Exhibit
10.3


 


REGISTRATION RIGHTS AGREEMENT


 


This Registration Rights
Agreement (this “Agreement”)
is made and entered into as of March    , 2006, by and
between Covad Communications Group, Inc., a Delaware corporation (the “Company”), and EarthLink, Inc., a
Delaware corporation (the “Purchaser”).


 


This Agreement is made
pursuant to that certain Purchase Agreement, dated as of March 15, 2006, between the Company and the
Purchaser (the “Purchase Agreement”), pursuant to which the Company is
issuing and selling to Purchaser (i) $40,000,000 aggregate principal
amount of a 12% Senior Secured Convertible Note due 2011 (the “Note”) and (ii) 6,134,969 shares (the “Primary Shares”)
of common stock, par value $0.001, of the Company (the “Common Stock”).  The Note is convertible into shares (the “Underlying Shares”) of Common Stock.


 


The Company and the
Purchaser hereby agree as follows:


 


1.             Definitions.  Capitalized terms used and not otherwise
defined herein that are defined in the Purchase Agreement shall have the meanings
given such terms in the Purchase Agreement. 
As used in this Agreement, the following terms shall have the respective
meanings set forth in this Section 1:


 


“Advice” shall have the meaning set forth in Section 5(a).


 


“Agreement”
shall have the meaning set forth in the Preamble.


 


“Business Day”
shall mean any day except Saturday, Sunday or any other day on which commercial
banks in the State of California are authorized by law or other governmental
action to close.


 


“Commission” means
the Securities and Exchange Commission.


 


“Common Stock”
shall have the meaning set forth in the Preamble.


 


“Company”
shall have the meaning set forth in the Preamble.


 


“Effective Date”
means the date that the Registration Statement filed pursuant to Section 2(a) or
2(b) is first declared effective by the Commission.


 


“Effectiveness Date”
means (a) with respect to the initial Registration Statement required to
be filed pursuant to Section 2(a), the earlier of: (a)(i) the 180th
day following the Closing Date and (ii) the fifth Trading Day following
the date on which the Company is notified by the Commission that the initial
Registration Statement will not be reviewed or is no longer subject to further
review and comments, and (b) with respect to any additional Registration Statements
that may be required pursuant to Section 2(b), the 180th day following the
date on which the Company first knows, or reasonably should have known, that
such additional Registration Statement is required under such Section.


 

















 


“Effectiveness Period”
shall have the meaning set forth in Section 2(a).


 


“Exchange Act”
means the Securities Exchange Act of 1934, as amended.


 


“Filing Date”
means (a) with respect to the initial Registration Statement required to
be filed pursuant to Section 2(a), the 60th day
following the Closing Date, and (b) with respect to any additional
Registration Statements that may be required pursuant to Section 2(b), the
60th day following the date on which the
Company first knows, or reasonably should have known, that such additional
Registration Statement is required under such Section.


 


“Indemnified Party”
shall have the meaning set forth in Section 5(c).


 


“Indemnifying Party”
shall have the meaning set forth in Section 5(c).


 


“Losses” shall
have the meaning set forth in Section 5(a).


 


“Note”
shall have the meaning set forth in the Preamble.


 


“Primary
Shares” shall have the
meaning set forth in the Preamble.


 


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.


 


“Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.


 


“Purchase
Agreement” shall have
the meaning set forth in the Preamble.


 


“Purchase
Price” means (i) with respect to
the Primary Shares, the price paid for such shares and (ii) with respect
to Underlying Shares, the then applicable Conversion Price (as defined in the
Note) for such shares.


 


“Purchaser”
shall have the meaning set forth in the Preamble.


 


“Registrable Securities” means: (i) the Primary Shares, (ii) the Underlying
Shares and (iii) any securities issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event with respect
to any of the securities referenced in (i) or (ii) above.


 


“Registration Statement” means the initial registration statement required to be filed in
accordance with Section 2(a) and any additional registration
statement(s) required to be 


 


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filed under Section 2(b),
including (in each case) the Prospectus, amendments and supplements to such
registration statements or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statements.


 


“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.


 


“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.


 


“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.


 


“Securities Act”
means the Securities Act of 1933, as amended.


 


“Suspension
Period” shall have the
meaning set forth in Section 6(c)(ii).


 


“Trading Day” means a day on which the principal national securities
exchange or automated quotation system in the United States on which the
Company’s Common Stock is listed or quoted or admitted to trading is open for
the transaction of business or, if the Company’s Common Stock is not listed or
quoted or admitted to trading on any national securities exchange or automated
quotation system in the United States, any Business Day.


