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EXHIBIT 4.5
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$85,000,000
8 1/4% Convertible Subordinated Notes due 2003
REGISTRATION RIGHTS AGREEMENT
Dated as of August 22, 1996
by and among
MIDCOM Communications Inc.
and
PaineWebber Incorporated
Wheat, First Securities, Inc.
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THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of August 22, 1996 by and among MIDCOM Communications Inc., a
Washington corporation (the "Company"), and PaineWebber Incorporated and Wheat,
First Securities, Inc., as initial purchasers (the "Initial Purchasers").
The Company proposes to issue and sell to the Initial Purchasers (the
"Initial Placement") $85,000,000 aggregate principal amount (plus up to an
additional $12,750,000 principal amount to cover over-allotments, if any) of
its 8 1/4% Convertible Subordinated Notes due 2003 (the "Notes"), pursuant to
the terms of a Purchase Agreement, dated as of August 15, 1996 (the "Purchase
Agreement"). As an inducement to the Initial Purchasers to enter into the
Purchase Agreement, and in satisfaction of a condition to the Initial
Purchasers' obligations thereunder, the Company agrees with the Initial
Purchasers, (i) for the benefit of the Initial Purchasers and (ii) for the
benefit of the holders from time to time of the Transfer Restricted Securities
(as defined) whose names appear in the register maintained by the Company's
registrar in accordance with the provisions of the Indenture (as defined in
Section 1 hereof) (including the Initial Purchasers) (each of the foregoing a
"Holder," and collectively the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following capitalized terms shall have the
following meanings:
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control
of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the State of New York are not required to be
open.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, $.0001 par value per share, of
the Company.
"Damages Payment Date" means each regular interest payment date with
respect to the Notes provided for in the Indenture and the Notes.
"Effectiveness Target Date" has the meaning set forth in Section 3(a)
hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the Commission promulgated
thereunder.
"Exchange Offer Registration Statement" has the meaning set forth in
Section 4 hereof.
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"Holder" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture dated as of August 22, 1996, between
the Company and IBJ Xxxxxxxx Bank & Trust Company, as trustee, pursuant to
which the Notes are to be issued, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"Initial Purchasers" has the meaning set forth in the preamble
hereto.
"Initial Placement" has the meaning set forth in the preamble hereto.
"Losses" has the meaning set forth in Section 9(d) hereof.
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of securities registered under a Shelf Registration Statement
(provided that Holders of Common Stock issued upon conversion of Notes shall be
deemed to be Holders of the aggregate principal amount of Notes from which such
Common Stock was converted).
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers that shall administer an Underwritten Offering
of the securities covered by the Shelf Registration Statement.
"New Notes" means debt securities of the Company identical in all
material respects to the Notes (except that the New Notes shall not be subject
to restrictions on transfer), which may be issued pursuant to Section 4 hereof.
"Notes" means the 8 1/4% Convertible Subordinated Notes due 2003 of
the Company.
"Offering Memorandum" has the meaning set forth in the Purchase
Agreement.
"Person" means any individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"Prospectus" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of Transfer Restricted Securities, covered by
such Shelf Registration Statement, and all amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference into such Prospectus.
"Registration Default" has the meaning set forth in Section 5 hereto.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations of the Commission promulgated
thereunder.
"Shelf Registration Period" has the meaning set forth in Section 3(b)
hereof.
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"Shelf Registration Statement" means a "shelf" registration statement
of the Company pursuant to the provisions of Section 3 hereof which covers the
Transfer Restricted Securities, on an appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the Commission,
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Supplement Delay Period" means any period commencing on the date of
receipt by a Holder of Transfer Restricted Securities of any notice from the
Company of the existence of any fact or event of the kind described in Section
6(c)(2) hereof and ending on the date of receipt by such Holder of an amended
or supplemented Shelf Registration Statement or Prospectus, as contemplated by
Section 6(i) hereof, or the receipt by such Holder of written notice from the
Company (the "Advice") that the use of the Prospectus may be resumed, and
receipt of copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus.
"Transfer Restricted Securities" means each Note and the Common Stock
issuable upon conversion thereof until (i) the date on which such Note or the
Common Stock issuable upon conversion thereof has been effectively registered
under the Securities Act and disposed of pursuant to an effective registration
statement or, with respect to any Note, exchanged for a New Note pursuant to
Section 4 hereof, (ii) the date on which such Note or the Common Stock issuable
upon conversion thereof is distributed to the public pursuant to Rule 144 under
the Securities Act (or any similar provision then in effect) or is saleable
pursuant to Rule 144(k) under the Securities Act and all legends thereon
relating to transfer restrictions have been removed, or (iii) the date on which
such Note or the Common Stock issuable upon conversion thereof ceases to be
outstanding.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trustee" means the trustee with respect to the Notes under the
Indenture.
"Underwritten Offering" or "Underwritten Registration" means a
registration in which securities of the Company are sold to one or more
underwriters for reoffering to the public.
2. Securities Subject to This Agreement. The securities entitled
to the benefits of this Agreement are the Transfer Restricted Securities.
3. Shelf Registration.
(a) The Company shall, within 60 days after Closing Date, file with
the Commission and thereafter shall use its best efforts to cause to be
declared effective under the Securities Act by the 150th day after the Closing
Date (the "Effectiveness Target Date"), a Shelf Registration Statement relating
to the offer and sale of the Transfer Restricted Securities by the Holders from
time to time in accordance with the methods of distribution elected by such
Holders and set forth in such Shelf Registration Statement.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the Prospectus
forming a part thereof to be usable by Holders for a period of three years from
the Closing Date or such shorter period that will terminate when (i) all the
Transfer
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Restricted Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement, or (ii) the date on which
there ceases to be outstanding any Transfer Restricted Securities (in any such
case, such period being called the "Shelf Registration Period"). The Company
shall be deemed not to have used its best efforts to keep the Shelf
Registration Statement effective during the requisite period if it voluntarily
takes any action that would result in Holders of Transfer Restricted Securities
covered thereby not being able to offer and sell such securities during that
period, unless (i) such action is required by applicable law, (ii) such action
is taken by the Company in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, so long as the Company promptly
thereafter complies with the requirements of Section 6(i) hereof, if
applicable, or (iii) such action is taken because of any fact or circumstance
giving rise to a Supplement Delay Period.
(c) The Company shall prepare and file with the Commission such
amendments, including post-effective amendments, to the Shelf Registration
Statement as may be necessary to keep such Registration Statement continuously
effective for the applicable time period; cause the related Prospectus to be
supplemented by any required Prospectus supplement and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all securities covered by such
Shelf Registration Statement during the applicable period in accordance with
the intended methods of disposition by the sellers thereof set forth in such
Shelf Registration Statement as so amended or in such Prospectus as so
supplemented.
4. Registered Exchange Offer. If the Company determines that it
is permissible to do so, in lieu of filing the Shelf Registration Statement or
maintaining the effectiveness of the Shelf Registration Statement as
contemplated herein, the Company, in its discretion, may file with the
Commission a registration statement on Form S-4 or other applicable form with
respect to the New Notes (the "Exchange Offer Registration Statement") and upon
the Exchange Offer Registration Statement becoming effective, offer the holders
of Notes the opportunity to exchange their Notes for an equal principal amount
of New Notes. Upon the effectiveness of an Exchange Offer Registration
Statement, the holders of Notes constituting Transfer Restricted Securities
shall not be entitled to include any such Notes in a Shelf Registration
Statement hereunder; provided, however, the effectiveness of an Exchange Offer
Registration Statement shall not affect the Company's obligations hereunder
with respect to any Holder's Common Stock constituting Transfer Restricted
Securities. Notwithstanding the foregoing, in no event shall the Company have
any obligation to file a registration statement with respect to, or to register
any Notes pursuant to, an Exchange Offer Registration Statement.
