REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of the 2nd day of October, 1998 among U.S. RealTel, Inc., an Illinois
Corporation (the "Company"), Xxxxx X. Xxxxxxx ("Xxxxxxx"), Xxxxxxx Corp., an
Illinois Corporation ("Xxxxxxx Corp."), Xxxxxxx Xxxxxxx ("Xxxxxxx"), Xxxxxx
Xxxxxxx ("Xxxxxx"), the Xxxxxxxx Xxxxxxx Xxxxxxx Foundation (the
"Foundation"), Jordan X. Xxxxxx, individually and as joint tenant with Xxxxxx
X. Xxxxxx (in such capacities "Glazov"), Xxxxx X. Xxxx ("Xxxx"), Jo & Co., an
Indiana general partnership ("Jo & Co."), the Xxxxxx family trusts identified
on the signature pages hereto (the "Xxxxxx Trusts"), Access Financial Group,
Inc. ("Access"), Xxxx X. Xxxxxxx ("Xxxxxxx") and Xxxxx Xxxx ("Xxxx").
Xxxxxxx, Xxxxxxx Corp., Stanley, Steven, the Foundation, Glazov, Xxxx, Xx &
Co., the Xxxxxx Trusts, Access, Xxxxxxx and Xxxx are herein referred to
collectively as the "Shareholders".
RECITALS
A. As of the date of execution hereof, Jo & Co. and the Xxxxxx Trusts
are purchasing shares of the Corporation's Common Stock, $.001 par value (the
"Common Stock").
B. It is a condition to such purchases that the parties hereto enter
into this Agreement.
AGREEMENTS
In consideration of the foregoing recitals, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged,, the parties hereto hereby agree as follows:
1. DEFINITIONS. As used in this Agreement:
(a) "Commission" means the Securities and Exchange Commission and any
successor thereto.
(b) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
(c) "Holders" means the Shareholders and any subsequent holders of
Registrable Shares to whom the rights hereunder accrue pursuant to Section 9
hereof.
(d) "Registrable Securities" shall mean: (i) any shares of Common
Stock held by, or issued to, the parties hereto on the date hereof; (ii) the
Common Stock issued or issuable upon exercise of warrants issued by the
Company to any of the parties hereto; and (iii) any other securities of the
Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, in exchange for or in replacement of such
warrants or the Common Stock referenced in Subsection 1(d)(i) and (ii)
immediately above; PROVIDED, HOWEVER, that Registrable Securities shall not
be deemed to include any shares after such shares have been registered under
the Securities Act and sold pursuant to such registration or any shares sold
without registration under the Securities Act
in compliance with Rule 144, or pursuant to any other exemption from
registration under the Securities Act, to a Person who is free to resell such
shares without registration or restriction under the Securities Act; and
PROVIDED , that at any time subsequent to the Company having its shares
listed on a national securities exchange, Nasdaq National Market or Nasdaq
Small-Cap Market, Registrable Securities shall not include any shares which
are eligible to be sold without registration under the Securities Act in
compliance with subsection (k) of Rule 144.
(f) "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
2. PIGGY-BACK REGISTRATION RIGHTS. If (but without any obligation to do so)
the Company, at any time during the term of this Agreement, proposes to register
any of its securities under the Securities Act in connection with the public
offering of such securities solely for cash (other than a registration on Form
X-0, Xxxx X-0 or any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, each such
time, promptly give each Holder written notice of such registration (the
"Piggy-Back Notice"). Upon the written request of any Holder, given within
twenty (20) days after such Holder's receipt of such Piggy-Back Notice from the
Company, the Company shall, subject to the provisions of this section, include
in a registration statement filed with the Commission under the Securities Act
all of the Registrable Securities that the Holder has requested to be
registered; PROVIDED, HOWEVER, that if the managing underwriter of the subject
proposed offering objects in writing to the inclusion of any Registrable
Securities in the subject registration statement on the grounds that in its
opinion such inclusion would materially adversely effect the distribution of all
such securities or the price per share paid in such offering, the Company
(subject to any other obligations existing on the date hereof to include shares)
shall include in such registration the number of shares proposed to be
registered by the Company and the Holders before including any other securities
in the registration and, if additional reduction in the number of securities
being registered is necessary, the Company shall include in such registration
first, all shares proposed to be registered by the Company, and second, a pro
rata portion of such shares of the Holders based on the number of shares
originally proposed to be registered by each such Holder.
3. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of this Agreement to use its best efforts to effect the
registration of any of its securities under the Securities Act, the Company
will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for the period provided in this
Section 3;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities covered by such
registration statement whenever the seller or sellers of such securities
shall desire to sell or otherwise dispose of the same;
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(c) furnish to the duly authorized underwriter of each seller such
number of copies of a prospectus, including copies of a preliminary
prospectus, prepared in conformity with the requirements of the Securities
Act, and such other documents as such seller may reasonably request in order
to facilitate the public sale or other disposition of the securities to be
sold by such seller;
(d) use every reasonable effort to register or qualify the
securities covered by such registration statement under such state securities
or "Blue Sky" laws of such jurisdictions as each seller shall request, and do
any and all other acts and things which may be necessary under such
securities or "Blue Sky" laws to enable such seller to consummate the public
sale or other disposition in such jurisdictions of the securities to be sold
by such seller, provided that the Company shall not for any such purpose be
required to consent to the general service of process in any such
jurisdiction; and
(e) before filing the registration statement or prospectus or
amendments or supplements thereto, furnish to counsel selected by each Holder
having Registrable Shares included in such registration statement copies of
all such documents proposed to be filed, all of which shall be subject to the
approval of such counsel, which may not be unreasonably withheld; PROVIDED,
HOWEVER, that notwithstanding any other provision of this Agreement, the
Company shall not in any event be required to use its best efforts to
maintain the effectiveness of any such registration statement (other than a
registration statement on Form S-3) for a period in excess of six months
after the effective date thereof; and , that notwithstanding anything herein
to the contrary, the Company may postpone for up to six months the filing or
the effectiveness of any registration statement if the Company's Board of
Directors determines in good faith that such registration might reasonably be
expected to have an adverse effect on any proposal or plan by the Company or
any of its subsidiaries.
4. EXPENSES.
(a) REGISTRATION EXPENSES. All expenses incurred in complying with
this Agreement, including without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel for the Company,
"Blue Sky" fees and expenses, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company which shall be paid in any event by the
Company) shall be borne by the Company.
(b) SELLING EXPENSES. All underwriting discounts, underwriters'
expense allowance and selling commissions applicable to the sale of
Registrable Securities by the Holders and all fees and disbursements of any
special counsel (other than the Company's regular counsel) shall be borne by
the Holders of the Registrable Securities so registered pro rata on the basis
of the number of Registrable Securities so registered.
5. INDEMNIFICATION. In the event that any Registrable Securities are
included in a registration statement pursuant hereto:
(i) To the extent permitted by law, the Company will indemnify and
hold harmless the Holders, the officers, directors and partners of the
Holders, any underwriter (as
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defined in the Securities Act) for the Holders and each person, if any, who
controls the Holders or underwriter within the meaning of the Securities Act
or the Exchange Act, against any losses, claims, damages or liabilities
(joint or several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or sate law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any of the following statements, omissions or violations
(collectively, a "Violation": (A) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (B) 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 (C) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
applicable state securities law or _ any rule or regulation promulgated under
the Securities Act, the Exchange Act or any applicable state securities law
in connection with the offering pursuant to such registration statement; and
the Company will reimburse the Holders for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the
indemnity agreement contained in this subsection shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld) nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a violation which occurs in reliance
upon and in conformity with written information furnished expressly for use
in connection with such registration by the Holders; and further PROVIDED,
HOWEVER, that the foregoing indemnity agreement is subject to the condition
that, insofar as it relates to any untrue statement, alleged untrue
statement, omission or alleged omission made in any preliminary prospectus
but eliminated or remedied in the prospectus, such indemnity agreement shall
not inure to the benefit of any underwriter or broker, if a copy of the
prospectus was not sent or given to such person with or prior to the
confirmation of the sale of such securities to such person.
(ii) To the extent permitted by law, each Holder will indemnify and
hold harmless the Company, its directors, its officers, any person who
controls the Company within the meaning of the Securities Act or the Exchange
Act, any underwriter (within the meaning of the Securities Act) for the
Company and any person who controls such underwriter against any losses,
claims, damages or liabilities (joint or several) to which the Company or any
such director, officer, controlling person, or underwriter or controlling
person may become subject, under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such
registration; and each Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or controlling person thereof, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of such Holder, which consent shall not be unreasonably withheld.
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(iii) Promptly after receipt by an indemnified party of notice of the
commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party hereunder, notify the indemnifying party in writing of
the commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof with counsel mutually satisfactory to the parties; PROVIDED, HOWEVER,
that an indemnified party shall have the right to retain its own counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to notify an
indemnifying party within a reasonable time of the commencement of any such
action, to the extent prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party
hereunder, but the omission so to notify the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under this subsection.
6. LOCK-UP. If so requested by the underwriter(s) managing a public
offering of the Company's common stock, each Holder of Registrable Securities
shall not effect any public sale or distribution (including pursuant to Rule
144) of securities of the Company, at any time from the effective date of a
registration statement filed by the Company with respect to such underwritten
public offering until 150 days after the closing of such offering, other than
pursuant to such registration.
7. TERMINATION OF REGISTRATION RIGHTS. Notwithstanding the
foregoing provisions of this Agreement, the rights to registration granted
hereunder shall terminate as to any particular Registrable Shares when such
Registrable Shares shall have been effectively registered under the
Securities Act or otherwise sold by the Holder thereof in a public sale in
accordance with applicable law and such shares shall cease to be Registrable
Shares for purposes hereof.