 


“Trading Market” means whichever of the New York Stock Exchange, the
American Stock Exchange, the NASDAQ National Market or the NASDAQ SmallCap
Market, on which the Common Stock is listed or quoted for trading on the date
in question.


 


“Underlying
Shares” shall have the
meaning set forth in the Preamble.


 


2.             Registration.


 


(a)           On or prior to the Filing Date, the
Company shall prepare and file with the Commission a Registration Statement
covering the resale of all Registrable Securities not already covered by an
existing and effective Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415. 
The Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another
appropriate form for such purpose).  The
Company shall use its reasonable best efforts to cause the Registration
Statement to be declared effective under the Securities Act no later than the Effectiveness
Date, and shall use its reasonable best efforts to keep the Registration
Statement continuously effective under the Securities Act until the date which
is the earlier of (i) five years after the Effective Date, (ii) such
time as all of the Registrable Securities have been publicly sold by the
Purchaser, or (iii) such time as all of the Registrable Securities may be
sold pursuant to Rule 144(k) (the “Effectiveness Period”).


 


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(b)           If for any reason the Commission does
not permit all of the Registrable Securities to be included in the Registration
Statement filed pursuant to Section 2(a), or for any other reason any
Registrable Securities are not included in a Registration Statement filed under
this Agreement, then the Company shall prepare and file as soon as possible
after the date on which the Commission shall indicate as being the first date
or time that such filing may be made, but in any event by its Filing Date, an
additional Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415,
on Form S-3 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form for such purpose).  The Company shall use its reasonable best
efforts to cause each such Registration Statement to be declared effective
under the Securities Act as soon as possible but, in any event, no later than
its Effectiveness Date, and shall use its reasonable best efforts to keep such
Registration Statement continuously effective under the Securities Act during
its entire Effectiveness Period.


 


(c)           If: (i) a Registration Statement
is not filed on or prior to its Filing Date (if the Company files a
Registration Statement without affording the Purchaser the opportunity to
review and comment on the same as required by Section 3(a) hereof,
the Company shall not be deemed to have satisfied this clause (i)), or (ii) a
Registration Statement is not declared effective by the Commission on or prior
to its required Effectiveness Date, or (iii) after its Effective Date,
without regard for the reason thereunder or efforts therefor other than a
Suspension Event in compliance with Section 6(c), such Registration
Statement ceases for any reason to be effective and available to the Purchaser
as to all Registrable Securities to which it is required to cover at any time
prior to the expiration of its Effectiveness Period, for an aggregate of 20
Trading Days for all such events (any such failure or breach being referred to
as an “Event,” and for purposes of clauses (i) and
(ii) or for purposes of clause (iii) the date on which such 20
Trading Day period is exceeded, being referred to as “Event Date”), then, for so long as
such event is within the Effectiveness Period, liquidated damages will accrue
based on the Purchase Price of the affected Registrable Securities paid by the
Purchaser pursuant to the Purchase Agreement from and including the Event Date
but excluding the date on which the Event has been cured.  For so long as the Event has not been cured, liquidated
damages will accrue at a rate of 0.50% per annum during the 90-day period
immediately following the occurrence of the Event Date and shall increase by
0.50% per annum at the end of each subsequent 90-day period, but in no event
shall such rate exceed 1.00% per annum. 
The liquidated damages shall be due and payable in cash or through the
issuance of Additional Notes (as defined in the Note), to the Purchaser on each
monthly anniversary of each such Event Date thereof (if the applicable Event
shall not have been cured by such date) until the applicable Event is cured.  The liquidated damages pursuant to the terms
hereof shall apply on a pro rata basis for any portion of a month prior to the
cure of an Event other than with respect to the initial Event Date thereof.  Following the cure of all Events, the accrual
of liquidated damages shall cease.  The
liquidated damages under this Section 2(c) shall be the sole and
exclusive remedy of the Purchaser under this Agreement for an Event.  Notwithstanding the foregoing, no liquidated
damages will accrue hereunder to the Purchaser with respect to the Primary
Shares or Underlying Shares that are no longer Registrable Securities.


 


(d)           Registration Statements under this Section 2
may contain shares other than Registrable Securities in accordance with the
requirements of piggy-back rights granted under 


 


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predecessor
agreements, provided, that the number of Registrable Securities shall not be
cutback under any such Registration Statements as a result of such piggy-back
rights.