5. Liquidated Damages.
(a) Subject to Section 6(m), if (i) the Company fails to file the
Shelf Registration Statement required by Section 3 of this Agreement on or
before the date specified for such filing under Section 3(a) hereof, (ii) such
Shelf Registration Statement is not declared effective by the Commission on or
prior to the Effectiveness Target Date or (iii) the Shelf Registration
Statement is declared effective but thereafter ceases to be continuously
effective or usable in connection with resales of Transfer Restricted
Securities during the Shelf Registration Period (each such event referred to in
clauses (a) through (c) above a "Registration Default"), then the Company will
pay Liquidated Damages to each Holder of Transfer Restricted Securities, with
respect to the first 90-day period immediately following the occurrence of such
Registration Default in an amount equal to $0.05 per week per $1,000 aggregate
principal amount of the
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Transfer Restricted Securities held by such Holder. The amount of the
Liquidated Damages will increase by an additional $0.05 per week per $1,000
aggregate principal amount of the Transfer Restricted Securities held by each
Holder with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of Liquidated Damages of $0.25
per week per $1,000 aggregate principal amount of the Transfer Restricted
Securities held by each Holder. In no event shall the Company pay Liquidated
Damages in excess of such maximum amount set forth in the preceding sentence,
regardless of whether one or multiple Registration Defaults exist. A
Registration Default under clause (a) above shall be cured on the date that the
Shelf Registration Statement is filed with the Commission; a Registration
Default under clause (b) above shall be cured on the date that the Shelf
Registration Statement is declared effective by the Commission; and a
Registration Default under clause (c) above shall be cured on the date of the
Shelf Registration Statement is declared effective or usable. All accrued
Liquidated Damages will be paid by the Company on each Damages Payment Date in
cash. Such payment will be made to the Holder(s) of the Global Notes (as
defined in the Indenture) by wire transfer of immediately available funds or by
federal funds check and to Holders of Transfer Restricted Securities
represented by Certificated Notes, if any, by wire transfer to the accounts
specified by them or by mailing checks to their registered addresses if no such
accounts have been specified. Following the cure of all Registration Defaults,
the accrual of Liquidated Damages will cease. For purposes of this Section 5,
Notes which have been converted into shares of Common Stock constituting
Transfer Restricted Securities shall be deemed to bear the principal amount at
which such securities were converted.
(b) Upon the occurrence of any event contemplated by Section
6(c)(2)(v) hereof and delivery of the Advice relating to such occurrence, the
Company shall be entitled to suspend the use of the Shelf Registration
Statement for three Supplement Delay Periods of up to 30 days for each such
period during which no Registration Default shall be deemed to occur under
Section 5(a)(iii). Such periods may run consecutively if a separate Advice is
delivered to Holders prior to the expiration of the preceding 30-day Supplement
Delay Period; provided, however, that such periods may not exceed an aggregate
of 45 days in any twelve-month period. The Company shall use its reasonable
best efforts to cause the use of the Shelf Registration Statement to be resumed
as soon as reasonably practicable following the commencement of a Supplement
Delay Period. A Registration Default shall be deemed to have occurred if the
use of the Shelf Registration Statement may not be resumed immediately upon the
expiration of a Supplement Delay Period permitted under this Section 5(b) and
Liquidated Damages in respect thereof shall accrue from the beginning of such
Supplement Delay Period.
(c) The parties hereto agree that the Liquidated Damages provided
for in this Section 5 constitute a reasonable estimate of the damages that may
be incurred by Holders of Transfer Restricted Securities by reason of the
failure of the Shelf Registration Statement to be filed, declared effective or
maintained effective, as the case may be, in accordance with the provisions
hereof.
6. Registration Procedures. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to the Initial Purchasers, the
Holders, the Managing Underwriters, if any, and their respective counsel,
not less than five Business Days prior to the filing thereof with the
Commission, a copy of any Shelf Registration Statement and each amendment
thereof, and each amendment or supplement, if any, to the Prospectus
included therein, and shall
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use its best efforts to reflect in each such document, when so filed with
the Commission, such comments as the Initial Purchasers and the Holders or
their counsel may reasonably propose.
(b) The Company shall use its best efforts to ensure that (i) any
Shelf Registration Statement and any amendment thereto and any Prospectus
forming part thereof and any amendment or supplement thereto complies in
all material respects with the Securities Act and the rules and
regulations thereunder, (ii) assuming any information provided by Holders
of Transfer Restricted Securities for inclusion in any Shelf Registration
Statement pursuant to Section 6(m) is true and correct, any Shelf
Registration Statement and any amendment or supplement thereto does not,
when it becomes effective, 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 (iii) assuming
any information provided by Holders of Transfer Restricted Securities for
inclusion in any Shelf Registration Statement pursuant to Section 6(m) is
true and correct, any Prospectus forming part of any Shelf Registration
Statement, and any amendment or supplement to such Prospectus, does not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(c) (1) The Company shall advise the Initial Purchasers, the
Holders of Transfer Restricted Securities named in the Shelf Registration
Statement and the Managing Underwriters, if any, and, if requested by the
Initial Purchasers, any such Holder or the Managing Underwriters, if any,
confirm such advice in writing, when a Shelf Registration Statement or any
amendment thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has become
effective.
(2) The Company shall advise the Initial Purchasers, the
Holders of Transfer Restricted Securities named in the Shelf Registration
Statement, the Managing Underwriters, if any, and their respective counsel
and, if requested by any such person, confirm such advice in writing:
(i) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information;
(ii) of the initiation by the Commission of proceedings
relating to a stop order suspending the effectiveness of the Shelf
Registration Statement;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Shelf Registration
Statement;
(iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the existence of any fact and the happening of any
event (including, without limitation, pending negotiations relating
to, or the consummation of, a transaction or the occurrence of any
event which would require additional disclosure of material
non-public information by the Company in the Shelf Registration
Statement as to which the Company has a bona fide business purpose
for preserving confidential or which renders the Company unable
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to comply with Commission requirements) that, in the opinion of the
Company, makes untrue any statement of a material fact made in its
Shelf Registration Statement, the Prospectus or any amendment or
supplement thereto or any document incorporated by reference therein
or requires the making of any changes in the Shelf Registration
Statement or the Prospectus so that, as of such date, the statements
therein are not misleading and do not omit to state a material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading.
Such Advice may be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made.
(d) The Company shall use its best efforts to obtain the withdrawal
of any order suspending the effectiveness of the Shelf Registration
Statement, or the lifting of any suspension of the qualification (or
exemption from qualification) of the Transfer Restricted Securities for
sale in any jurisdiction, at the earliest possible time.
(e) The Company shall furnish to each selling Holder named in the
Shelf Registration Statement and each underwriter, if any, without charge,
at least one conformed copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules. Upon written request, the Company shall furnish to each
selling Holder named in the Shelf Registration Statement and each
underwriter, if any, without charge, one copy of all exhibits to such
Shelf Registration Statement (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of Transfer Restricted Securities named in the Shelf
Registration Statement and each underwriter, if any, without charge, as
many copies of the Prospectus (including each preliminary Prospectus)
included in such Shelf Registration Statement and any amendment or
supplement thereto as such Holder or underwriters may reasonably request;
and, subject to any notice by the Company in accordance with Section 7(b),
the Company consents to the use of the Prospectus or any amendment or
supplement thereto by each of the selling Holders and such underwriters
for the purposes of offering and resale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto.
(g) Prior to the offering of Transfer Restricted Securities pursuant
to the Shelf Registration Statement, the Company shall use its best
efforts to register or qualify or cooperate with the Holders of Transfer
Restricted Securities named therein, the underwriters, if any, and their
respective counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Transfer
Restricted Securities for offer and sale under the securities or blue sky
laws of such jurisdictions of the United States as any such Holders or
underwriters reasonably request in writing; keep each such registration or
qualification (or exemption therefrom) effective during the period the
Shelf Registration Statement is required to be kept effective and do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the Shelf Registration Statement; provided, however, that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
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(h) The Company shall cooperate with the Holders of Transfer
Restricted Securities and underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold pursuant to the Shelf Registration Statement, free
of any restrictive legends and in such denominations and registered in
such names as such Holders or underwriters may request in writing at least
two Business Days prior to sales of securities pursuant to such Shelf
Registration Statement.
(i) Upon the occurrence of any event contemplated by Section
6(c)(2)(v) hereof, subject to Section 5(b), the Company shall promptly
prepare a post-effective amendment to the Shelf Registration Statement or
an amendment or supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document so
that as thereafter delivered to purchasers of the Transfer Restricted
Securities covered thereby, the Prospectus will not include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(j) Not later than the effective date of any such Shelf Registration
Statement hereunder, the Company shall cause to be provided CUSIP numbers
for the Transfer Restricted Securities registered under such Shelf
Registration Statement, and provide the Trustee with printed certificates
for such Transfer Restricted Securities where necessary, in a form
eligible for deposit with The Depository Trust Company.
(k) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make
generally available to its security holders in a regular filing on Form
10-Q or Form 10-K an earnings statement satisfying the provisions of Rule
158 (which need not be audited) for the twelve-month period commencing
after effectiveness of the Shelf Registration Statement.
(l) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act in a timely manner.
(m) The Company may require each Holder of Transfer Restricted
Securities to be sold pursuant to the Shelf Registration Statement to
furnish to the Company within 10 Business Days after written request for
such information has been made by the Company such customary information
regarding the Holder and the distribution of such securities as the
Company may from time to time reasonably require for inclusion in such
Shelf Registration Statement and such other information as may be
necessary or advisable in the reasonable opinion of the Company and its
counsel, in connection with such Shelf Registration Statement (and, with
respect to any Holder not previously identified by the Company in an
effective Shelf Registration Statement, such Holder shall notify the
Company in writing, not less than 5 Business Days prior to any sale by
such Holder under the Shelf Registration Statement of its name and the
number of Transfer Restricted Securities to be included in the Shelf
Registration Statement). No Holder of Transfer Restricted Securities
shall be entitled to the benefit of any Liquidated Damages under Section 5
of this Agreement or be entitled to use the Prospectus unless and until
such Holder shall have furnished the information required by this Section
6(m) and all such other information required to be disclosed in order to
make such information previously furnished to the Company by such Holder
not materially misleading.
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(n) The Company shall, if requested, promptly incorporate in the
Shelf Registration Statement or Prospectus, if necessary, pursuant to a
supplement or post-effective amendment to the Shelf Registration
Statement, such information as the Managing Underwriters, if any, or the
Majority Holders reasonably request to have included therein and shall
make all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment.
(o) The Company shall enter into such agreements on terms reasonably
acceptable to the Company (including underwriting agreements) in form,
scope and substance as are customary in underwritten offerings, and take
all other reasonable actions necessary to facilitate the registration or
the disposition of the Transfer Restricted Securities included in the
Shelf Registration Statement.
(p) The Company shall (i) make reasonably available at reasonable
times for inspection by the Holders of Transfer Restricted Securities to
be registered thereunder, any underwriter participating in any disposition
pursuant to such Shelf Registration Statement, and any attorney,
accountant or other agent retained by the Holders or such underwriters, at
the office where normally kept during normal business hours, all financial
and other records, pertinent corporate documents and properties of the
Company and its subsidiaries, and cause the Company's officers, directors
and employees to supply all relevant information reasonably requested by
the Holders, underwriters, attorney, accountant or other agent in
connection with the Shelf Registration Statement as is customary for
similar due diligence examinations, provided, however, that such persons
shall first agree in writing with the Company that any information that is
reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons; (ii) obtain opinions of counsel to the
Company and updates thereof (which counsel, if different from counsel to
the Company referred to in the Purchase Agreement, shall be reasonably
satisfactory to the Majority Holders of Transfer Restricted Securities to
be registered thereunder, the underwriters, if any, and their respective
counsel) addressed to each selling Holder covering such matters in form,
scope and substance as are customary in underwritten offerings; (iii)
obtain "cold comfort" letters (or, in the case of any person that does not
satisfy the conditions for receipt of a "cold comfort" letter specified in
Statement on Auditing Standards No. 72, an "agreed-upon procedures
letter") and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed where reasonably practicable to each selling Holder
of Transfer Restricted Securities registered thereunder, and the
underwriters, if any, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with primary
underwritten offerings; and (iv) deliver such documents and certificates
as may be reasonably requested by the Majority Holders and the Managing
Underwriters, if any, including those to evidence compliance with Section
6(i). The foregoing actions set forth in clauses (ii), (iii) and (iv) of
this Section 6(p) shall be performed at (A) the effectiveness of such
Shelf Registration Statement and each post-effective amendment thereto and
(B) each closing under any underwriting or similar agreement as and to the
extent required thereunder.
(q) The Company shall (i) list all Common Stock covered by such
Shelf Registration Statement on any securities exchange on which the
Common Stock is then listed or (ii) authorize for quotation
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on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or the National Market System of NASDAQ all Common Stock
covered by such Shelf Registration Statement if the Common Stock is then
so authorized for quotation.
7. Holders' Agreements. Each Holder of Transfer Restricted
Securities, by the acquisition of such Transfer Restricted Securities agrees:
(a) To furnish the information required to be furnished pursuant to
Section 6(m) hereof within the time periods set forth therein. The
Company may exclude from any Shelf Registration Statement the Transfer
Restricted Securities of any Holder who does not furnish such information.
Each Holder of Transfer Restricted Securities shall promptly furnish to
the Company all such information required to be disclosed in order to make
the information previously furnished to the Company by such Holder not
materially misleading.
(b) That upon receipt of a notice of the commencement of a
Supplement Delay Period, it will keep the fact of such notice
confidential, forthwith discontinue disposition of its Transfer Restricted
Securities, as the case may be, pursuant to the Shelf Registration
Statement, and will not deliver any Prospectus forming a part thereof
until receipt of the amended or supplemented Shelf Registration Statement
or Prospectus, as applicable, as contemplated by Section 6(i) hereof, or
until receipt of the Advice.
(c) If so directed by the Company in a notice of the commencement of
a Supplement Delay Period, each Holder of Transfer Restricted Securities,
as the case may be, will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Holder's
possession, of the Prospectus covering the Transfer Restricted Securities,
as the case may be.
(d) Sales of such Transfer Restricted Securities pursuant to a Shelf
Registration Statement shall only be made in the manner set forth in such
currently effective Shelf Registration Statement.
8. Registration Expenses. The Company shall bear all expenses
incurred in connection with the performance of its obligations under Sections
2, 3, 5 and 6 hereof and will reimburse the Holders for the reasonable fees and
disbursements of one firm or counsel designated by the Majority Holders to act
as counsel for the Holders in connection therewith. Notwithstanding the
foregoing or anything in this Agreement to the contrary, each Holder shall pay
all underwriting discounts and commissions of any underwriters with respect to
any Transfer Restricted Securities sold by it.
9. Indemnification and Contribution.
(a) In connection with the Shelf Registration Statement, the Company
will indemnify and hold harmless each Holder of Transfer Restricted Securities
covered thereby, the directors, officers, employees and agents of each such
Holder and each person who controls any such Holder within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against any and all losses, claims, liabilities, expenses and damages,
joint or several (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Securities Act, the Exchange Act or other
federal, state or foreign statutory law or regulation,
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at common law or otherwise, insofar as such losses, claims, liabilities,
expenses and damages arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Shelf Registration
Statement as originally filed or in any amendment thereof, or in any
preliminary Prospectus or Prospectus, or in any amendment thereof or supplement
thereto, or the omission or alleged omission to state in such documents a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, that (i) the Company will not be liable to
the extent that any such loss, claim, liability expense or damage arises out of
or is based on any such untrue statement or omission or alleged untrue
statement or omission made therein in reliance on and in conformity with
information relating to any Holder of Transfer Restricted Securities furnished
in writing to the Company by any such Holder expressly for inclusion therein
and (ii) the Company will not be liable to any Holder of Transfer Restricted
Securities under the indemnity agreement in this Section 9(a) with respect to
any preliminary Prospectus or a Prospectus that is subsequently amended or
supplemented to the extent that any such loss, claim, liability, expense or
damage of such Holder results solely from an untrue statement of a material
fact contained in, or the omission of a material fact from, the preliminary
Prospectus or Prospectus which untrue statement or omission was completely
corrected in the final Prospectus or the Prospectus as amended or supplemented,
as the case may be, if the Company shall sustain the burden of proving that
such Holder sold Transfer Restricted Securities to the person alleging such
loss, claim, liability, expense or damage without sending or giving, at or
prior to the written confirmation of such sale, a copy of the final Prospectus
or the Prospectus as amended or supplemented, as the case may be, if the
Company had previously furnished copies thereof to such Holder within a
reasonable amount of time prior to such sale or such confirmation. This
indemnity agreement will be in addition to any liability which the Company
might otherwise have.
The Company also agrees to indemnify or contribute to the losses,
claims, liabilities, expenses and damages, joint or several (including any and
all investigative, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted) of any underwriters of Transfer Restricted Securities
registered under the Shelf Registration Statement, their officers and directors
and each person who controls such underwriters on substantially the same basis
as that of the indemnification of the selling Holders provided in this Section
9(a) and shall, if requested by any Holder, enter into a customary underwriting
agreement reflecting such agreement, as provided in Section 6(o) hereof.
(b) Each Holder of Transfer Restricted Securities covered by the
Shelf Registration Statement will severally indemnify and hold harmless the
Company, each person who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, each
director of the Company and each officer of the Company to the same extent as
the foregoing indemnity from the Company to each such Holder, but only insofar
as losses, claims, liabilities, expenses or damages arise out of or are based
on any untrue statement or omission or alleged untrue statement or omission
made in reliance on and in conformity with information relating to such Holder
furnished to the Company by or on behalf of such Holder expressly for use in
the Shelf Registration Statement as originally filed or in any amendment
thereof, or in any preliminary Prospectus or Prospectus, or in any amendment
thereof or supplement thereto. This indemnity agreement will be in addition to
any liability that such Holder might otherwise have.
(c) Any party that proposes to assert the right to be indemnified
under this Section 9 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 9, notify each
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indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party (i) will
not relieve it from any liability that it may have to any indemnified party
under the foregoing provisions of this Section 9 unless, and only to the extent
that, it did not otherwise learn of such action and such omission results in
the forfeiture of substantive rights or defenses by the indemnifying party and
(ii) will not, in any event relieve the indemnifying party from any obligations
to any indemnified party other than the indemnification obligations in Sections
9(a) and 9(b) hereof. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the extent that
it elects by delivering written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the indemnified party,
jointly with any other indemnifying party similarly notified, to assume the
defense of the action, with counsel satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to
the indemnified party for any legal or other expenses except as provided below
and except for the reasonable costs of investigation subsequently incurred by
the indemnified party in connection with the defense. The indemnified party
will have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advice of counsel to the indemnified
party) that there may be legal defense available to it or other available
indemnified parties that are different from or in addition to those available
to the indemnifying party, (3) a conflict or potential conflict exists (based
on advice of counsel to the indemnified party) between the indemnified party
and the indemnifying party (in which case the indemnifying party will not have
the right to direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed counsel to assume
the defense of such action within a reasonable time after receiving notice of
the commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties. Such
firm shall be designated in writing by the Majority Holders in the case of
parties indemnified pursuant to Section 9(a) and by the Company, in the case of
parties indemnified pursuant to Section 9(b). All such fees, disbursements and
other charges will be reimbursed by the indemnifying party promptly as they are
incurred. No indemnifying party shall, without the prior written consent of
each indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding relating to
the matters contemplated by this Section 9 (whether or not any indemnified
party is a party thereto), unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising or that may arise out of such claim, action or proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 9 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Holders of
Transfer Restricted Securities, or insufficient, the Company and such Holders
will contribute to the total losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted, but after deducting any contribution received
by the Company from persons other than such Holders, such as persons who
control the Company within the meaning of the Securities Act or the
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Exchange Act and officers and directors of the Company, who also may be liable
for contribution) (collectively, "Losses") to which the Company and any one or
more of such Holders of Transfer Restricted Securities may be subject in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company on the one hand and such Holders on the other. The relative
benefits received by the Company shall be deemed to be equal to the sum of (x)
the total net proceeds from the Initial Placement (before deducting expenses)
as set forth on the cover page of the Offering Memorandum and (y) the total
amount of Liquidated Damages, if any, which the Company was not required to pay
as a result of registering the securities covered by the Shelf Registration
Statement which resulted in such Losses. Benefits received by the Initial
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions as set forth on the cover page of the Offering Memorandum, and
benefits received by any other Holders shall be deemed to be equal to the value
of receiving Notes or Common Stock issuable upon conversion thereof, as
applicable, registered under the Securities Act. Benefits received by any
underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a part of
the Shelf Registration Statement which resulted in such Losses. If, but only
if, the allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in such proportion
as is appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and the Holders, on the other, with respect to the statements or omissions
which resulted in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Holders, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Holders agree that it would
not be just and equitable if contributions pursuant to this Section 9(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,
liability, expense or damage, or action in respect thereof, referred to above
in this Section 9(d) shall be deemed to include, for purpose of this Section
9(d), 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 9(d), in no case shall any
Initial Purchaser or any subsequent Holder of any Transfer Restricted
Securities be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Notes, as set forth on the
cover page of the Offering Memorandum, nor shall any underwriter be responsible
for any amount in excess of the underwriting discount or commission applicable
to the securities purchased by such underwriter under the Shelf Registration
Statement which resulted in such Losses. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute as
provided in this Section 9(d) are several and not joint. For purposes of this
Section 9(d), any person who controls the Company or a Holder within the
meaning of the Securities Act will have the same rights to contribution as that
party, and each officer or director of the Company or such Holder will have the
same rights to contribution, as the Company or such Holder, as applicable,
subject in each case to the provisions hereof. Any party entitled to
contribution promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 9(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may
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be sought from any other obligation it or they may have under this Section
9(d). No party will be liable for contribution with respect to any action or
claim settled without its written consent (which consent will not be
unreasonably withheld or delayed).
(e) The indemnity and contribution agreements contained in this
Section 9 will remain in full force and effect, regardless of any investigation
made by or on behalf of any Holder or the Company or any of the officers,
directors or controlling persons referred to in this Section 9, and will
survive the sale by a Holder of securities covered by the Shelf Registration
Statement.
10. Rules 144 and 144A. The Company shall use its best efforts to
file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time it is not required to file
such reports but in the past had been required to or did file such reports, it
will, upon the request of any holder of Transfer Restricted Securities, make
available other information as reasonably required by, and so long as necessary
to permit, sales of its Transfer Restricted Securities pursuant to Rule 144 and
Rule 144A. Notwithstanding the foregoing, nothing in this Section 10 shall be
deemed to require the Company to register any of its securities pursuant to the
Exchange Act.
11. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages (including the Liquidated Damages
contemplated hereby) would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law; provided, that monetary
damages relating solely to a Registration Default shall be limited to the
amount of Liquidated Damages calculated in accordance with Section 5 hereof.
(b) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into,
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Holders of at least a majority of the then outstanding aggregate
principal amount of Transfer Restricted Securities; provided that, with respect
to any matter that directly or indirectly affects the rights of any Initial
Purchaser hereunder, the Company shall obtain the written consent of each such
Initial Purchaser against which such amendment, qualification, supplement,
waiver or consent is to be effective. Notwithstanding the foregoing (except
the foregoing proviso), a waiver or consent to departure from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders whose securities are being sold pursuant to a Shelf Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by the Majority Holders, determined on the basis of Notes
being sold rather than registered under such Shelf Registration Statement.
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(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered or
certified first-class mail, telex, telecopier, or air courier guaranteeing
overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this
Section 11(d), which address initially is, with respect to each
Holder, the address of such Holder maintained by the registrar under
the Indenture, with a copy in like manner to PaineWebber
Incorporated;
(2) if to the Initial Purchasers, initially at the address set
forth in the Purchase Agreement; and
(3) if to the Company, initially at its address set forth in
the Purchase Agreement.
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.
The Initial Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties hereto, including, without the need for an express assignment or any
consent by the Company thereto, subsequent Holders of Transfer Restricted
Securities. The Company hereby agrees to extend the benefits of this Agreement
to any Holder of Transfer Restricted Securities and any such Holder may
specifically enforce the provisions of this Agreement as if an original party
hereto. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder of Transfer Restricted Securities.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE (WITHOUT
REFERENCE TO THE CONFLICT OF LAW RULES THEREOF).
(i) Submission to Jurisdiction. The Company hereby irrevocably
submits to the non-exclusive jurisdiction of any New York state court sitting
in the Borough of Manhattan in the City of New York or any federal court
sitting in the Borough of Manhattan in the City of New York in respect of any
suit, action or proceeding arising out of or relating to this Agreement, and
irrevocably accepts for itself and
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in respect of its property, generally and unconditionally, jurisdiction of the
aforesaid courts. The Company irrevocably waives, to the fullest extent it may
effectively do so under applicable law any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.
(j) Severability. In the event that any one of more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(k) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, shall
be entitled to recover its reasonable attorneys' fees in addition to any other
available remedy.
(l) Approval of Holders. Whenever the consent or approval of
holders of a specified percentage of Transfer Restricted Securities is required
hereunder, Transfer Restricted Securities held by the Company or its affiliates
(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. For purposes of calculating the consent
or approval of holders of a majority of the then outstanding aggregate
principal amount of Transfer Restricted Securities, Transfer Restricted
Securities which have been converted into shares of Common Stock shall be
deemed to bear the principal amount at which such securities were converted.
(m) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement relating to the registration under the
Securities Act of the Transfer Restricted Securities and is 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 and the
registration rights granted by the Company with respect to the Notes sold
pursuant to the Purchase Agreement and the Common Stock issuable upon
conversion of the Notes. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect to
the registration rights granted by the Company with respect to the Notes or the
Common Stock issuable upon conversion of the Notes. This Agreement supersedes
all prior agreements and understandings among the parties with respect to such
registration rights.
(n) Further Assurances. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things reasonably necessary, proper or advisable under
applicable law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and the other
documents contemplated hereby and consummate and make effective the
transactions contemplated hereby.
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
MIDCOM COMMUNICATIONS INC.
By: XXXXXX X. XXXXXXXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
PaineWebber Incorporated
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: First Vice President
Wheat, First Securities, Inc.
By:
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
S-1
19
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
MIDCOM COMMUNICATIONS INC.
By:
---------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
PaineWebber Incorporated
By: XXXXXXX X. XXXXXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: First Vice President
Wheat, First Securities, Inc.
By:
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
S-1
20
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
MIDCOM COMMUNICATIONS INC.
By:
---------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
PaineWebber Incorporated
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: First Vice President
Wheat, First Securities, Inc.
By: XXXXX X. XXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
S-1
