<PAGE>
Exhibit 10.1
[EXECUTION COPY]
RESALE REGISTRATION RIGHTS AGREEMENT
Dated as of September 25, 2000
COVAD COMMUNICATIONS GROUP, INC.
and
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
DEUTSCHE BANK SECURITIES INC.
and
GOLDMAN, SACHS & CO.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. Definitions..............................................................................................1
2. Shelf Registration.......................................................................................4
3. Liquidated Damages.......................................................................................5
4. Registration Procedures..................................................................................6
5. Registration Expenses...................................................................................12
6. Indemnification and Contribution........................................................................13
7. Rule 144A...............................................................................................16
8. Participation in Underwritten Registrations.............................................................17
9. Miscellaneous...........................................................................................17
</TABLE>
i
<PAGE>
RESALE REGISTRATION RIGHTS AGREEMENT, dated as of September 25, 2000,
among COVAD COMMUNICATIONS GROUP, INC., a Delaware corporation (together with
any successor entity, herein referred to as the "ISSUER"), and BEAR, STEARNS
& CO. INC., MORGAN STANLEY & CO. INCORPORATED, CREDIT SUISSE FIRST BOSTON
CORPORATION, DEUTSCHE BANK SECURITIES INC. and GOLDMAN, SACHS & CO.
(collectively, the "INITIAL PURCHASERS").
Pursuant to the Purchase Agreement, dated September 19, 2000, between
the Issuer and the Initial Purchasers (the "PURCHASE AGREEMENT"), the Initial
Purchasers have agreed to purchase from the Issuer up to $500,000,000
($575,000,000 if the Initial Purchasers exercise the over-allotment option in
full) in aggregate principal amount of 6% Convertible Senior Notes due 2005 (the
"CONVERTIBLE NOTES"). The Convertible Notes will be convertible into fully paid,
nonassessable common stock, par value $.001 per share, of the Issuer (the
"COMMON STOCK") on the terms, and subject to the conditions, set forth in the
Indenture (as defined herein). To induce the Initial Purchasers to purchase the
Convertible Notes, and in satisfaction of a condition to the Initial Purchasers'
obligations under the Purchase Agreement, the Issuer has agreed to provide the
registration rights set forth in this Agreement.
The parties hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following capitalized
terms shall have the following meanings:
"ADVICE": As defined in Section 4(c)(ii) hereof.
"AGREEMENT": This Resale Registration Rights Agreement.
"BLUE SKY APPLICATION": As defined in Section 6(a)(i) hereof.
"BROKER-DEALER": Any broker or dealer registered under the Exchange
Act.
"BUSINESS DAY": A day other than a Saturday or Sunday or any federal
holiday in the United States.
"CLOSING DATE": The date of this Agreement.
"COMMISSION": Securities and Exchange Commission.
"COMMON STOCK": As defined in the preamble hereto.
"CONTROL": With respect to a person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of such person, whether through the ability to exercise voting
power, by contract or otherwise.
"CONVERTIBLE NOTES": As defined in the preamble hereto.
<PAGE>
"DAMAGES PAYMENT DATE": Each Interest Payment Date. For purposes of
this Agreement, if no Convertible Notes are outstanding, "Damages Payment
Date" shall mean each March 15 and September 15.
"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 September 25, 2000, between
the Issuer and United States Trust Company of New York, as trustee (the
"Trustee"), pursuant to which the Convertible Notes 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.
"INTEREST PAYMENT DATE": As defined in the Indenture.
"ISSUER": As defined in the preamble hereto.
"LIQUIDATED DAMAGES": As defined in Section 3(a) hereof.
"MAJORITY OF HOLDERS": Holders holding over 50% of the aggregate
principal amount of Convertible Notes outstanding; provided that, for
purpose of this definition, a Holder of shares of Common Stock which
constitute Transfer Restricted Securities and issued upon conversion of the
Convertible Notes shall be deemed to hold an aggregate principal amount of
Convertible Notes (in addition to the principal amount of Convertible Notes
held by such Holder) equal to the product of (x) the number of such shares
of Common Stock held by such Holder and (y) the prevailing conversion
price, such prevailing conversion price as determined in accordance with
Article 5 of the Indenture.
"NASD": National Association of Securities Dealers, Inc.
"PERSON": An individual, partnership, corporation, unincorporated
organization, trust, joint venture or a government or agency or political
subdivision thereof.
"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.
"QUESTIONNAIRE DEADLINE": As defined in Section 2(b) hereof.
2
<PAGE>
"RECORD HOLDER": With respect to any Damages Payment Date, each Person
who is a Holder on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur. In the case of a
Holder of shares of Common Stock issued upon conversion of the Convertible
Notes, "Record Holder" shall mean each Person who is a Holder of shares of
Common Stock which constitute Transfer Restricted Securities on the March 1
or September 1 immediately preceding the Damages Payment Date.
"REGISTRATION DEFAULT": As defined in Section 3(a)(iii) hereof.
"SALE NOTICE": As defined in Section 4(e) 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.
"SUSPENSION PERIOD": As defined in Section 4(b)(i) hereof.
"TIA": Trust Indenture Act of 1939, as in effect on the date the
Indenture is qualified under the TIA.