 


3.             Registration Procedures


 


In connection with the
Company’s registration obligations hereunder, the Company shall:


 


(a)           Not less than four Trading Days prior
to the filing of a Registration Statement or any related Prospectus or any
amendment or supplement thereto furnish to the Purchaser copies of the “Selling
Stockholders” section of such document, the “Plan of Distribution” and any
risk factor contained in such document that addresses specifically this
transaction or the Selling Stockholders, as proposed to be filed which
documents will be subject to the review of the Purchaser, except for any
amendment or supplement or document (a copy of which has been previously
furnished to the Purchaser) which counsel to the Company shall advise the
Company is required to be filed sooner in order to comply with applicable law, rules and
regulations.  The Company shall not file
a Registration Statement or any such Prospectus or any amendments or
supplements thereto that does not contain the disclosure containing the
Purchaser as a “Selling Stockholder” as provided to the Company by the
Purchaser in connection therewith.


 


(b)           (i) Subject to Section 6(c),
prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration Statement
continuously effective as to the applicable Registrable Securities for its
Effectiveness Period and prepare and file with the Commission such additional
Registration Statements in order to register for resale under the Securities
Act all of the Registrable Securities; (ii) cause the related Prospectus
to be amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) respond
as promptly as reasonably possible to any comments received from the Commission
with respect to each Registration Statement or any amendment thereto and, as
promptly as reasonably possible provide the Purchaser true and complete copies
of all correspondence from and to the Commission relating to such Registration
Statement that would not result in the disclosure to the Purchaser of material
and non-public information concerning the Company; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange
Act with respect to the Registration Statements and the disposition of all
Registrable Securities covered by each Registration Statement.


 


(c)           Notify the Purchaser as promptly as
reasonably possible (and, in the case of (i)(A) below, not less than three
Trading Days prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Trading Day following the day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed; (B) when
the Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement (the Company shall provide true and complete copies
thereof and all written responses thereto to the Purchaser that pertain to the
Purchaser as a Selling Stockholder or to the Plan of Distribution, but not
information which the 


 


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Company believes
would constitute material and non-public information); and (C) with
respect to each Registration Statement or any post-effective amendment, when
the same has become effective; (ii) of any request by the Commission or
any other Federal or state governmental authority for amendments or supplements
to a Registration Statement or Prospectus or for additional information; (iii) of
the issuance by the Commission of any stop order suspending the effectiveness
of a Registration Statement covering any or all of the Registrable Securities
or the initiation of any Proceedings for that purpose; (iv) of the receipt
by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of
any Proceeding for such purpose; (v) of the occurrence of any event or
passage of time that makes the financial statements included in a Registration
Statement ineligible for inclusion therein or any statement made in such
Registration Statement or Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that
requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or the
Prospectus, as the case may be, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and (vi) 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 Registration Statement, the
Prospectus, any amendment or supplement thereto, untrue, or that requires the
making of additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading.


 


(d)           Use its reasonable best efforts to
avoid the issuance of, or, if issued, obtain the withdrawal of (i) any
order suspending the effectiveness of a Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.


 


(e)           Furnish to the Purchaser, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto and all exhibits to the extent requested by the Purchaser
(including those previously furnished) promptly after the filing of such
documents with the Commission.


 


(f)            Promptly deliver to the Purchaser,
without charge, as many copies of each Prospectus or Prospectuses (including
each form of prospectus) and each amendment or supplement thereto as the
Purchaser may reasonably request.  The
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by the selling Purchaser in connection with the offering and
sale of the Registrable Securities covered by such Prospectus and any amendment
or supplement thereto.


 


(g)           Prior to any public offering of
Registrable Securities, use its reasonable best efforts to register or qualify
or cooperate with the selling Purchaser in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of all jurisdictions within the United States reasonably requested by the
Purchaser proposing to sell securities in such jurisdiction, to keep each such
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things necessary or 


 


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advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statements; provided, that the Company shall
not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or subject the Company to any
material tax in any such jurisdiction where it is not then so subject or (ii) file
a general consent to service of process in any such jurisdiction, except in
such jurisdictions where the Company is already subject to service of process.


 


(h)           Cooperate with the Purchaser to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statements, which certificates shall be free, to the extent
permitted by the Purchase Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such
names as the Purchaser may request.


 


(i)            Upon the occurrence of any event
contemplated by Section 3(c)(v), as promptly as reasonably possible,
prepare a supplement or amendment, including a post-effective amendment, to the
affected Registration Statements or a supplement to the related Prospectus or
any document incorporated or deemed to be incorporated therein by reference,
and file any other required document so that, as thereafter delivered, no
Registration Statement nor any Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.


 


4.             Registration Expenses.  All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement.  The fees and
expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (A) with respect to filings required to be
made with any Trading Market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities or Blue
Sky laws), (ii) fees and disbursements of counsel for the Company, and (iii) fees
and expenses of all other Persons retained by the Company in connection with
the consummation of the transactions contemplated by this Agreement.  In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation
of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit and the fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder.


