to such Registration Statement, in the case
of Clause (i), correcting any such misstatement or omission, and,
in the case of either Clause (i) or (ii), use its reasonable best
efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become
usable for their intended purpose(s) as soon as practicable
thereafter;
(B) 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 Securities Act in a timely manner;
(C) advise each Holder promptly and, if requested by any Holder, to
confirm such advice in writing, (i) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed,
and, with respect to the Registration Statement or any post-
effective amendment thereto,
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when the same has become effective, (ii) of any request by the
Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional
information relating thereto, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Securities Act or of the
suspension by any state securities commission of the
qualification of the Shares for offering or resale in any
jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, or (iv) of the existence of any fact or the
happening of any event (without requiring the Company to disclose
the nature of such fact or happening) that makes any statement of
a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue in any material respect,
or that requires the making of any additions to or changes in the
Registration Statement or the Prospectus in order to make the
statements therein not misleading in any material respect. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from
qualification of the Shares under state securities or Blue Sky
laws, the Registrant shall use its reasonable best efforts to
obtain the withdrawal or lifting of such order at the earliest
possible time;
(D) make available at reasonable times for inspection by the selling
Holders, any underwriter participating in any Underwritten
Offering pursuant to such Registration Statement, and any
attorney or accountant retained by such Holders or any of the
underwriter(s), all financial and other records, pertinent
corporate documents and properties of the Registrant and cause
the Registrant's officers, trustees, directors, managers and
employees to supply all information reasonably requested by any
such Holder, underwriter, attorney or accountant in connection
with such Registration Statement subsequent to the filing thereof
and prior to its effectiveness or in connection with any
amendment or supplement thereto (including the filing of any
document that is to be incorporated by reference into the
Registration Statement) provided, however, that any information
that is reasonably and in good faith designated by the Company in
writing as confidential at the time of delivery of such
information shall be kept confidential by such Persons (and such
Persons shall so agree in writing), unless (i) disclosure of such
information is required by court or administrative order or is
necessary to respond to inquiries of regulatory authorities, (ii)
disclosure of such information is required by law (including any
disclosure requirements pursuant to federal securities laws in
connection with the filing of the Registration Statement or the
use of the Prospectus), (iii) such information becomes generally
available to the public other than as a result of a disclosure or
failure to safeguard by any such Person or (iv) such information
becomes available to any such Person
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from a source other than the Company and to the knowledge of such
Person, such source is not bound by a confidentiality agreement;
(E) if requested by any Holders or the underwriter(s) in any
Underwritten Offering promptly incorporate in the Registration
Statement or Prospectus, pursuant to a supplement or post-
effective amendment if necessary, such information as such
Holders and underwriter(s), if any, may reasonably request to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Shares being sold
to such underwriter(s), the purchase price being paid therefor
and any other terms of the offering of the Shares to be sold in
such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable
after the Registrant is notified of the matters to be
incorporated in such Prospectus supplement or post-effective
amendment;
(F) upon request of any Holder, furnish to such Holder and each of
the underwriter(s) in any Underwritten Offering acting on behalf
of any such Holder without charge, copies of the Registration
Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by
reference therein, if any, and all exhibits (including exhibits
incorporated therein by reference, if any), the Prospectus and
all other documents each such Holder may reasonably require in
order to facilitate its distribution of Shares;
(G) consent to the use of the Prospectus and any amendment or
supplement thereto by each of the Holders and each of the
underwriter(s) in any Underwritten Offering, if any, in
connection with the resale of the Shares covered by the
Prospectus or any amendment or supplement thereto;
(H) enter into such agreements (including an underwriting agreement),
and make such representations and warranties, and take all such
other actions in connection therewith in order to expedite or
facilitate the disposition of the Shares pursuant to the
Registration Statement contemplated by this Agreement, all to
such extent as may be requested by any Holder of Shares or any
underwriter in connection with any resale pursuant to the
Registration Statement contemplated by this Agreement; and in
connection with an Underwritten Offering, the Registrant shall
cause opinions and certificates to be prepared and delivered as
are customarily delivered by issuers to underwriters in primary
offerings; provided that the related underwriting agreement shall
set forth in full or incorporate by reference the
indemnification provisions and procedures of Clause 5 hereof with
respect to all parties to be indemnified pursuant to said Clause;
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(I) cooperate with the Holders, the underwriter(s) in any
Underwritten Offering, and their respective counsel in connection
with the registration and qualification of the Shares under the
securities or Blue Sky laws of such jurisdictions as the selling
Holders or underwriter(s) may reasonably request and do any and
all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of such Shares covered by the
Registration Statement;
(J) in connection with any Underwritten Offering, the Company will
agree to make available members of its senior management from
time to time upon reasonable notice at such place and times as
shall be reasonably requested for the purpose of conducting
"roadshow" type presentations for or one on one meetings with
potential purchasers of the Shares; provided, however, that such
roadshow shall be no more than five business days in duration;
(K) issue, upon the request of any Holder of Shares covered by the
Registration Statement, a number of shares of Common Stock equal
to the number of shares of Common Stock surrendered to the
Registrant by such Holder in exchange therefor or being resold by
such Holder; such Common Stock to be registered in the name of
such Holder or in the name of the purchaser(s) of such Common
Stock, as the case may be; in return, the Common Stock held by
such Holder shall be surrendered to the Registrant for
cancellation;
(L) cooperate with the Holders and the underwriter(s) in any
Underwritten Offering to facilitate the timely preparation and
delivery of certificates representing Common Stock to be sold;
and enable such Shares to be in such denominations and registered
in such names as the Holders or the underwriter(s), if any, may
request at least two Business Days prior to any resale of Shares
made by such underwriter(s); and
(M) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with
the rules and regulations of the NASD.
3.2 Each Holder agrees that, upon receipt of any notice from the Registrant
of the existence of any fact of the kind described in Clause 3.1(A) or
3.1(C)(iv), such Holder will forthwith discontinue disposition of the
Shares pursuant to the Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus
contemplated by Clauses 3.1(A) and 3.1(C)(i), or until it is advised in
writing (the "Advice") by the Registrant 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; provided that nothing herein
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shall limit the right of any Holder to sell or otherwise dispose of the
Shares pursuant to any available exemption under the Securities Act.
4. REGISTRATION EXPENSES
All expenses incident to the Registrant's performance of or compliance with
this Agreement in connection with Underwritten Offerings will be borne by the
Participants, regardless of whether the Registration Statement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses; (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing,
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Registrant; (v) all application and filing fees in
connection with listing the Shares on a national securities exchange or
automated quotation system or making them eligible for trading within any other
system pursuant to the requirements hereof; and (vi) all fees and disbursements
of independent certified public accountants of the Company (including the
expenses of any special audit and comfort letters required by or incident to
such performance). Notwithstanding the foregoing, in the event that other
securities of the Registrant are included in with Shares of a Holder in an
Underwritten Offering, a Holder shall only be obligated to pay its pro rata
share of such expenses.
The Registrant will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and
the fees and expenses of any Person, including special experts and legal
counsel, retained by the Registrant.
5. INDEMNIFICATION AND CONTRIBUTIONS
5.1 In connection with the Registration Statement, the Registrant shall
indemnify and hold harmless each Holder of Common Stock included within
the Registration Statement, and each person, if any, who controls any
such person within the meaning of the Securities Act and any underwriter
involved in any Underwritten Offering by such Holder (each, a
"Participant"), from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, but not
limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Common Stock) to which such Participant or
controlling person may become subject, under the Securities Act or
otherwise, insofar as 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 the Registration
Statement or any Prospectus or in any amendment or supplement thereto or
document incorporated by reference therein, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading or (iii) a
violation or alleged violation by the Company of the Securities Act or
the Exchange Act in connection with the Registration of the Shares, and
shall reimburse each Participant promptly upon demand for any legal or
other expenses reasonably incurred by such Participant in connection
with investigating or defending or preparing to defend against any such
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loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that (i) the Registrant shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged
untrue statement or omission or alleged omission made in the
Registration Statement or the Prospectus forming part thereof or in any
such amendment or supplement thereto in reliance upon and in conformity
with written information furnished to the Registrant by or on behalf of
any Participant specifically for inclusion therein. The foregoing
indemnity agreement is in addition to any liability which the
Registrant may otherwise have to any Participant or to any controlling
person of that Participant.
5.2 Each Participant, severally and not jointly, shall indemnify and hold
harmless the Registrant, each of its trustees, directors, officers,
employees or agents and each person, if any, who controls the Registrant
within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect
thereof, to which the Registrant or any such director, officer,
employees or agents or controlling person may become subject, under the
Securities Act or otherwise, insofar as 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
the Registration Statement or any Prospectus or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the
extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Registrant by or on behalf of that
Participant specifically for inclusion therein, and shall reimburse the
Registrant and any such trustee, director, officer, employees or agents
or controlling person for any legal or other expenses reasonably
incurred by the Registrant or any such trustee, director, officer,
employees or agents or controlling person in connection with
investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred;
provided, however, that (i) the obligations of each of the Participants
hereunder shall be limited to an amount equal to the net proceeds to
such Participant of the Shares sold in connection with such Registration
and (ii) no Participant shall be liable to any such person in any such
case to the extent of any such loss, claim, damage or liability (or
action or proceeding in respect thereof), if such Participant shall
sustain the burden of proving that such Registrant, agent or underwriter
or controlling person of such underwriter, or any other Participant, as
the case may be, sold Shares to the person alleging such loss, claim,
damage or liability (or action or proceeding in respect thereof),
without sending or giving, at or prior to the written confirmation of
such sale, a copy of the applicable Prospectus (excluding any documents
incorporated by reference therein) or the applicable Prospectus, as then
amended or supplemented (excluding any documents incorporated therein),
if such Prospectus corrected such untrue statement or alleged untrue
statement or omission or alleged omission. The foregoing indemnity
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agreement is in addition to any liability which any Participant may
otherwise have to the Registrant or any such trustee, director, officer
or controlling person.
5.3 Promptly after receipt by an indemnified party under this Clause 5 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 Clause 5, 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 Clause 5
except to the extent it has been materially prejudiced by such failure;
and provided 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 Clause 5. If any such claim
or action shall be brought against an indemnified party, and it shall
have notified 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 defence thereof with counsel satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified
party of its election to assume the defence of such claim or action, the
indemnifying party shall not be liable to the indemnified party under
this Clause 5 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defence thereof other than
reasonable costs of investigation; provided, however, that any
indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defence thereof but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the employment thereof has been specifically authorized
by the indemnifying party in writing, (ii) such indemnified party shall
have been advised by such counsel that there may be one or more legal
defences available to it which are different from or additional to those
available to the indemnifying party and in the reasonable judgment of
such counsel it is advisable for such indemnified party to employ
separate counsel or (iii) the indemnifying party has failed to assume
the defence of such action and employ counsel reasonably satisfactory to
the indemnified party, in which case, if such indemnified party notifies
the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defence of such action on behalf
of such indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for all such indemnified
parties, which firm shall be designated in writing by the indemnifying
party. 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
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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), but
if settled with its written consent or if there be a final judgment of
the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any
loss of liability by reason of such settlement or judgment.
5.4 If the indemnification provided for in this Clause 5 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified
party under Clause 5.1 or 5.2 in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in
respect thereof, in such proportion as shall be appropriate to reflect
the relative fault of the Registrant on the one hand and the
Participants on the other with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information
supplied by the Registrant or the Participants, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Registrant and the Participants agree that it would not be just and
equitable if contributions pursuant to this Clause 5.4 were to be
determined by pro rata allocation (even if the Participants were treated
as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred
to herein. 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 Clause 5.4 shall be deemed to
include, for purposes of this Clause 5.4, 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 Clause 5.4, no Participant shall be required to
contribute any amount in excess of the amount by which the total
proceeds received by such Participant with respect to the sale of its
Shares exceeds the amount of any damages which such Participant has
otherwise paid or become liable 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
Participants' obligations to contribute as provided in this Clause 5.4
are several and not joint.
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6. SELECTION OF UNDERWRITERS
Each Holder may sell Shares in an Underwritten Offering administered by an
investment banker or investment bankers or manager or managers to be selected
by the Registrant with the consent of a majority-in-interest of such Holders
participating in such Underwritten Offering (not to be unreasonably withheld,
it being understood that, among other factors, the fees to be paid to such
investment bank shall be a reasonable factor in determining whether such
Holder's consent is reasonable); provided, however, that the Registrant shall
have the right to delay any such Underwritten Offering by a period not to
exceed 45 days in the event such Underwritten Offering would, in the reasonable
judgment of the Registrant prevent or delay any other transaction being
considered by the Registrant or in the event such delay is necessary to comply
with any "quiet periods" under applicable securities regulations or the
requirements of any applicable securities exchange.
7. MISCELLANEOUS
7.1 REMEDIES
The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agree to waive the defence in
any action for specific performance that a remedy at law would be
adequate.
7.2 NO INCONSISTENT AGREEMENTS
The Company has not previously entered into any agreement granting any
registration rights with respect to its securities to any Person that
has not already been publicly filed with the Commission. The Company
represents and warrants that rights granted to the Holders hereunder do
not in any way conflict with and are not inconsistent with the rights
granted to the holders of the Company's securities under any agreement
in effect on the date hereof.
7.3 AMENDMENTS AND WAIVERS
The provisions of 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 Holders of a majority of the outstanding principal
amount of Shares.
7.4 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, telecopier, or air
courier guaranteeing overnight, or, in the case of international
deliveries, two business days, delivery:
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(A) if to a Holder, at the address set forth on the records of
Esprit; and
(B) if to the Company: Global TeleSystems, Inc., 0000 Xxxxxxxx Xxxxx,
Xxxxx Xxxxx, XxXxxx, Xxxxxxxx 00000, Attn: General Counsel.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered, five
Business Days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt acknowledged, if
telecopied; and on the next Business Day, if timely delivered to an
internationally recognized air courier guaranteeing overnight, or, in
the case of international deliveries, two business days, delivery.
7.5 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 of Shares; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a
Holder unless and to the extent such successor or assign acquired Common
Stock from such Holder.
7.6 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.
7.7 HEADINGS
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
7.8 GOVERNING LAW
This agreement and the rights and duties of the parties hereunder shall
be governed by and construed in accordance with the laws of the State of
New York.
7.9 CONSENT TO JURISDICTION
To the fullest extent permitted by applicable law, the Company and each
Holder irrevocably submits to the non-exclusive jurisdiction of any
federal or state court in the Borough of Manhattan in the City of New
York, County and State of New York or the City of XxXxxx, the
Commonwealth of Virginia, United States of America, in any suit or
proceeding based on or arising under this Agreement, and irrevocably
agrees that all claims in respect of such suit or proceeding may be
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determined in any such court. The Company and each Holder, to the
fullest extent permitted by applicable law, irrevocably and fully waives
the defence of an inconvenient forum to the maintenance of such suit or
proceeding and hereby irrevocably designates and appoints Shearman &
Sterling (the "Authorized Agent"), as its authorized agent upon whom
process may be served in any such suit or proceeding. The Company
represents that it has notified the Authorized Agent of such designation
and appointment and that the Authorized Agent has accepted the same in
writing. The Company hereby irrevocably authorizes and directs its
Authorized Agent to accept such service. The Company further agrees
that service of process upon its Authorized Agent and written notice of
said service to the Company mailed by first class mail or delivered to
its Authorized Agent shall be deemed in every respect effective service
of process upon the Company in any such suit or proceeding. Nothing
herein shall affect the right of any person to serve process in any
other manner permitted by law. The Company agrees that a final action
in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other lawful
manner.
The Company and each Holder hereby irrevocably waives, to the extent
permitted by law, any immunity to jurisdiction to which it may otherwise
be entitled (including, without limitation, immunity to pre-judgment
attachment, post-judgment attachment and execution) in any legal suit,
action or proceeding against it arising out of or based on this
Agreement or the transactions contemplated hereby.
The provisions of this Clause 7.9 are intended to be effective upon the
execution of this Agreement without any further action by the Company
and the introduction of a true copy of this Agreement into evidence
shall be conclusive and final evidence as to such matters.
7.10 SEVERABILITY
In the event that 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.
7.11 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 Registrant
with respect to the Shares. This Agreement supersedes all prior
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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.
GLOBAL TELESYSTEMS GROUP INC.
By: XXXXXX XXXXXX
----------------------------
APAX FUNDS NOMINEES LIMITED
By: XXXXXX XXXXXXX
----------------------------
WARBURG, XXXXXX VENTURES, L.P.
BY: X.X. XXXXXXX, XXXXXX & CO., LLC
MANAGER
By: XXXXXXX ITALIA
----------------------------
For and on behalf of Xxxxxxx
Xxxxxxxxxx Member
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