8. COMPLIANCE WITH RULE 144. In the event that the Company (a)
registers a class of securities under Section 12 of the Exchange Act, (b)
issues an offering circular meeting the requirements of Regulation A under
the Securities Act or (b) commences to file reports under Section 13 or 15(d)
of the Exchange Act, then at the request of any Holder who proposes to sell
securities in compliance with Rule 144 of the Commission, the Company shall
(i) forthwith furnish to such Holder a written statement of compliance with
the filing requirements of the Commission as set forth in Rule 144 as such
rule may be amended from time to time and (ii) make available to the public
and such Holder such information as will enable such Holder to make sales
pursuant to such Rule 144.
9. ASSIGNABILITY OF REGISTRATION RIGHTS. Subject to Section 7, the
registration rights set forth in this Agreement shall accrue to each
subsequent holder of Registrable Shares to the extent that they execute and
deliver to the Company a written agreement (in form and substance reasonable
acceptable to the Company) to be bound by the terms hereof, including,
without limitation, Section 6 hereof.
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10. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
13. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been delivered (i)
when actually delivered by hand, (ii) two business days after mailed by first
class mail, postage prepaid, (iii) on the day transmitted by facsimile if
confirmation of transmission has been received, or (iv) one business day after
delivery to a nationally recognized overnight carrier service, as follows: (a)
if to the Holder, at the address of the Holder as shown on the registry books
maintained by the Company or the Company's transfer agent; and (b) if to the
Company, at U.S. RealTel, Inc., 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxx 00000.
14. GOVERNING LAW. The validity, meaning and effect of this Agreement
shall be determined in accordance with the laws of the State of Illinois
applicable to contracts made and to be performed in that state.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
by and among the parties hereto with respect to the subject matter hereof, and
any registration rights granted prior to the date hereof pursuant to the terms
of (x) any warrants or options granted to any of the parties hereto and (y)
agreements, whether oral or written, between any such parties and the Company,
shall be, and hereby are, superseded in their entirety by the terms hereof and
shall be of no further force or effect.
16. AMENDMENT. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Company, Holders of
not less than 75% of the then existing shares of Registrable Stock; provided
that no such amendment shall disproportionately affect the rights or obligations
of any holder or Registrable Stock hereunder (as compared to the rights of other
holders of Registrable Stock) without the consent of such Holder. Any term,
covenant, agreement or conditions in this Agreement may be waived (either
generally or in particular instances and either retroactively or prospectively)
by written instruments signed by the Company and Holders of not less than 75% of
the then existing shares of Registrable Stock. Any such waiver shall be limited
to its express terms and shall not be termed a waiver of any other term,
covenant, agreement or condition.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
U.S. REALTEL, INC.
By: /s/ Jordan X. Xxxxxx
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Its: President
---------------------------------------------
/s/ Xxxxx X. Xxxxxxx
--------------------------------------------------
Xxxxx X. Xxxxxxx
XXXXXXX CORP.,
By:/s/ Xxxxx X. Xxxxxxx
-----------------------------------------------
Its: President
--------------------------------------------
/s/ Xxxxxxx Xxxxxxx
--------------------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxx
--------------------------------------------------
Xxxxxx Xxxxxxx
XXXXXXXX XXXXXXXX XXXXXXX FOUNDATION
By:/s/ Xxxxx X. Xxxxxxx
-----------------------------------------------
Its:
----------------------------------------------
/s/ Jordan X. Xxxxxx
--------------------------------------------------
Jordan X. Xxxxxx, individually and as joint tenant
with Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Xxxxxx X. Xxxxxx, as joint tenant with Jordan X.
Xxxxxx
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/s/ Xxxxx X. Xxxx
--------------------------------------------------
Xxxxx X. Xxxx
XX & CO.
By:/s/ Xxxx X. Xxxxxxx
-----------------------------------------------
Its: Partner
---------------------------------------------
XXXXXX X. XXXXXX TRUST --
GO XXXXXXXXXX FUND
By:/s/ Xxxx X. Xxxxxxx
-----------------------------------------------
Xxxx X. Xxxxxxx, as Trustee
XXXXXX X. XXXXXX TRUST --
XXXXX XXXXXX XX FUND
By:/s/ Xxxx X. Xxxxxxx
-----------------------------------------------
Xxxx X. Xxxxxxx, as Trustee
XXXXXX X. XXXXXX TRUST --
XXXXXX X. XXXXXX XX. FUND
By:/s/ Xxxx X. Xxxxxxx,
-----------------------------------------------
Xxxx X. Xxxxxxx, as Trustee
XXXXXX X. XXXXXX TRUST --
XXXXX X. XXXXXX FUND
By:/s/ Xxxx X. Xxxxxxx,
-----------------------------------------------
Xxxx X. Xxxxxxx, as Trustee
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ACCESS FINANCIAL GROUP, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------------
Its: C.E.O.
---------------------------------------------
/s/ Xxxx X. Xxxxxxx
--------------------------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxxx Xxxx
--------------------------------------------------
Xxxxx Xxxx
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