 


5.             Indemnification.


 


(a)           Indemnification by the Company.  The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless the Purchaser, the
officers, directors, agents, investment advisors, partners, members and
employees of the Purchaser, each Person who controls the Purchaser (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable costs of 


 


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preparation and
reasonable attorneys’ fees) and expenses (collectively, “Losses”),
as incurred, arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (1) such untrue statements or omissions are based solely upon
information regarding the Purchaser furnished in writing to the Company by the
Purchaser expressly for use therein, or to the extent that such information
relates to the Purchaser or the Purchaser’s proposed method of distribution of
Registrable Securities, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (2) in the case of an occurrence of an
event of the type specified in Section 3(c)(ii)-(vi), the use by the
Purchaser of an outdated or defective Prospectus after the Company has notified
the Purchaser in writing that the Prospectus is outdated or defective and prior
to the receipt by the Purchaser of advice in writing (the “Advice”) from the Company that the use of
the applicable Prospectus may be resumed or an amended or supplemented
Prospectus, but only if and to the extent that following the receipt of the
Advice or the amended or supplemented Prospectus the misstatement or omission
giving rise to such Loss would have been corrected.  The Company shall notify the Purchaser
promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.


 


(b)           Indemnification by the Purchaser.
The Purchaser shall indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from
and against all Losses, as incurred, to the extent arising out of or to the
extent based upon: (x) the Purchaser’s failure to comply with the prospectus
delivery requirements of the Securities Act or (y) any untrue statement of a
material fact contained in any Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto, or to the extent
arising out of or to the extent based upon any omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading to the extent, but only to the extent that, (1) such untrue
statements or omissions are based solely upon information regarding the
Purchaser furnished in writing to the Company by the Purchaser expressly for
use therein, or to the extent that such information relates to the Purchaser or
the Purchaser’s proposed method of distribution of Registrable Securities, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(vi),
the use by the Purchaser of an outdated or defective Prospectus after the
Company has notified the Purchaser in writing that the Prospectus is outdated
or defective and prior to the receipt by the Purchaser of an Advice or an
amended or supplemented Prospectus, but only if and to the extent that
following the receipt of the Advice or the amended or supplemented Prospectus
the misstatement or omission giving rise to such Loss would have been
corrected.  In no event shall the
liability of any selling Purchaser hereunder be greater in amount than the
dollar amount of the net proceeds received by the Purchaser upon the sale of
the Registrable Securities giving rise to such indemnification obligation.


 


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(c)           Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”)
in writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that
such failure shall have materially and adversely prejudiced the Indemnifying
Party.


 


An Indemnified Party shall
have the right to employ separate counsel in any such Proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties unless:  (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall
have failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised in writing by counsel
that a conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party).  The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld.  No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such Proceeding.


 


All fees and expenses of
the Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Trading Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).


 


(d)           Contribution.  If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable
considerations.  The relative fault of
such Indemnifying Party and 


 


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Indemnified Party
shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission of a material fact, has been taken or made by,
or relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission.  The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations set
forth in Section 5(c), any reasonable attorneys’ or other reasonable fees
or expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party
in accordance with its terms.


 


The parties hereto agree
that it would not be just and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
immediately preceding paragraph. 
Notwithstanding the provisions of this Section 5(d), the Purchaser
shall not be required to contribute, in the aggregate, any amount in excess of
the amount by which the proceeds actually received by the Purchaser from the
sale of the Registrable Securities subject to the Proceeding exceeds the amount
of any damages that the Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission.


 


The indemnity and
contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.


 


6.             Miscellaneous


 


(a)           Remedies.  In the event of a breach by the Company or by
the Purchaser, of any of their obligations under this Agreement, the Purchaser
or the Company, as the case may be, in addition to being entitled to exercise
all rights granted by law and under this Agreement, including recovery of
damages, will be entitled to specific performance of its rights under this Agreement.  The Company and the Purchaser agree that
monetary damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.


 


(b)           Compliance.  The Purchaser covenants and agrees that it
will comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.


 


(c)           Discontinued Disposition.


 


(i)            The
Purchaser agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Section 3(c)(ii)-(vi), the Purchaser will forthwith
discontinue disposition of such Registrable Securities under the Registration
Statement until the Purchaser’s receipt of the copies of the supplemented or
amended Prospectus and/or 


 


10

















 


amended Registration Statement, or until the Purchaser’s receipt of the
Advice, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.  The Company may provide appropriate stop
orders to enforce the provisions of this paragraph.