"TRANSFER RESTRICTED SECURITIES": Each Convertible Note and each share
of Common Stock issued upon conversion of Convertible Notes until the
earlier of:
(i) the date on which such Convertible Note or such share of
Common Stock issued upon conversion has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement;
(ii) the date on which such Convertible Note 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 pursuant to
Rule 144 under the Securities Act (or any other similar provision then in
force); or
(iii) the date on which such Convertible Note 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).
"UNDERWRITING MAJORITY": On any date, Holders holding at least 66 2/3%
of the aggregate principal amount of the Transfer Restricted Securities
outstanding on such date; PROVIDED that for the purpose of this definition,
a holder of shares of Common Stock that constitute Transfer Restricted
Securities and issued upon conversion of Convertible Notes shall be deemed
to hold an aggregate principal amount of Transfer Restricted Securities (in
addition to the principal amount of Convertible Notes held by such holder)
equal to (x) the number of such shares of Common Stock that are Transfer
Restricted Securities held by such holder multiplied by (y) the then
applicable Conversion Price (as defined in the Indenture).
3
<PAGE>
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING": A registration
in which securities of the Issuer are sold to an underwriter for reoffering
to the public.
2. SHELF REGISTRATION. (a) The Issuer 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(b) hereof;
(ii) use its reasonable best efforts to cause the Shelf
Registration Statement to be declared effective by the Commission as
promptly as practicable, but in no event later than 180 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 of Transfer
Restricted Securities 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") of:
(1) two years following the last date of original issuance of
Convertible Notes; or
(2) such shorter period that will terminate when (x) all of
the Holders of Transfer Restricted Securities are able to sell all
Transfer Restricted Securities immediately without restriction
pursuant to Rule 144(k) under the Securities Act or any successor rule
thereto, (y) when all Transfer Restricted Securities have ceased to be
outstanding (whether as a result of redemption, repurchase and
cancellation, conversion or otherwise) or (z) all Transfer Restricted
Securities registered under the Shelf Registration Statement have been
sold.
(b) No Holder of Transfer Restricted Securities may include any of
its Transfer Restricted Securities in the Shelf Registration Statement pursuant
to this Agreement unless such Holder furnishes to the Issuer in writing, prior
to or on the 20th Business Days after receipt of a request therefor (the
"Questionnaire Deadline"), such information as the Issuer may reasonably request
for use in connection with the Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein and in any application to be filed with
or under state securities laws. In connection with all such requests for
information from Holders of Transfer Restricted Securities, the Issuer shall
notify such Holders of the requirements set forth in the preceding sentence. No
Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages
pursuant to Section 3 hereof unless such Holder shall have provided all such
reasonably requested information prior to or on the Questionnaire Deadline. Each
Holder as to which the Shelf Registration Statement is being effected agrees to
furnish promptly to the Issuer
4
<PAGE>
all information required to be disclosed in order to make information previously
furnished to the Issuer by such Holder not materially misleading.
3. LIQUIDATED DAMAGES.
(a) If:
(i) the Shelf Registration Statement has not been declared
effective by the Commission prior to or on the Effectiveness Target Date,
(ii) subject to the provisions of Section 4(b)(i) hereof, the
Shelf Registration Statement is filed and declared effective but, during
the Effectiveness Period and after the Effectiveness Target Date, shall
thereafter cease to be effective or fail to be usable for its intended
purpose without being succeeded within five Business Days by a post-
effective amendment to the Shelf Registration Statement 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
(iii) prior to or on the 60th or 90th day, as the case may be, of
any Suspension Period, such suspension has not been terminated, (each such
event referred to in foregoing clauses (i) through (iii), a "REGISTRATION
DEFAULT"),
then the Issuer hereby agrees to pay liquidated damages ("LIQUIDATED DAMAGES")
to each Holder from and including the day following the Registration Default to
but excluding the day on which the Registration Default has been cured in an
amount equal to:
(A) with respect to such Holder's Convertible Notes, (i) for
the first 90-day period during which a Registration Default shall have
occurred and be continuing, an amount equal to 0.50% per annum on the
principal amount of such Holder's then outstanding and not converted
Convertible Notes and (ii) for each subsequent 90-day period during which a
Registration Default shall have occurred and be continuing, an amount per
annum on the principal amount of such Holder's then outstanding and not
converted Convertible Notes 0.25% greater than the rate applicable to the
immediately preceding period, provided that in no event shall the aggregate
Liquidated Damages pursuant to this clause (A) accrue at a rate per annum
exceeding 2.00% of the sum of the principal amount of the then outstanding
Convertible Notes;
(B) with respect to such Holder's Common Stock issued upon
conversion of Convertible Notes (i) for the first 90-day period during
which a Registration Default shall have occurred and be continuing, an
amount equal to 0.50% per annum on the principal amount of such Holder's
converted Convertible Notes and (ii) for each subsequent 90-day period
during which a Registration Default shall have occurred and be continuing,
an amount per annum on the principal amount of such Holder's converted
Convertible Notes 0.25% greater than the rate applicable to the immediately
preceding period, provided that in no event shall the aggregate
5
<PAGE>
Liquidated Damages pursuant to this clause (B) accrue at a rate per annum
exceeding 2.00% of the sum of the principal amount of the then converted
Convertible Notes;
(b) All accrued Liquidated Damages shall be paid in arrears to Record
Holders by the Issuer on each Damages Payment Date by wire transfer of
immediately available funds or by federal funds check. Following the cure of all
Registration Defaults relating to any particular Convertible Note or share of
Common Stock, the accrual of Liquidated Damages with respect to such Convertible
Note or share of Common Stock will cease.
All obligations of the Issuer 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 of Transfer Restricted Securities for such
Registration Default.
4. REGISTRATION PROCEDURES.
(a) In connection with the Shelf Registration Statement, the Issuer
shall comply with all the provisions of Section 4(b) hereof and shall, in
accordance with Section 2, 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 Issuer shall:
(i) Subject to any notice by the Issuer 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 reasonable 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 therein (A) to
contain a material misstatement or omission or (B) not be effective and
usable for resale of Transfer Restricted Securities during the
Effectiveness Period, the Issuer shall file promptly an appropriate
amendment to the Shelf Registration Statement 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 reasonable
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 Issuer may suspend the effectiveness of the Shelf
Registration Statement by written notice to the Holders for a period not to
exceed an aggregate of 60 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 would, in the Issuer's reasonable judgment, contain
an
6
<PAGE>
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 Issuer reasonably determines that the disclosure of such
event at such time would have a material adverse effect on the
business of the Issuer (and its subsidiaries, if any, taken as a
whole);
provided that (A) in the event the disclosure relates to a previously
undisclosed proposed or pending material business transaction, the
disclosure of which would impede the Issuer's ability to consummate such
transaction, the Issuer may extend a Suspension Period from 60 days to 90
days and (B) the Suspension Periods shall not exceed an aggregate of 120
days in any 360-day period. Each holder, by its acceptance of a Transfer
Restricted Security, agrees to hold any communication by us in response to
a notice of a proposed material business transaction in confidence.
(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 Securities
Act in a timely manner; and comply with the provisions of the
Securities Act with respect to the disposition of all securities
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 underwriter(s), if any, and, in the case of
(A), (C) and (D) below, the selling Holders promptly and, if requested
by such Persons, to confirm such advice in writing:
(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
7
<PAGE>
(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
Issuer shall use its reasonable best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time.
(iv) Furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, a copy of the
Shelf Registration Statement and copies of any Prospectus included therein
or any amendments or supplements to any the Shelf Registration Statement or
Prospectus (other than documents incorporated by reference after the
initial filing of the Shelf Registration Statement), which documents will
be subject to the review of such holders and underwriter(s), if any, for a
period of two Business Days, and the Issuer will not file the Shelf
Registration Statement or Prospectus or any amendment or supplement to the
Shelf Registration Statement or Prospectus (other than documents
incorporated by reference) to which a selling Holder of Transfer Restricted
Securities covered by the Shelf Registration Statement or the
underwriter(s), if any, shall reasonably object within two Business Days
after the receipt thereof. A selling Holder or underwriter, if any, shall
be deemed to have reasonably objected to such filing if the Shelf
Registration Statement, amendment, Prospectus or supplement, as applicable,
as proposed to be filed, contains a material misstatement or omission.
(v) Subject to the execution of a confidentiality agreement
reasonably acceptable to the Issuer, 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, any
underwriter, if any, participating in any distribution pursuant to the
Shelf Registration Statement, and any attorney or accountant retained by
the Majority of Holders or any of the underwriter(s), all financial and
other records, pertinent corporate documents and properties of the Issuer
as shall be reasonably necessary to enable them to exercise any applicable
due diligence responsibilities, and cause the Issuer's officers, directors,
managers and employees to supply all information reasonably requested by
any such representative or representatives of the selling Holders,
underwriter, attorney or accountant in connection with the Shelf
Registration Statement after the filing thereof and before its
effectiveness; provided, however, that any information designated by the
Company as confidential at the time of delivery of such information shall
be kept confidential by the recipient thereof.
8
<PAGE>
(vi) If requested by any selling Holders or the underwriter(s),
if any, 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 and underwriter(s), if
any, may reasonably request to have included therein, including, without
limitation: (1) information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, (2) information with respect to the
principal amount of Convertible Notes or number of shares of Common Stock
being sold (3) the purchase price being paid therefor and (4) any other
terms of the offering of the Transfer Restricted Securities to be sold in
such offering; and make all required filings of such Prospectus supplement
or post-effective amendment as soon as reasonably practicable after the
Issuer is notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(vii) Furnish to each selling Holder and each of the
underwriter(s), if any, 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 in writing).
(viii) Deliver to each selling Holder and each of the
underwriter(s), if any, 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 Issuer 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
Issuer hereby consents to the use of the Prospectus and any amendment or
supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment
or supplement thereto.
(ix) If an underwriting agreement is entered into and the
registration is an Underwritten Registration, the Issuer shall:
(A) upon request, furnish to each selling Holder and each
underwriter, if any, in such substance and scope as they may
reasonably request and as are customarily made by issuers to
underwriters in primary underwritten offerings, upon the date of
closing of any sale of Transfer Restricted Securities in an
Underwritten Registration:
(1) a certificate, dated the date of such closing, signed by (y)
the Chairman of the Board, its President or a Vice President and (z)
the Chief Financial Officer of the Issuer confirming, as of the date
thereof, such matters as such parties may reasonably request;
(2) opinions, each dated the date of such closing, of counsel to
the Issuer covering such matters as are customarily covered in legal
opinions to underwriters in connection with primary underwritten
offerings of securities; and
9
<PAGE>
(3) customary comfort letters, dated the date of such closing,
from the Issuer's independent accountants (and from any other
accountants whose report is contained or incorporated by reference in
the Shelf Registration Statement), in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with primary underwritten offerings of
securities;
(B) set forth in full in the underwriting agreement, if any,
indemnification provisions and procedures which provide rights no less
protective than those set forth in Section 6 hereof with respect to
all parties to be indemnified; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the selling
Holders pursuant to this clause (ix).
(x) Before any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities or
Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s), if any, 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 Issuer 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 themselves to taxation in any such
jurisdiction if they are not now so subject.
(xi) Cooperate with the selling Holders and the underwriter(s),
if any, 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 or the
underwriter(s), if any, may reasonably request at least two Business Days
before any sale of Transfer Restricted Securities made by such
underwriter(s).
(xii) 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
or the underwriter(s), if any, to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso in clause (x) above.
(xiii) 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 reasonable best efforts 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
10
<PAGE>
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 not misleading.
(xiv) 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 Convertible Notes that are in a form eligible for deposit with The
Depository Trust Company.
(xv) 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.
(xvi) Otherwise use its reasonable 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.
(xvii) 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 Convertible Notes 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 reasonable
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.
(xviii) Cause all Transfer Restricted Securities 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 similar
securities issued by the Issuer are then listed or quoted.
(xix) Provide promptly 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.
(xx) If requested by the underwriters in an Underwritten
Offering, make appropriate officers of the Issuer reasonably available
to the underwriters for meetings with prospective purchasers of the
Transfer Restricted Securities and prepare and present to potential
investors customary "road show" material in a manner consistent with other
new issuances of other securities similar to the Transfer Restricted
Securities.
(c) Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice from the Issuer of the existence
of any fact of the kind described in Section 4(b)(iii)(D) hereof, such
Holder will, and will use its reasonable best efforts to cause any
underwriter(s) in an Underwritten Offering to, forthwith discontinue
disposition of Transfer Restricted Securities pursuant to the Shelf
Registration Statement until:
11
<PAGE>
(i) such Holder has received copies of the supplemented or
amended Prospectus contemplated by Section 4(b)(xiii) hereof; or
(ii) such Holder is advised in writing (the "ADVICE") by the
Issuer 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 Issuer, each Holder will deliver to the Issuer (at the
Issuer'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 notice of suspension.
(d) Each Holder who intends to be named as a selling Holder in the
Shelf Registration Statement shall furnish to the Issuer in writing, within 20
Business Days after receipt of a request therefor as set forth in a
questionnaire in the form attached hereto as Exhibit A, such information
regarding such Holder and the proposed distribution by such Holder of its
Transfer Restricted Securities as the Issuer may reasonably request for use in
connection with the Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. Holders that do not complete the questionnaire and
deliver it to the Issuer shall not be named as selling securityholders in the
Prospectus or preliminary Prospectus included in the Shelf Registration
Statement and therefore shall not be permitted to sell any Transfer Restricted
Securities pursuant to the Shelf Registration Statement. Each Holder who intends
to be named as a selling Holder in the Shelf Registration Statement shall
promptly furnish to the Issuer in writing such other information as the Issuer
may from time to time reasonably request in writing.
(e) Upon the effectiveness of the Shelf Registration Statement, each
Holder shall notify the Issuer at least three Business Days prior to any
intended distribution of Transfer Restricted Securities pursuant to the Shelf
Registration Statement (a "Sale Notice"), which notice shall be effective for
five Business Days. Each Holder of this Security, by accepting the same, agrees
to hold any communication by the Company in response to a Sale Notice in
confidence.
5. REGISTRATION EXPENSES.
(a) All expenses incident to the Issuer's performance of or
compliance with this Agreement shall be borne by the Issuer regardless of
whether a Shelf Registration Statement becomes effective, including, without
limitation:
(i) all registration and filing fees and expenses (including
filings made by any Initial Purchasers or Holders with the NASD);
(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 Convertible Notes), messenger and delivery services and
telephone;
12
<PAGE>
(iv) all fees and disbursements of counsel to the Issuer and,
subject to Section 5(b) below, the Holders of Transfer Restricted
Securities;
(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 Issuer (including the expenses of any special audit
and comfort letters required by or incident to such performance).
The Issuer 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 Issuer.
(b) In connection with the Shelf Registration Statement required by
this Agreement, the Issuer shall reimburse the Initial Purchasers and the
Holders of Transfer Restricted Securities being registered pursuant to the Shelf
Registration Statement, as applicable, for the reasonable fees and disbursements
of not more than one counsel, which shall be Simpson Thacher & Bartlett or such
other chosen by a Majority of Holders for whose benefit the Shelf Registration
Statement is being prepared and is reasonably acceptable to the Issuer. The
Issuer shall not be required to pay any underwriter discount, commission or
similar fees related to the sale of the Securities.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Issuer, jointly and severally, shall indemnify and hold
harmless each Holder, such Holder's directors, officers, employees,
representatives, agents and each person, if any, who controls such Holder within
the meaning of Section 15 of the Securities Act (each, an "Indemnified Holder"),
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 resales of the Transfer Restricted
Securities), to which such Indemnified Holder may become subject, under the
Securities Act or otherwise, 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 or
Prospectus or 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 Issuer (or based upon written information
furnished by or on behalf of the Issuer 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 (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
13
<PAGE>
the circumstances under which they were made, not misleading, and
shall reimburse each Indemnified Holder promptly upon demand for any legal
or other expenses reasonably incurred by such Indemnified Holder 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 the Issuer 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 Shelf
Registration Statement or Prospectus or amendment or supplement thereto or
Blue Sky Application in reliance upon and in conformity with written
information furnished to the Issuer by or on behalf of any Holder (or its
related Indemnified Holder) specifically for use therein; provided further
that as to any preliminary Prospectus, this indemnity agreement shall not
inure to the benefit of any Indemnified Holder or any officer, employee,
representative, agent, director or controlling person of that Indemnified
Holder on account of any loss, claim, damage, liability or action arising
from the sale of the Transfer Restricted Securities sold pursuant to the
Shelf Registration Statement to any person by such Indemnified Holder if
(i) that Indemnified Holder failed to send or give a copy of the
Prospectus, as the same may be amended or supplemented, to that person
within the time required by the Securities Act and (ii) the untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact in such preliminary Prospectus
was corrected in the Prospectus or a supplement or amendment thereto, as
the case may be, unless in each case, such failure resulted from
noncompliance by the Issuer with Section 4. The foregoing indemnity
agreement is in addition to any liability which the Issuer may otherwise
have to any Indemnified Holder.
(b) Each Holder, severally and not jointly, shall indemnify and hold
harmless the Issuer, its directors, officers, employees, representatives, agents
and each person, if any, who controls the Issuer within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Issuer or any such officer, employee, representative,
agent or controlling person may become subject, insofar as any such loss, claim,
damage or liability or action arises out of, or is based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Shelf Registration Statement or Prospectus
or any amendment or supplement thereto or any Blue Sky Application; or
(ii) the omission or the alleged omission to state therein any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading,
but in each case only to the extent that such 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 Issuer by or on behalf of
such Holder (or its related Indemnified Holder) specifically for use therein,
and shall reimburse the Issuer and any such director, officer, employee,
representative, agent or controlling
14
<PAGE>
person promptly upon demand for any legal or other expenses reasonably
incurred by the Issuer or any such officer, employee 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. The
foregoing indemnity agreement is in addition to any liability which any Holder
may otherwise have to the Issuer and any such director, officer, employee or
controlling person.
(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, 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 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 indemnified party shall have the right to employ counsel to represent
jointly the indemnified party and its respective directors, employees, officers
and controlling persons who may be subject to liability arising out of any claim
in respect of which indemnity may be sought by the indemnified party against the
indemnifying party under this Section 6 if such indemnified party shall have
been advised in writing that the representation of such indemnified party and
those directors, employees, officers and controlling persons by the same counsel
would be inappropriate under applicable standards of professional conduct due to
actual or potential differing interests between them, and in that event the fees
and expenses of such separate counsel shall be paid by the indemnifying party.
It is understood that the indemnifying party shall not be liable for the fees
and expenses of more than one separate firm (in addition to local counsel in
each jurisdiction) for all indemnified parties in connection with any proceeding
or related proceedings. Each indemnified party, as a condition of the indemnity
agreements contained in Sections 6(a) and 6(b), shall use its reasonable best
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. 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), but if settled with its
15
<PAGE>
written consent or if there be a final judgment for 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 in accordance with
this Section 6.
(d) 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, in such proportion as is
appropriate to reflect the relative fault of the Company, on the one hand, and
the Holders, on the other hand, 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, among other things, 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
Company, on the one hand, or the Holders, on the other hand, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. Each of the Company and each
Holder agrees that it would not be just and equitable if contributions pursuant
to this Section 6(d) were to be determined by pro rata allocation (even if the
Holders 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 Section 6(d) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6(d), no Holder
shall be required to indemnify or 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 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 remedies provided for in this Section 6 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity. The Holders' obligations
to contribute as provided in this Section 6(d) are several and not joint.
(e) The indemnity and contribution provisions contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Initial Purchaser, any Holder or any person controlling any Initial
Purchaser or any Holder, or by or on behalf of the Company, its officers or
directors or any person controlling the Company, and (iii) any sale of Transfer
Restricted Securities pursuant to the Shelf Registration Statement.
7. RULE 144A. In the event the Issuer is not subject to Section 13
or 15(d) of the Exchange Act, the Issuer hereby agrees with each Holder, for so
long as any Transfer Restricted Securities remain outstanding, to make available
to any Holder or beneficial owner of
16
<PAGE>
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities from 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.
8. UNDERWRITTEN REGISTRATIONS.
(a) PARTICIPATION OF HOLDERS. No Holder may participate in any
Underwritten Registration hereunder unless such Holder:
(i) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved
by the Persons entitled hereunder to approve such arrangements; and
(ii) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters
and other documents reasonably required under the terms of such
underwriting arrangements.
(b) SELECTION OF UNDERWRITERS. The Underwriting Majority may sell
its Transfer Restricted Securities in an Underwritten Offering pursuant to the
Shelf Registration Statement. In any such Underwritten Offering, the investment
banker or investment bankers and manager or managers that will administer the
offering will be selected by a Majority of Holders whose Transfer Restricted
Securities are included in such Underwriting Offering; provided, that such
investment bankers and managers must be reasonably satisfactory to the Issuer.
9. MISCELLANEOUS.
(a) REMEDIES. The Issuer acknowledges and agrees that any failure by
the Issuer 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 Issuer's obligations under Section 2 hereof. The
Issuer further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Issuer will not, on or after the
date of this Agreement, 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 Issuer shall
not grant to any of its security holders (other than the holders of Transfer
Restricted Securities 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. Other than as disclosed in the
Issuer's Offering Memorandum dated September 20, 2000, the Issuer has not
previously entered into any agreement (which has not expired or been terminated)
granting any registration rights with respect to its securities to any Person
which rights conflict with the provisions hereof.
17
<PAGE>
(c) ADJUSTMENTS AFFECTING TRANSFER RESTRICTED SECURITIES. The Issuer
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 of Transfer Restricted Securities to include such Transfer Restricted
Securities in a registration undertaken pursuant to this Agreement.
(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 Issuer has obtained the
written consent of a Majority of Holders; provided, however, that no amendment,
modification, supplement, waiver or consent to or departure from the provisions
of Section 6 that materially and adversely affects a Holder hereof shall be
effective as against any such Holder of Transfer Restricted Securities unless
consented to in writing by such Holder.
(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, telecopier, 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 Issuer:
4250 Burton Drive
Santa Clara, CA 95054
Attention: General Counsel
Facsimile: (408) 844-7501
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067
Attention: Meredith S. Jackson, Esq.
Facsimile: (310) 203-7199
(iii) if to the Initial Purchasers:
c/o Bear, Stearns & Co., Inc.
245 Park Avenue
New York, NY 10167
Attention: Corporate Finance Department
Facsimile: (212) 272-3092.
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
18
<PAGE>
Attention: Gary Sellers, Esq.
Facsimile: (212) 455-2502
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 air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.
A document or notice shall be deemed to have been furnished to
the Holders of the Transfer Restricted Securities if it is provided to the
registered holders of the Transfer Restricted Securities at the address set
forth in clause (i) above.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including without limitation and without the need for an
express assignment, subsequent Holders of Transfer Restricted Securities;
provided, however, that (i) nothing contained herein shall be deemed to permit
any assignment, transfer or other disposition of Transfer Restricted Securities
in violation of the terms of the Purchase Agreement or the Indenture and (ii)
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
Transfer Restricted Securities from such Holder. If any transferee of any Holder
shall acquire Transfer Restricted Securities, in any manner, whether by
operation of law or otherwise, such Transfer Restricted Securities shall be held
subject to all of the terms of this Agreement, and by taking and holding such
Transfer Restricted Securities such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof. The
Initial Purchasers (in their capacity as Initial Purchasers) shall have no
liability or obligation to the Issuer with respect to any failure by a Holder to
comply with, or breach by any Holder of, any of the obligations of such Holder
under this Agreement.
(g) PURCHASES AND SALES OF CONVERTIBLE NOTES. The Company
shall not, and shall use its reasonable best efforts to cause its affiliates
(as defined in Rule 405 under the Securities Act) within its Control not to,
purchase and then resell or otherwise transfer any Convertible Notes.
(h) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Issuer and the
Initial Purchasers, and such Initial Purchasers shall have the right to enforce
such agreements directly to the extent they deem such enforcement necessary or
advisable to protect their rights or the rights of Holders hereunder.
(i) 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
19
<PAGE>
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(j) SECURITIES HELD BY THE ISSUER 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 Issuer or its "affiliates" (as such term is defined in
Rule 405 under the Securities Act) shall not be counted in determining whether
such consent or approval was given by the Holders of such required percentage.
(k) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(l) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
(m) CONSENT TO JURISDICTION. Each party irrevocably agrees
that any legal suit, action or proceeding arising out of or based upon this
Agreement or the transactions contemplated hereby ("Related Proceedings")
may be instituted in the federal courts of the United States of America located
in the City of New York or the courts of the State of New York in each case
located in the Borough of Manhattan in the City of New York (collectively, the
"Specified Courts"), and irrevocably submits to the exclusive jurisdiction
(except for proceedings instituted in regard to the enforcement of a judgment of
any such court (a "Related Judgment"), as to which such Jurisdiction is
non-exclusive) of such courts in any such suit, action or proceeding. The
parties further agree that service of any process, summons, notice or document
by mail to such party's address set forth above shall be effective service of
process for any lawsuit, action or other proceeding brought in any such court.
The parties hereby irrevocably and unconditionally waive any objection to the
laying of venue of any lawsuit, action or other proceeding in the Specified
Courts, and hereby further irrevocably and unconditionally waive and agree not
to plead or claim in any such court that any such lawsuit, action or other
proceeding brought in any such court has been brought in an inconvenient forum.
(n) 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.
(o) ENTIRE AGREEMENT. This Agreement together with the
Purchase Agreement and the Indenture, 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 Issuer with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
COVAD COMMUNICATIONS GROUP, INC.
By: /s/ Terence W. Murphy
----------------------
Name: Terence W. Murphy
Title: Vice President of
Finance/Treasurer
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
DEUTSCHE BANK SECURITIES INC
GOLDMAN, SACHS & Co.
By: Bear, Stearns & Co. Inc.
By: /s/ Mark Goldstein
----------------------------
Authorized Representative
<PAGE>
Exhibit A
COVAD COMMUNICATIONS GROUP, INC.
NOTICE OF REGISTRATION STATEMENT
AND
SELLING SECURITYHOLDER ELECTION AND QUESTIONNAIRE
--------------
NOTICE
Covad Communications Group, Inc. (the "Company") has filed, or intends
shortly to file, with the Securities and Exchange Commission (the "Commission")
a registration statement on Form S-3 or such other Form as may be available (the
"Shelf Registration Statement") for the registration and resale under Rule 415
of the Securities Act of 1933, as amended (the "Securities Act"), of the
Company's 6% Convertible Senior Notes due 2005 (CUSIP No. 222814 AN 5) (the
"Convertible Notes"), and common stock, par value $.001 per share, issuable upon
conversion and thereof (the "Shares" and together with the Convertible Notes,
the "Transfer Restricted Securities") in accordance with the terms of the
Registration Rights Agreement, dated as of September 25, 2000 (the "Registration
Rights Agreement") between the Company and Bear, Stearns & Co. Inc., Morgan
Stanley & Co. Incorporated, Credit Suisse First Boston Corporation, Deutsche
Bank Securities Inc. and Goldman, Sachs & Co. A copy of the Registration Rights
Agreement is available from the Company. All capitalized terms not otherwise
defined herein have the meaning ascribed thereto in the Registration Rights
Agreement.
To sell or otherwise dispose of any Transfer Restricted Securities pursuant
to the Shelf Registration Statement, a beneficial owner of Transfer Restricted
Securities generally will be required to be named as a selling securityholder in
the related Prospectus, deliver a Prospectus to purchasers of Transfer
Restricted Securities, be subject to certain civil liability provisions of the
Securities Act and be bound by those provisions of the Registration Rights
Agreement applicable to such beneficial owner (including certain indemnification
rights and obligations, as described below). To be included in the Shelf
Registration Statement, this Election and Questionnaire must be completed,
executed and delivered to the Company at the address set forth herein for
receipt PRIOR TO OR ON [insert date that is 20 business days from the notice
date] (the "Election and Questionnaire Deadline"). BENEFICIAL OWNERS THAT DO NOT
COMPLETE AND RETURN THIS ELECTION AND QUESTIONNAIRE PRIOR TO THE ELECTION AND
QUESTIONNAIRE DEADLINE AND DELIVER IT TO THE COMPANY AS PROVIDED BELOW WILL NOT
BE NAMED AS SELLING SECURITYHOLDERS IN THE PROSPECTUS AND THEREFORE WILL NOT BE
PERMITTED TO SELL ANY TRANSFER RESTRICTED SECURITIES PURSUANT TO THE SHELF
REGISTRATION STATEMENT.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and the related Prospectus.
Accordingly, holders and beneficial owners of Transfer Restricted Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling securityholder in the Shelf
Registration Statement and the related Prospectus.
A-1
<PAGE>
ELECTION
The undersigned holder (the "Selling Securityholder") of Transfer
Restricted Securities hereby elects to include in the Shelf Registration
Statement the Transfer Restricted Securities beneficially owned by it and listed
below in Item 3 (unless otherwise specified under Item 3). The undersigned, by
signing and returning this Election and Questionnaire, understands that it will
be bound with respect to such Transfer Restricted Securities by the terms and
conditions of this Election and Questionnaire and the Registration Rights
Agreement.
Pursuant to the Registration Rights Agreement, the Selling Securityholder
has agreed to indemnify and hold harmless the Company, the Company's directors,
the Company's officers, employees, representatives and agents who sign the Shelf
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against certain losses arising in connection with
statements concerning the Selling Securityholder made in the Shelf Registration
Statement or the related Prospectus in reliance upon the information provided in
this Election and Questionnaire.
The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
QUESTIONNAIRE
1. (a) Full legal name of Selling Securityholder:
-----------------------------------------------------------------------
(b) Full legal name of registered holder (if not the same as (a) above)
through which Transfer Restricted Securities listed in (3) below are
held:
-----------------------------------------------------------------------
(c) Full legal name of DTC participant (if applicable and if not the same
as (b) above) through which Transfer Restricted Securities listed in
(3) are held:
----------------------------------------------------------------------------
2. Address for notices to Selling Securityholders:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Telephone:_________________________________________________________________
Fax:_______________________________________________________________________
Contact Person:____________________________________________________________
A-2
<PAGE>
3. Beneficial ownership of Transfer Restricted Securities:
(a) Type of Transfer Restricted Securities beneficially owned, and
principal amount of Convertible Notes or Number of shares of Common
Stock, as the case may be, beneficially owned:
--------------------------------------------------------------------------------
(b) CUSIP No(s). of such Transfer Restricted Securities beneficially owned:
--------------------------------------------------------------------------------
4. Beneficial ownership of the Company's securities owned by the Selling
Securityholder:
EXCEPT AS SET FORTH BELOW IN THIS ITEM (4), THE UNDERSIGNED IS NOT THE
BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE COMPANY OTHER THAN
THE TRANSFER RESTRICTED SECURITIES LISTED ABOVE IN ITEM (3) ("OTHER
SECURITIES").
(a) Type and amount of Other Securities beneficially owned by the Selling
Securityholder:
--------------------------------------------------------------------------------
(b) CUSIP No(s). of such Other Securities beneficially owned:
--------------------------------------------------------------------------------
5. Relationship with the Company
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (5% or more)
has held any position or office or has had any other material relationship
with the Company (or their predecessors or affiliates) during the past
three years.
State any exceptions here:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
6. Plan of Distribution
Except as set forth below, the undersigned (including its donees or
pledgees) intends to distribute the Transfer Restricted Securities listed
above in Item (3) pursuant to the Shelf Registration Statement only as
follows (if at all). Such Transfer Restricted Securities may be sold from
time to time directly by the undersigned or, alternatively, through
underwriters, broker-dealers or agents. If the Transfer Restricted
Securities are sold through underwriters or broker-dealers, the Selling
Securityholder will be responsible for underwriting discounts or
commissions or agent's commissions. Such Transfer Restricted Securities may
be sold in one or more transactions at fixed prices, at prevailing market
prices at the time of sale, at varying prices determined at the time of
sale, or at negotiated prices. Such sales may be effected in transactions
(which may involve crosses or block transactions):
A-3
<PAGE>
(i) on any national securities exchange or quotation service
on which the Transfer Restricted Securities may be listed or quoted at
the time of sale;
(ii) in the over-the-counter market;
(iii) in transactions otherwise than on such exchanges or services or
in the over-the-counter market; or
(iv) through the writing of options.
In connection with sales of the Transfer Restricted Securities or
otherwise, the undersigned may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the Transfer
Restricted Securities and deliver Transfer Restricted Securities to close
out such short positions, or loan or pledge Transfer Restricted Securities
to broker-dealers that in turn may sell such securities.
State any exceptions here:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Note: In no event will such method(s) of distribution take the form of an
underwritten offering of the Transfer Restricted Securities without the prior
agreement of the Company.
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees it will comply, with the
provisions of the prospectus delivery and other provisions of the Securities Act
and Exchange Act and the respective rules and regulations promulgated
thereunder, particularly Regulation M thereunder (or any successor rules or
regulations), in connection with any offering of Transfer Restricted Securities
pursuant to the Shelf Registration Statement.
If the Selling Securityholder transfers all or any portion of the Transfer
Restricted Securities listed in Item 3 above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Election and Questionnaire and the Registration Rights
Agreement.
By signing below, the Selling Securityholder consents to the disclosure of
the information contained herein in its answers to Items (1) through (6) above
and the inclusion of such information in the Shelf Registration Statement and
the related Prospectus. The Selling Securityholder understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Shelf Registration Statement and the related
Prospectus.
In accordance with the Selling Securityholder's obligation under the
Registration Rights Agreement to provide such information as may be required by
law for inclusion in the Shelf Registration Statement, the Selling
Securityholder agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Shelf Registration Statement remains effective. All
notices hereunder and pursuant to the Registration Rights Agreement shall be
made in writing at the address set forth below.
A-4
<PAGE>
Once this Election and Questionnaire is executed by the Selling
Securityholders and received by the Company, the terms of this Election and
Questionnaire and the representations and warranties contained herein shall be
binding on, shall inure to the benefit of and shall be enforceable by the
respective successors, heirs, personal representatives and assigns of the
Company and the Selling Securityholder with respect to the Transfer Restricted
Securities beneficially owned by such Selling Securityholder and listed in Item
3 above. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Election and Questionnaire to be executed and delivered either in person or
by its authorized agent.
Dated:
Beneficial Owner
By:__________________________________________
Name:
Title:
Please return the completed and executed Election and Questionnaire for receipt
PRIOR TO OR ON [DEADLINE FOR RESPONSE] to Covad Communications Group, Inc. at:
Covad Communications Group, Inc.
4250 Burton Drive
Santa Clara, California 95054
Attention: Treasurer
A-5
<PAGE>
EXHIBIT 1 TO ANNEX A
NOTICE TO TRANSFER PURSUANT TO REGISTRATION STATEMENT
Covad Communications Group, Inc.
4250 Burton Drive
Santa Clara, California 95054
Attention: Treasurer
United States Trust Company of New York
114 West 47th Street
25th Floor
New York, NY 10036
Attention: Corporate Trust
Re: Covad Communications Group, Inc.'s
6% Convertible Senior Notes
due 2005 (the "Convertible Notes")
Dear Sirs:
Please be advised that __________ has transferred $_________ aggregate
principal amount of the above-referenced
Convertible Notes or ____________________________ shares of the Company's Common
Stock issued on conversion or repurchase of Convertible Notes, pursuant to the
Registration Statement on Form S-3 (File No. 333- __________ ) filed by the
Company.
We hereby certify that the prospectus delivery requirements, if any, of
the Securities Act of 1933, as amended, have been satisfied with respect to the
transfer described above and that the above named beneficial owner of the
Convertible Notes or Common Stock is named as a selling securityholder in the
Prospectus dated _____________________ , or in amendments or supplements
thereto, and that the aggregate principal amount of the Convertible Notes or
number of shares of Common Stock transferred are [all or a portion of] the
Convertible Notes or Common Stock listed in such Prospectus, as amended or
supplemented, opposite such owner's name.
Very truly yours,
[name]
By:____________________________________
(Authorized signature)
Dated:________________________________