 


(ii)           Notwithstanding the foregoing, the Company may suspend the
effectiveness of the Registration Statement by written notice to the Purchaser
for a period not to exceed an aggregate of 30 days in any 90-day period (each
such period a “Suspension Period”) if:


 


(1) an event occurs and is
continuing as a result of which the Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein would, in the Company’s reasonable judgment, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and


 


(2) the Company determines
in good faith that the disclosure of such event at such time would be seriously
detrimental to the Company and its subsidiaries;


 


provided that, in the event the
disclosure relates to a previously undisclosed proposed or pending material
business transaction, the disclosure of which the Board of Directors of the
Company determines in good faith would be reasonably likely to impede the
Company’s ability to consummate such transaction, the Company may extend a
Suspension Period from 30 days to 45 days; provided, however, that Suspension
Periods shall not (i) exceed an aggregate of 90 days in any 360-day period
and (ii) occur more than three separate times in any 360-day period.  The Company shall not be required to specify
in the written notice to the Purchaser the nature of the event giving rise to
the Suspension Period.


 


(iii)          During the occurrence of any
Suspension Period, the Company shall use its commercially reasonable efforts to
promptly amend or supplement the Registration Statement on a post-effective
basis or to take such action as is necessary to permit resumed use of the
Registration Statement as soon as possible.


 


(iv)          Notwithstanding any provision herein
to the contrary, if the Company shall give notice of a Suspension Period
pursuant to Section 6(c)(ii) with respect to any Registration
Statement, the Company agrees that it shall extend the Effectiveness Period by
the number of days during the period from the date of the giving of notice of a
Suspension Period to and including the date when the Company provides written
notice that the Suspension Period has ended and copies of the supplemented or
amended Prospectus necessary to resume sales, with respect to each Suspension
Period.


 


(d)           Piggy-Back Registrations.  If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the 


 


11

















 


Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form S-8
(each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to the Purchaser written notice of such determination and, if within
fifteen days after receipt of such notice, the Purchaser shall so request in
writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be registered,
subject to customary underwriter cutbacks applicable to all holders of
registration rights and the cutback provisions of any predecessor registration
rights agreement.


 


(e)           Amendments and Waivers. No
provision of this Agreement may be waived or amended except in a written
instrument signed by the Company and the Purchaser.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.


 


(f)            Notices.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior
to 5:30 p.m. (New York City time) on a Trading Day, (ii) the Trading
Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this Section later
than 5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m.
(New York City time) on such date, (iii) the Trading Day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to
be given.  The address for such notices
and communications shall be as follows:


 


If to the Company:                                                                                       Covad
Communications Group, Inc.


110 Rio Robles


San Jose, California 95134-1813


Attention: 
Chief Financial Officer and General Counsel


(408) 952-6400 (phone)


(408) 952-7539 (facsimile)


 


With a copy to:  
                                                                                              Weil,
Gotshal & Manges LLP


200 Crescent Court, Suite 300


Dallas, Texas 
75201


Attention: 
Michael A. Saslaw


(214) 746-8117 (phone)


(214) 746-8417 (facsimile)


 


12

















 


If to Purchaser:                                                                                                         EarthLink, Inc.


1375 Peachtree Street


Atlanta, Georgia 30309


Attention: 
Chief Financial Officer and General Counsel


(404) 815-0770 (phone)


(404) 892-7616 (facsimile)


 


With a copy to:  
                                                                                              Hunton &
Williams LLP


600 Peachtree Street, NE


Suite 4100


Atlanta, Georgia 30308


Attention:  David
M. Carter


(404) 888-4246 (phone)


(404) 888-4190 (facsimile)


 


(g)           Successors and Assigns.  This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of the Purchaser and its assigns.  The Company may not assign its rights or
obligations hereunder without the prior written consent of the Purchaser.


 


(h)           Execution and Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement.  In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.


 


(i)            Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof.  Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner
permitted by law.  Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any Proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.


 


(j)            Cumulative Remedies.  The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.


 


(k)           Severability. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and 


 


13

















 


the parties hereto shall use their reasonable efforts
to find and employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision, covenant or
restriction.  It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.


 


(l)            Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


 


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IN WITNESS WHEREOF, the parties
have executed this Registration Rights Agreement as of the date first written
above.


 


	
   

  	
  COVAD COMMUNICATIONS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


 


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SIGNATURE PAGE OF PURCHASER TO FOLLOW]


 

















 


IN WITNESS WHEREOF, the
parties have executed this Registration Rights Agreement as of the date first
written above.


 


	
   

  	
  EARTHLINK,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title: