EXHIBIT 10.39
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REGISTRATION RIGHTS AGREEMENT
Dated As of August 15, 1997
by and among
USN COMMUNICATIONS, INC.
and
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
and
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
as Initial Purchasers
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of August 15, 1997 by among USN COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), and XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED ("Xxxxxxx Xxxxx") and XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES
CORPORATION ("DLJ" and, together with Xxxxxxx Xxxxx, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated as of
August 13, 1997, by and among the Company and the Initial Purchasers (the
"Purchase Agreement"), which provides for, among other things, the sale by the
Company to the Initial Purchasers of 152,725 Units (the "Units"), each Unit
consisting of $1,000 principal amount at Stated Maturity of a 14 5/8% Senior
Discount Note due 2004 (each, a "Note" and collectively, the "Notes") and ten
warrants (each, a "Warrant" and collectively, the "Warrants"), each Warrant
entitling the holder to purchase 0.134484 shares of Class A Common Stock, $.01
par value per share (the "Class A Common Stock"), of the Company. In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the Company
has agreed to provide to the Initial Purchasers and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
"Advice" shall have the meaning set forth in Section 6(c) hereof.
"Business Day" shall mean any day except a Saturday, Sunday or other
day in The City of New York, or in the city of the corporate trust office of the
Trustee, on which banks are authorized to close.
"Broker-Dealer" shall mean any broker or dealer registered under the
Exchange Act.
"Broker-Dealer Transfer Restricted Notes" shall mean Exchange Notes
that are acquired by a Broker-Dealer in the Exchange Offer in substitution for
notes that such Broker-Dealer acquired for its own account as a result of
market-making activities or other trading activities (other than Notes acquired
directly from the Company or any of its affiliates).
"Class A Common Stock" shall mean the Class A Common Stock, $.01 par
value per share, of the Company.
"Class B Common Stock" shall mean the Class B Common Stock, $.01 par
value per share, of the Company.
"Closing Time" shall mean August 18, 1997.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall mean, together, the Class A Common Stock and the
Class B Common Stock.
"Company" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
"Consummate" an Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Securities Act of the Exchange Offer Registration
Statement relating to the Exchange Notes to be issued in the Exchange Offer, (b)
the maintenance of such Exchange Offer Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period not less than
the minimum period required pursuant to Section 3(b) hereof and (c) the delivery
by the Company to the Registrar under the Indenture of Exchange Notes in the
same aggregate principal amount upon maturity as the aggregate principal amount
upon maturity, if any, of Notes properly tendered by Holders thereof pursuant to
the Exchange Offer.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Company; provided, however, that such Depositary
must have an address in the Borough of Manhattan, in The City of New York.
"DLJ" shall have the meaning set forth in the preamble to this
Agreement.
"Effectiveness Target Date" shall have the meaning set forth in
Section 5 and as specified in Sections 3 and 4 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" shall mean the Company's 14 5/8% Senior Discount
Notes due 2004, to be issued pursuant to the Indenture in the Exchange Offer.
"Exchange Offer" shall mean the registration by the Company under the
Securities Act of the Exchange Notes pursuant to the Exchange Offer Registration
Statement pursuant to which the Company shall offer the Holders of all
outstanding Transfer Restricted Notes
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the opportunity to exchange all such outstanding Transfer Restricted Notes,
being the original evidence of indebtedness, for Exchange Notes, as evidence of
the same indebtedness in an aggregate principal amount equal to the aggregate
principal amount of the Transfer Restricted Notes properly tendered in such
Exchange Offer by such Holders.
"Exchange Offer Registration Statement" shall mean the Registration
Statement relating to the Exchange Offer and the registration of Exchange Notes
for sale from time to time by the Market Makers pursuant to Section 4(h) hereof,
including the related Prospectus.
"Exempt Resales" shall mean the transactions in which the Initial
Purchasers propose to sell the Securities (i) to certain persons whom an Initial
Purchaser reasonably believes to be a "qualified institutional buyers," as such
term is defined in Rule 144A under the Securities Act and (ii) to non-U.S.
persons outside the United States to whom an Initial Purchaser reasonably
believes offers and sales of the Securities may be made in reliance upon
Regulation S under the Securities Act.
"Holders" shall have the meaning set forth in Section 2 hereof.
"Indemnified Holder" shall have the meaning set forth in Section 8(a)
hereof.
"Indenture" shall mean the Indenture, dated as of the Closing Time,
between the Company and the Trustee, pursuant to which the Notes and the
Exchange Notes are to be issued, as such Indenture is amended or supplemented
from time to time in accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble
to this Agreement.
"Interest Payment Date" shall have the meaning set forth in the
Indenture and the Notes.
"IPO Effective Date" shall have the meaning set forth in Section 4(c)
hereof.
"Managing Underwriter(s)" shall have the meaning set forth in Section
6(b) hereof.
"Market Makers" shall mean each of Xxxxxxx Xxxxx and DLJ.
"Xxxxxxx Xxxxx" shall have the meaning set forth in the preamble to
this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Note Registration Default" shall have the meaning set forth in
Section 5(a) hereof.
"Note Shelf Registration Statement" shall have the meaning set forth
in Section 4(a) hereof.
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"Notes" shall have the meaning set forth in the preamble to this
Agreement.
"Offering Memorandum" shall mean the Offering Memorandum, dated August
13, 1997, and all amendments and supplements thereto, relating to the Units,
Notes and Warrants and prepared by the Company pursuant to the Purchase
Agreement.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust, unincorporated organization or a government or agency
or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement, term sheet, abbreviated
term sheet, supplement with pricing related information and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
"Public Equity Offering" means an underwritten public offering of
Capital Stock (other than Disqualified Stock (as defined in the Indenture)) of
the Company pursuant to an effective registration statement filed under the
Securities Act.
"Purchase Agreement" shall have the meaning set forth in the preamble
to this Agreement.
"Record Holder" shall mean, with respect to any Special Interest
Payment Date for the Notes, each Person who is a Holder of Notes on the record
date with respect to the Interest Payment Date on which such Special Interest
Payment Date shall occur.
"Registration Statement" shall mean any registration statement of the
Company relating to (a) an offering of Exchange Notes pursuant to an Exchange
Offer or the sale of Exchange Notes from time to time by the Market Makers or
(b) the registration of Transfer Restricted Securities or Securities pursuant to
a Shelf Registration Statement, in any case, (i) which is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and materials incorporated by reference therein.
"Restricted Broker-Dealer" shall mean any Broker-Dealer that holds
Broker-Dealer Transfer Restricted Notes.
"Securities" shall mean the Units, the Notes, the Warrants and the
Warrant Shares.
"Securities Act" shall meant the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Selling Holders" shall have the meaning set forth in Section 6(b)
hereof.
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"Shelf Registration Statement" shall mean the Note Shelf Registration
Statement, the Warrant Shelf Registration Statement and the Warrant Shares Shelf
Registration Statement, as applicable.
"Special Interest Payment Date" shall mean, with respect to the Notes,
each Interest Payment Date for such Notes, if applicable.
"TIA" shall mean the Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect at the Closing Time.
"Transfer Restricted Notes" shall mean each Note, until the earliest
to occur of (a) the date on which such Note is replaced in the Exchange Offer,
(b) the date on which such Note has been effectively registered under the
Securities Act and disposed of in accordance with the Note Shelf Registration
Statement and (c) the date on which such Note is distributed to the public
pursuant to Rule 144 under the Securities Act.
"Transfer Restricted Securities" shall mean, together, Transfer
Restricted Notes, Transfer Restricted Warrants and Transfer Restricted Warrant
Shares.
"Transfer Restricted Warrant Share" shall mean each outstanding
Warrant Share, until the earlier to occur of (a) the date on which such Warrant
Share has been effectively registered under the Securities Act and disposed of
in accordance with a Warrant Shares Shelf Registration Statement and (b) the
date on which such Warrant Share is distributed to the public pursuant to Rule
144 under the Securities Act.
"Transfer Restricted Warrants" shall mean each outstanding Warrant,
until the earlier to occur of (a) the date on which such Warrant has been
effectively registered under the Securities Act and disposed of in accordance
with a Warrant Shelf Registration Statement and (b) the date on which such
Warrant is distributed to the public pursuant to Rule 144 under the Securities
Act.
"Trustee" shall mean Xxxxxx Trust and Savings Bank.
"Underwriter" shall mean any underwriter, placement agent, selling
broker, dealer manager, qualified independent underwriter or similar securities
industry professional.
"Underwritten Offering" shall mean an offering in which securities of
the Company are sold by the applicable Holders to an underwriter for reoffering
to the public.
"Units" shall have the meaning set forth in the preamble to this
Agreement.
"Warrant Agent" shall mean Xxxxxx Trust and Savings Bank.
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"Warrant Agreement" shall mean the Warrant Agreement, dated the date
hereof, by and between the Company and the Warrant Agent pursuant to which the
Warrants are or may be issued from time to time as such Warrant Agreement is
amended or supplemented from time to time in accordance with the terms thereof.
"Warrant Shares" shall mean the shares of Class A Common Stock
issuable upon the exercise of the Warrants.
"Warrant Shelf Registration Statement" shall have the meaning set
forth in Section 4(b) hereof.
"Warrant Shares Shelf Registration Statement" shall have the meaning
set forth in Section 4(c) hereof.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns of record Transfer Restricted
Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company shall (i) cause to be filed with the Commission
within 60 days after the date of original issuance of the Notes, the Exchange
Offer Registration Statement, (ii) use its best efforts to cause such Exchange
Offer Registration Statement to become effective under the Securities Act within
120 days after the date of original issuance of the Notes, (iii) in connection
with the foregoing, cause all necessary filings, if any, in connection with the
registration and qualification of the Exchange Notes to be made under the
Securities Act and the Blue Sky laws of such jurisdictions as are necessary to
permit Consummation of the Exchange Offer (provided, however, that the Company
shall not be obligated to file in any jurisdiction in which they are not so
qualified or take any action which would subject them to general service of
process or taxation in any jurisdiction where it is not so subject), and (iv)
upon the effectiveness of such Exchange Offer Registration Statement, commence
and Consummate the Exchange Offer within 180 days (or longer if required by
applicable law) after the date of original issuance of the Notes. Any Notes not
tendered will remain outstanding and continue to accrete interest or accrue
interest, as the case may be, but will not retain any rights under this
Agreement. The Exchange Offer shall be on the appropriate form permitting
registration of the Exchange Notes to be offered in substitution for the Notes
that are Transfer Restricted Notes and to permit sales of Broker-Dealer Transfer
Restricted Notes by Restricted Broker-Dealers as contemplated by Section 3(c)
below and the sale of Exchange Notes from time to time by the Market Makers as
contemplated by Section 12 hereof.
(b) The Company shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No securities other than the
Transfer Restricted Notes shall be
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included in the Exchange Offer Registration Statement; provided that the Company
may include in the Exchange Offer Registration Statement additional notes issued
pursuant to the Indenture. The Company shall use its best efforts to cause the
Exchange Offer to be Consummated within 180 days after the Closing Date.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any affiliate of the Company who holds Notes or Restricted Broker-
Dealer who holds Notes that are Transfer Restricted Notes, and that were
acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities, may acquire Exchange Notes in
substitution for such Notes (other than Transfer Restricted Notes acquired
directly from the Company) pursuant to the Exchange Offer; provided, however,
that such Broker-Dealer may be deemed to be an "underwriter" within the meaning
of the Securities Act and must, therefore, deliver a prospectus meeting the
requirements of the Securities Act in connection with its initial sale of each
Exchange Note received by such Broker-Dealer in the Exchange Offer, which
prospectus delivery requirement may be satisfied by the delivery by such Broker-
Dealer of the Prospectus contained in the Exchange Offer Registration Statement.
Such "Plan of Distribution" section shall also contain all other information
with respect to such sales of Broker-Dealer Transfer Restricted Notes by
Restricted Broker-Dealers that the Commission may require in order to permit
such sales pursuant thereto, but such "Plan of Distribution" shall not name any
such Broker-Dealer or disclose the amount of Notes held by any such Broker-
Dealer except to the extent required by the Commission.
Each Holder of Notes (other than certain specified holders) who wishes
to acquire Exchange Notes, as substitute evidence of the indebtedness originally
evidenced by the Notes, pursuant to the Exchange Offer, will be required to
represent that (i) it is not an affiliate of the Company, (ii) any Exchange
Notes to be received by it were acquired in the ordinary course of its business
and (iii) at the time of commencement of the Exchange Offer, it has no
arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(b) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted Notes
by Restricted Broker-Dealers, and to ensure that such Exchange Offer
Registration Statement conforms with the requirements of this Agreement, the
Securities Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least 20 business days (or
longer if required by applicable law) from the date on which the Exchange Offer
is Consummated.
The Company shall promptly provide a reasonable number of copies of
the latest version of the Prospectus included in the Exchange Offer Registration
Statement to such Restricted Broker-Dealers upon request, and in no event later
than two days after such request, at any time during such 60-day period in order
to facilitate such sales.
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SECTION 4. SHELF REGISTRATION
(a) Note Shelf Registration. In the event that either (a) any changes
in law or applicable interpretations of the staff of the Commission do not
permit the Company to effect the Exchange Offer or, (b) the Exchange Offer
Registration Statement is not declared effective within 120 days following the
date of original issuance of the Notes, then the Company shall cause to be filed
as promptly as practicable a shelf registration statement under the Securities
Act (which may be an amendment to the Exchange Offer Registration Statement (the
"Note Shelf Registration Statement")), relating to all Transfer Restricted
Notes, the Holders of which shall have provided the information required
pursuant to Section 4(d) hereof, and shall use its best efforts to cause such
Note Shelf Registration Statement to become effective by the 180th day after the
original issuance of the Notes. The Company shall use its best efforts to keep
the Note Shelf Registration Statement continuously effective, supplemented and
amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for sales of Transfer Restricted
Notes by the Holders thereof entitled to the benefit of this Section 4(a), and
to ensure that it conforms with the requirements of this Agreement, the
Securities Act and the policies, rules and regulations of the Commission as
announced from time to time, until two years after its effective date or such
shorter period that will terminate when all the Transfer Restricted Notes
covered by such Shelf Registration Statement have been sold pursuant to such
Note Shelf Registration Statement or otherwise.
(b) Warrant Shelf Registration: The Company shall cause to be filed
within 60 days after the date of original issuance of the Warrants, or shall
otherwise cause the Warrants to be registered under the Securities Act pursuant
to, a shelf registration statement under the Securities Act (the "Warrant Shelf
Registration Statement"), relating to all Transfer Restricted Warrants, the
Holders of which shall have provided the information required pursuant to
Section 4(d) hereof, and, if such Warrant Shelf Registration Statement has not
been declared effective under the Securities Act, shall use its best efforts to
cause such Warrant Shelf Registration Statement to become effective under the
Securities Act within 120 days after the date of original issuance of the
Warrants. The Company shall use its best efforts to keep the Warrant Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for sales of Transfer Restricted
Warrants by the Holders thereof entitled to the benefit of this Section 4(b),
and to ensure that it conforms with the requirements of this Agreement, the
Securities Act and the policies, rules and regulations of the Commission as
announced from time to time, until the earlier of (i) such time as all Transfer
Restricted Warrants have been sold thereunder or otherwise or exercised and (ii)
two years after its effective date; provided, that (x) in the event the Company
is required to issue Contingent Warrants, the Company shall amend the Warrant
Shelf Registration Statement to include such Contingent Warrants, and (y) the
Company may include in the Warrant Shelf Registration Statement additional
warrants issued pursuant to the Warrant Agreement, and in the case of either (x)
or (y), the time period specified in this Section 4(b)(ii) shall be two years
after the issuance of such additional warrants pursuant to the Warrant Agreement
and/or Contingent Warrants.
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(c) Warrant Shares Shelf Registration. The Company shall cause to be
filed within 270 days after the date of original issuance of the Warrants, or
shall otherwise cause the Warrants to be registered under the Securities Act
pursuant to, a shelf registration statement under the Securities Act (the
"Warrant Shares Shelf Registration Statement"), relating to all Transfer
Restricted Warrant Shares, the Holders of which shall have provided the
information required pursuant to Section 4(d) hereof, and, if such Warrant
Shares Shelf Registration Statement has not been declared effective under the
Securities Act shall use its best efforts to cause such Warrant Shares Shelf
Registration Statement to become effective under the Securities Act within 360
days after the date of original issuance of the Warrants; provided, however,
that if prior to such 270th day, the Company shall file a Registration Statement
with respect to any Public Equity Offering, then the Company shall cause the
Warrant Shares Shelf Registration Statement to be filed on or prior to such date
and; provided, further, that at the time such Registration Statement relating to
any such Public Equity Offering has been declared effective (the "IPO Effective
Date"), the Company shall use its best efforts to cause such Warrant Shares
Shelf Registration Statement to become effective on the earlier of (i) such
360th day and (ii) sixty days following the IPO Effective Date (or such earlier
date as the Warrants may be exercised pursuant to Section 8(ii) of the Warrant
Agreement). The Company shall use its best efforts to keep the Warrant Shares
Shelf Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for sales of Transfer Restricted
Warrant Shares by the Holders thereof entitled to the benefit of this Section
4(c), and to ensure that it conforms with the requirements of this Agreement,
the Securities Act and the policies, rules and regulations of the Commission as
announced from time to time, until the earlier of (i) such time as all Warrants
have been exercised or have expired either pursuant to the terms thereof or as a
result of such Warrants becoming no longer issuable and (ii) the date when all
the Transfer Restricted Warrant Shares covered by such Warrant Shares Shelf
Registration Statement have been sold pursuant to such Warrant Shares Shelf
Registration Statement or otherwise.
(d) Provision by Holders of Certain Information in Connection with a
Shelf Registration Statement. A Holder of Transfer Restricted Securities may not
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within ten (10) Business Days after receipt of a written
request therefor, such information specified in Item 507 of Regulation S-K under
the Securities Act, and any other similar information reasonably requested by
the Company, for use in connection with any Shelf Registration Statement,
Prospectus or preliminary Prospectus included therein. Each Holder as to which
any Shelf Registration Statement is being effected agrees to furnish promptly to
the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading. A Holder of Notes shall not be entitled to receive Special Interest
pursuant to Section 5 to the extent that such Holder fails to comply with any
obligation under this subsection and the failure by such Holder to comply with
any obligation under this subsection and the failure by such Holder to comply
with such obligation is the sole reason for the accrual of Special Interest
pursuant to Section 5 hereof.
(e) Limitation on Sale. Each Holder whose Transfer Restricted
Securities are covered by a Shelf Registration Statement filed pursuant to
Section 4 agrees, upon the request of
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the Underwriter(s) in any Underwritten Offering permitted pursuant to this
Agreement, not to effect any public sale or distribution of securities of the
Company of the same class as the Transfer Restricted Securities included in such
Shelf Registration Statement (except as part of such registration) including a
sale pursuant to Rule 144 under the Securities Act, during the 10-day period
prior to, and during the 120-day period (subject to Section 6(d) hereof)
beginning on, the closing date of any such Underwritten Offering made pursuant
to such Shelf Registration Statement, to the extent timely notified in writing
by the Company or such Underwriter(s).
(f) Shelf Registration for Market Making. The Company shall (i)
include in the Exchange Offer Registration Statement, the Note Shelf
Registration Statement (if applicable), the Warrant Shelf Registration Statement
and the Warrant Shares Shelf Registration Statement such disclosures as may be
necessary to permit the Prospectus contained in each such Registration Statement
to be used in connection with offers and sales by the Market Makers of the
Exchange Notes and the Transfer Restricted Securities and (ii) following the
effectiveness of each such Registration Statement, use its best efforts to keep
each such Registration Statement continuously effective, supplemented and
amended as required by the provisions of Sections 6(b) and (c) hereof for the
time periods specified in Section 3 or 4 of this Agreement, as applicable, to
the extent necessary to ensure that it is available for sales of Exchange Notes
and Transfer Restricted Securities in connection with market making activities
by the Market Makers entitled to the benefit of this Section 4(f), and to ensure
that it conforms with the requirements of this Agreement, the Securities Act and
the policies, rules and regulations of the Commission as announced from time to
time, for so long as any Shelf Registration Statement is required to be
effective pursuant to this Agreement and such Market Makers or any of their
affiliates (as defined in the rules and regulations of the Commission under the
Securities Act) own any equity securities of the Company and propose to make a
market in the Securities as part of their business in the ordinary course.
SECTION 5. SPECIAL INTEREST
If (i) any Exchange Offer Registration Statement or Note Shelf
Registration Statement required to be filed pursuant to this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any such Exchange Offer Registration Statement or Note
Shelf Registration Statement has not been declared effective by the Commission
on or prior to the date specified for such effectiveness in this Agreement (the
"Effectiveness Target Date"), (iii) the Exchange Offer has not been Consummated
on or prior to the date specified in this Agreement, or (iv) any Exchange Offer
Registration Statement or Note Shelf Registration Statement required by this
Agreement is filed and declared effective but shall thereafter within the time
periods specified in Section 3 or 4 of this Agreement, as applicable, cease to
be effective or fail to be usable for its intended purpose without being
succeeded immediately by a post-effective amendment to such Exchange Offer
Registration Statement or Note Shelf Registration Statement that cures such
failure and that is itself declared effective for a period of more than 30
consecutive days (each such event referred to in clauses (i) through (iv), a
"Note Registration Default"), then commencing on the day following the date on
which such Note Registration Default occurs, the Company agrees to pay to each
Holder of Transfer Restricted Notes during the first 90-day period immediately
following the occurrence of such Note Registration Default additional interest
at the rate of 0.5% per annum ("Special Interest"). The
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amount of Special Interest payable to each Holder shall increase by an
additional 0.5% per annum for each subsequent 90-day period up to a maximum rate
of 1.5% per annum. A Note Registration Default shall cease, and Special Interest
shall cease to be payable with respect to such Note Registration Default (1)
upon the filing of the applicable Exchange Offer Registration Statement or Note
Shelf Registration Statement, in the case of clause (i) above, (2) upon the
effectiveness of the Exchange Offer Registration Statement or Note Shelf
Registration Statement, in the case of clause (ii) above, (3) upon the
Consummation of the Exchange Offer, in the case of (iii) above, and (4) when the
Exchange Offer Registration Statement or Note Shelf Registration Statement
becomes effective or usable in the case of clause (iv) above. Notwithstanding
the foregoing to the contrary, (I) the amount of Special Interest payable shall
not increase because more than one Note Registration Default has occurred and is
pending, (II) a Holder of Transfer Restricted Notes who is not entitled to the
benefits of a Note Shelf Registration (i.e., such Holder has not elected to
include Transfer Restricted Notes in such Notes Shelf Registration or has failed
to provide all the information required pursuant to Section 4(d) hereof) shall
not be entitled to Special Interest with respect to a Note Registration Default
that pertains to a Note Shelf Registration Statement and (III) a Holder of Notes
constituting an unsold allotment from the original sale of the Notes shall not
be entitled to Special Interest by reason of a Note Registration Default that
pertains to an Exchange Offer.
All accrued Special Interest shall be paid to Record Holders on each
Special Interest Payment Date in the same manner in which payments of interest
are made pursuant to the Indenture. All obligations of the Company set forth in
the preceding paragraph that are outstanding with respect to any Transfer
Restricted Note at the time such security ceases to be a Transfer Restricted
Note shall survive until such time as all such obligations with respect to such
security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement.
(i) If there is a substantial question as to whether the
Exchange Offer is permitted by applicable federal law, the Company hereby
agrees to seek oral interpretive advice, a no-action letter or other
interpretive advice from the Commission staff allowing the Company to
Consummate an Exchange Offer for such Notes and in connection with the
foregoing (A) to participate in telephonic conferences with the Commission
staff, (B) to deliver to the Commission staff an analysis prepared by
counsel to the Company setting forth the legal basis, if any, upon which
such counsel has concluded that such an Exchange Offer should be permitted
and (C) to pursue diligently a resolution by the Commission staff of such
submission (which need not be favorable); provided, however, that the
Company may alternatively determine to file a Note Shelf Registration
Statement and provided, further, that the Company agrees to pursue the
issuance of a decision to the Commission staff level, but shall not be
required to take commercially unreasonable action in connection therewith.
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(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Notes shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
(which may be contained in the letter of transmittal furnished in
connection with the Exchange Offer) to the effect that such Holder (A) is
not an affiliate of the Company (or that if it is such an affiliate, it
will comply with the registration and prospectus delivery requirements of
the Securities Act to the extent applicable), (B) is not engaged in, and
does not intend to engage in, and has no arrangement or understanding with
any person to participate in, a distribution of the Exchange Notes to be
issued in the Exchange Offer and (C) is acquiring the Exchange Notes in its
ordinary course of business. The Company shall ensure that each Holder and
Broker-Dealer acknowledges and agrees that any such Broker-Dealer and any
such Holder using the Exchange Offer to participate in a distribution of
the securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Xxxxxx Xxxxxxx and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
May 13, 1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters (including, if
applicable, any no-action letter obtained pursuant to clause (i) above),
and (2) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction and that such a secondary resale transaction must be covered by
an effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K
if the resales are of Exchange Notes obtained by such Holder in
substitution for Notes acquired by such Holder directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange Offer
in reliance on the position of the Commission enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988), Xxxxxx Xxxxxxx and Co., Inc.
(available June 5, 1991) and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) representing that the Company has not
entered into any arrangement or understanding with any Person to distribute
the Exchange Notes to be received in the Exchange Offer and that, to the
best of the Company's information and belief (if in fact the following
statement is to the Company's knowledge true and correct), each Holder
participating in the Exchange Offer is acquiring the Exchange Notes in its
ordinary course of business and has no arrangement or understanding with
any Person to participate in the distribution of the Exchange Notes
received in the Exchange Offer and (C) including any other undertaking or
representation reasonably required by the Commission as set forth in any
no-action letter obtained pursuant to clause (i) above.
(b) General Provisions. In connection with any Registration
Statement and any related Prospectus provided for by this Agreement, the Company
shall:
(i) use its reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the periods
12
specified in Section 3 or 4 of this Agreement, as applicable. Upon the
occurrence of any event that would cause any such Registration Statement or
the Prospectus contained therein (A) to contain a material misstatement or
omission or (B) not to be effective and usable for resale of Transfer
Restricted Securities, during the period required by this Agreement, the
Company shall, in the case of clause (A), take appropriate action to
correct any such misstatement or omission and, in the case of clause (A) or
(B), cause such Registration Statement and the related Prospectus to become
effective and usable for their intended purpose(s) as soon as practicable
thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the periods set forth in
Section 3 or 4 hereof, as applicable, and otherwise to comply with the
applicable provisions of the Securities Act and the rules and regulations
promulgated thereunder in respect of such amendments; and comply with the
provisions of the Securities Act directly applicable to and required to be
complied with by the Company with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by
the sellers thereof set forth in such Registration Statement or Prospectus
or supplement to the Prospectus;
(iii) in the case of a Shelf Registration Statement, advise the
managing Underwriter(s) with respect to such Registration Statement (the
"Managing Underwriter(s)"), if any, and selling holders named in any
Registration Statement (the "Selling Holders") promptly and confirm such
advice in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any Shelf
Registration Statement or any post-effective amendment thereto, when the
same has become effective, (B) of any request by the Commission for
amendments to a Shelf Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C) of
the issuance by the Commission of any stop order suspending the
effectiveness of a Shelf Registration Statement under the Securities Act or
of the suspension by any state securities commission of the qualification
of the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, (D) of the existence of any fact or the happening of any event
that makes any statement of a material fact made in the Registration
Statement, the Prospectus, any amendment or supplement thereto or any
document incorporated by reference therein untrue, or that requires the
making of any additions to or changes in the Registration Statement in
order to make the statements therein not misleading, or that requires the
making of any additions to or changes in the Prospectus in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading or (E) of the Company's reasonable determination
that a post-effective amendment to the Registration Statement would be
appropriate. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws, the
Company shall use its
13
reasonable best efforts to obtain the withdrawal or lifting of such order
at the earliest possible time;
(iv) to the extent reasonably practicable, furnish to the Initial
Purchasers, each Selling Holder and each of the Managing Underwriter(s) in
connection with such sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus which documents will be subject to the review and comment of
such Holders and Managing Underwriter(s) in connection with such sale, if
any, for a period of three Business Days, and the Company will not file any
such Registration Statement or Prospectus or any amendment or supplement to
any such Registration Statement or Prospectus to which the Selling Holders
or the Managing Underwriter(s), if any, shall object on reasonable legal
grounds within three business days after the receipt thereof. A Selling
Holder or Underwriter, if any, shall be deemed to have reasonably objected
to such filing if such document as proposed to be filed contains a material
misstatement or omission;
(v) to the extent reasonably practicable, prior to the filing of
any document that is to be incorporated by reference into a Registration
Statement or Prospectus, provide copies of such document to the Selling
Holders and to the Managing Underwriter(s) in connection with such sale, if
any, for a period of three Business Days, make the Company's
representatives available for discussion of such document and other
customary due diligence matters during such period, and include such
information in such document prior to the filing thereof as such Selling
Holders or Managing Underwriter(s), if any, reasonably may request within
three Business Days; provided, however, that any document incorporated by
reference in any such Registration Statement or Prospectus shall be
provided to the Initial Purchasers, such Selling Holders and such Managing
Underwriter(s) no later than the time that such amendment or supplement is
filed with the Commission;
(vi) in the case of a Shelf Registration Statement, make
available at reasonable times for inspection by the Selling Holders, any
Managing Underwriter(s) and any attorney or accountant retained by such
Selling Holders or any of such Managing Underwriter(s), all relevant
information as is customary for similar due diligence examinations, and
cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Selling Holder, underwriter,
attorney or accountant in connection with such Shelf Registration Statement
or any post-effective amendment thereto subsequent to the filing thereof
and prior to its effectiveness; provided, however, that such Selling
Holders, Managing Underwriter(s), attorneys or accountants agree to keep
confidential any records, information or documents that are designated by
the Company in writing as confidential and to use such information obtained
pursuant to this provision only in connection with the transaction for
which such information was obtained, and not for any other purpose, unless
(i) such records, information or documents (x) are available to the public,
(y) were already in such Selling Holders', Managing Underwriter(s)',
attorneys' or accountants' possession prior to its receipt from the Company
and they do not otherwise have any obligation to keep such records,
information or
14
documents confidential or (z) are obtained by such Selling Holders,
Managing Underwriter(s), attorneys or accountants from a third person who,
insofar as is known to such Selling Holders, Managing Underwriter(s),
attorneys or accountants, after due inquiry, is not prohibited from
transmitting the information to such Selling Holders, Managing
Underwriter(s), attorneys or accountants by a contractual, legal or
fiduciary obligation to the Company or a third party, or (ii) disclosure of
such records, information or documents is required by court or
administrative order after the exhaustion of appeals therefrom;
(vii) if requested by any Selling Holders or the Managing
Underwriter(s) in order to accurately reflect information regarding such
Selling Holder's or Underwriter's plan of distribution as required in the
Registration Statement promptly include in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such Selling Holders and Managing
Underwriter(s), if any, may reasonably request to have included therein and
make all required filings of such Prospectus supplement or post-effective
amendment as soon as legally required after the Company is notified of the
matters to be included in such Prospectus supplement or post-effective
amendment;
(viii) in the case of a Shelf Registration Statement, furnish to
each Selling Holder and each of the Managing Underwriter(s) in connection
with such sale, if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including upon the requests of such Person all documents
incorporated therein by reference (in each case, without exhibits thereto,
unless requested);
(ix) in the case of a Shelf Registration Statement, deliver to
each Selling Holder and each of the Managing Underwriter(s), if any,
without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company hereby consents to the use of
the Prospectus and any amendment or supplement thereto by each of the
Selling Holders and each of the Managing Underwriter(s), if any, in
connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement thereto
in compliance with applicable law;
(x) in the case of a Shelf Registration Statement, use its best
efforts to enter into such underwriting agreements and other selling
agreements as are customary in underwritten offerings and take all such
other reasonable actions in connection therewith (including those
reasonably requested by the Managing Underwriter(s) or the Selling Holders
who hold a majority of the Transfer Restricted Securities included in such
registration) in order to expedite or facilitate the disposition of the
Transfer Restricted Securities pursuant to the Shelf Registration
Statement; provided, however, that the Company shall have no liability for
any compensation or reimbursement of expenses due to any Underwriter or
other party assisting in the disposition of such Transfer Restricted
Securities or other expenses incurred by the Holder thereof in connection
with such disposition other than agreed upon expenses, and in such
connection, whether or not an
15
underwriting agreement is entered into and whether or not the registration
is an Underwritten Offering, the Company shall: (i) to the extent possible,
make such representations and warranties to the Selling Holders and the
Managing Underwriter(s), if any, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when reasonably requested; (ii) obtain opinions of
counsel to the Company and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the Managing
Underwriter(s), if any, and the Selling Holders of a majority in principal
amount of the Transfer Restricted Securities included in such Shelf
Registration Statement), addressed to each Selling Holder and each of the
Managing Underwriter(s), if any, covering the matters customarily covered
in opinions requested in underwritten offerings; (iii) to the extent
permitted by the professional standards governing the accounting profession
at the time, obtain "cold comfort" letters and updates thereof (which
letters and updates (in form, scope and substance) shall be reasonably
satisfactory to the Managing Underwriter(s), if any) 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 requested to be, included in the
Registration Statement), addressed to each of the Managing Underwriter(s),
if any, and each Selling Holder, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters
in connection with underwritten offerings; and (iv) deliver such other
documents and certificates as may be reasonably requested by the Selling
Holders of a majority in principal amount of the Transfer Restricted
Securities included in such Registration Statement or the Managing
Underwriter(s), if any, to evidence compliance with clause (i) above and
with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company pursuant to this clause (x).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any
time the representations and warranties of the Company contemplated in
Section 6(x)(i) above cease to be true and correct, the Company shall so
advise the Managing Underwriter(s), if any, and Selling Holders promptly
and if requested by such Persons, shall confirm such advice in writing;
(xi) cooperate with the Selling Holders, the Managing
Underwriter(s), if any, and their respective counsel in connection with the
registration and qualification of the Transfer Restricted Securities under
the Blue Sky law of such jurisdictions as the Selling Holders or Managing
Underwriter(s) may reasonably request and do any and all other acts or
things reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that the Company
shall not be required to register or qualify as a foreign corporation where
it is not now so qualified or to take any action that would subject it to
the service of process in suits or to taxation in any jurisdiction where it
is not now so subject;
(xii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the
16
Selling Holders and the Managing Underwriter(s), if any, to facilitate the
timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive legends;
and to register such Transfer Restricted Securities in such denominations
and such names as the Holders or the Managing Underwriter(s), if any, may
request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xiii) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other regulatory agencies or authorities as are necessary
to enable the seller or sellers thereof or the Managing Underwriter(s), if
any, to consummate the disposition of such Transfer Restricted Securities
subject to the proviso contained in clause (xi) above;
(xiv) in the case of a Shelf Registration Statement, if any
fact or event contemplated by Section 6(b)(iii)(D) or (E) above shall exist
or have occurred, use its reasonable best efforts to prepare a supplement
or post-effective amendment to a Shelf Registration Statement or related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers
of Transfer Restricted Securities, such Prospectus will not contain 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;
(xv) provide CUSIP number(s) for all Transfer Restricted
Securities not later than the effective date of a Registration Statement
covering such Transfer Restricted Securities and provide the Trustee under
the Indenture with printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with the Depositary;
(xvi) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its best efforts to cause such Registration Statement to
become effective and approved by such regulatory agencies or authorities as
are necessary to enable the Holders selling Transfer Restricted Securities
to consummate the disposition of such Transfer Restricted Securities;
(xvii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Securities Act);
(xviii) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement required
by this Agreement in connection with the Transfer Restricted Notes or
Exchange Notes, and, in connection therewith,
17
cooperate with the Trustee and the Holders of Notes to effect such changes
to the Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its best efforts
to cause the Trustee to execute all documents that may be required to
effect such changes and all other forms and documents required to be filed
with the Commission to enable the Indenture to be so qualified in a timely
manner.
(c) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of any notice from the Company
of the existence of any fact of the kind described in Section 6(b)(iii)(C), (D)
or (E) hereof, such Holder will forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(b)(xiv) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus currently being used may
be resumed, and has received copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus. If so directed by the
Company, each Holder 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 such Transfer Restricted Securities that was current at
the time of receipt of such notice. In the event the Company shall give any such
notice, the time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(b)(iii)(C), (D) or (E) hereof to and
including the date when each Selling Holder covered by such Registration
Statement shall have received (x) the copies of the supplemented or amended
Prospectus contemplated by Section 6(b)(xiv) hereof or (y) the Advice.
Subject to Section 6(d) hereof, each Holder further agrees that, upon
receipt of notice from the Company that the Company intends to make an offering
to the public of its securities, whether or not through an Underwriter, such
Holder will forthwith discontinue disposition of Transfer Restricted Securities
for such period (not to exceed 120 days) as is required to complete such
offering and for a further period of 120 days after the completion of such
offering.
(d) In the event that the Company agrees with any other Person that
such Person shall be restricted from effecting any public sale or disposition of
securities of the Company for a shorter period than the periods stated in
Sections 4(e) or Section 6(c) of this Agreement, then the respective periods
stated in Sections 4(e) and 6(c) hereof shall be adjusted, from time to time, so
that the Holders shall have the benefit of the shortest period to which the
Company has agreed.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made with the NASD (including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel, as may be required by the
rules and regulations of the NASD); (ii) all fees and expenses of compliance
with federal securities and state Blue Sky or securities laws; (iii) all
printing expenses of printing (including printing certificates for
18
the Exchange Notes and printing of Prospectuses, if necessary); (iv) all fees
and disbursements directly related to the Exchange Offer of counsel for the
Company and, in accordance with Section 7(b) below, the Holders of Transfer
Restricted Notes; and (v) all fees and disbursements of independent certified
public accountants of the Company (including the expenses of any special audit
and comfort letters required by or incident to such performance).
Notwithstanding anything in this Section 7 to the contrary, the Company shall
not be required to pay (a) the fees and expenses of any Underwriter or of legal
counsel for any Underwriter, other than a "qualified independent underwriter"
(acting solely in such capacity) as provided in clause (i) of the preceding
sentence or (b) any underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Transfer Restricted
Securities.
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with the Exchange Offer and the Shelf Registration
Statements, the Company will reimburse the Holders of Transfer Restricted Notes
for the reasonable fees and disbursements of not more than one counsel chosen by
the Holders of a majority of the principal amount of such Transfer Restricted
Notes; provided, however, that such counsel must be reasonably satisfactory to
the Company and that such fees shall not exceed $10,000 with respect to the
Exchange Offer and $10,000 with respect to the Shelf Registration Statements in
the aggregate.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION
(a) The Company shall indemnify and hold harmless each Initial
Purchaser, each Restricted Broker-Dealer, each Holder, each Underwriter who
participates in an offering of Transfer Restricted Securities, their respective
affiliates and each Person, if any, who controls any of such parties within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment or
supplement thereto) covering Transfer Restricted Securities or
Exchange Notes, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
19
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission; provided, that (subject to Sections 8(c) and
8(d) below) any such settlement is effected with the prior written
consent of the Company; and
(iii) to the extent provided for in Section 8(c) below, against
any and all expenses whatsoever, as incurred including reasonable fees
and disbursements of one counsel chosen by Xxxxxxx Xxxxx, such Holder,
such Restricted Broker-Dealer or any Underwriter, reasonably incurred
in investigating, preparing or defending against any litigation, or
any investigation or proceeding by any court or governmental agency or
body commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under subparagraph (i) or (ii) of this Section 8(a);
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission (i) made in reliance upon and
in conformity with information furnished in writing to the Company by or on
behalf of such Initial Purchaser, such Holder, such Restricted Broker-
Dealer or any Underwriter with respect to such Initial Purchaser, Holder,
Restricted Broker-Dealer or Underwriter, as the case may be, expressly for use
in the Registration Statement (or any amendment or supplement thereto) or any
Prospectus (or any amendment or supplement thereto) or (ii) contained in any
preliminary Prospectus if such Initial Purchaser, such Holder, such Restricted
Broker-Dealer or such Underwriter failed to send or deliver a copy of the
Prospectus (in the form it was provided to such parties for confirmation of
sales) to the Person asserting such losses, claims, damages or liabilities on or
prior to the delivery of written confirmation of any sale of securities covered
thereby to such Person in any case where the Company shall have previously
furnished copies therefor to such Initial Purchaser, such Holder, such
Restricted Broker-Dealer or such Underwriter, as the case may be, in accordance
with this Agreement, at or prior to the written confirmation of the sale of such
Securities to such Person and the untrue statement contained in or the omission
from the preliminary Prospectus was corrected in the final Prospectus (or any
amendment or supplement thereto). Any amounts advanced by the Company to an
indemnified party pursuant to this Section 8 as a result of such losses shall be
returned to the Company if it shall be finally determined by a court of
competent jurisdiction in a judgment not subject to appeal or final review that
such indemnified party was not entitled to indemnification by the Company.
20
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, each Initial Purchaser, each Underwriter who
participates in an offering of Transfer Restricted Securities and the other
Selling Holders and each of their respective directors and each Person, if any,
who controls any of the Company, any Initial Purchaser, any Underwriter or any
other Selling Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all loss, liability, claim,
damage and expense whatsoever described in the indemnity contained in Section
8(a) hereof, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in any Registration
Statement (or any amendment or supplement thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Selling Holder with
respect to such Holder expressly for use in the Registration Statement (or any
supplement thereto), or any such Prospectus (or any amendment thereto);
provided, however, that, in the case of the Shelf Registration Statement, no
such Holder shall be liable for any claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement; provided, further, that
for purposes of Section 8(a)(iii), such counsel shall (subject to Section 8(c)
hereof) be chosen by the Company.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. If it so elects
within a reasonable time after receipt of such notice, an indemnifying party,
severally or jointly with any other indemnifying parties receiving such notice,
may assume the defense of such action with counsel chosen by it and reasonably
acceptable to the indemnified parties defendant in such action. If an
indemnifying party assumes the defense of such action, the indemnifying parties
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action, provided, however,
that if the instance contemplated by clause (ii) of the following sentence
occurs then the indemnifying party can no longer assume such defense.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in any action, the indemnified party shall have
the right to employ separate counsel at any time, and the indemnifying party
shall bear the reasonable fees, costs and expenses of such separate counsel if
(i) the indemnifying party shall have failed to assume the defense and employ
counsel or (ii) the use of counsel chosen by the indemnifying party to represent
the indemnified party would, in the opinion of counsel to the indemnified party,
present such counsel with a conflict of interest. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
21
Section 8 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes a
full and unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and the offer
and sale of any Securities and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees and
expenses of counsel pursuant to Section 8(a)(iii) above, then such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 8(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 8 is for any reason held to be unavailable to or insufficient to hold
harmless the indemnified parties although applicable in accordance with its
terms, the Company, the Initial Purchasers and the Holders, as applicable, shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnity agreement incurred by the Company, the
Initial Purchaser and the Holders; provided, however, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person that was not
guilty of such fraudulent misrepresentation. As between the Company and the
Initial Purchasers and the Holders, such parties shall contribute to such
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect the relative fault of the Company on the one hand and the
Holder of Transfer Restricted Securities, the Restricted Broker-Dealer or
Initial Purchaser, as the case may be, on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and the Holder of
Transfer Restricted Securities, the Restricted Broker-Dealer or the Initial
Purchasers, as the case may be, on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, or by the Holder of Transfer
Restricted Securities, the Restricted Broker-Dealer or the Initial Purchasers,
as the case may be, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders of the Transfer Restricted Securities and
the Initial Purchasers agree that it would not be just and equitable if
contribution pursuant to this Section 8
22
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 8.
For purposes of this Section 8, each affiliate of any Person, if any,
who controls a Holder of a Transfer Restricted Security, an Initial Purchaser or
a Restricted Broker-Dealer within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such other Person, and each director of the Company, each affiliate of the
Company, each executive officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Company.
SECTION 9. RULE 144 AND 144A
The Company covenants that, so long as any Transfer Restricted
Securities remain outstanding, it will file the reports required to be filed by
it (if so required) under the Exchange Act and the rules and regulations
thereunder in a timely manner and, if at any time the Company is not required to
file such reports, it will, so long as any Transfer Restricted Securities remain
outstanding, upon the request of any Holder of Transfer Restricted Securities,
use its best efforts to make available to such Holder and any prospective
purchaser the information required to permit sales pursuant to Rule 144 and Rule
144A. The Company further covenants that it will take such further action as any
Holder of Transfer Restricted Securities may reasonably request, all to the
extent required from time to time, to enable such Holder to sell Transfer
Restricted Securities without registration under the Securities Act pursuant to
the exemptions provided by Rule 144 and Rule 144A. Upon the request of any
Holder of Transfer Restricted Securities, the Company will deliver to such
Holder a written statement as to whether the Company has complied with such
information and requirements.
SECTION 10. UNDERWRITTEN OFFERINGS
The Holders of Transfer Restricted Securities may elect to sell their
Transfer Restricted Securities pursuant to up to three Underwritten Offerings;
provided, however, that in no event shall any Holder commence any such
Underwritten Offering if (A) a period of less than 180 days has elapsed (i)
since the consummation of the most recent Underwritten Offering hereunder or
(ii) since the consummation of any offering of securities by the Company to the
public, whether or not through an Underwriter, or (B) the Company notifies such
Holder that it intends to make such an offering within the next 120 days. No
Holder may participate in any Underwritten Offering hereunder unless such Holder
(a) agrees to sell such Holder's Transfer Restricted Securities on the basis
provided in customary underwriting arrangements entered into in connection
therewith and (b) completes and executes all reasonable questionnaires, powers
of attorney, lock-up letters and other documents required under the terms of
such underwriting arrangements. Nothing in this Agreement shall give any Holder
any right to join in any offering by the Company of its securities to the
public.
23
SECTION 11. SELECTION OF UNDERWRITERS
In any Underwritten offering, the Underwriters for the offering will
be selected by the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities included in such offering; provided, that such
investment bankers and managers must be reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise
all rights provided herein, in the Indenture, the Purchase Agreement or granted
by law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof, provided, however, that nothing
herein shall be deemed to prevent the Company from entering into arrangements
for the sale of its securities pursuant to normal and customary arrangements
therefor.
(c) Amendments and Waivers. The provisions of this Agreement,
including provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to or departures from the provisions
hereof may not be given, otherwise than with the prior written consent of the
Company and the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities; provided, however, that no amendment,
modification, or supplement or waiver or consent to the departure with respect
to the provisions of Section 8 hereof shall be effective as against any Holder
of Transfer Restricted Securities or the Company unless consented to in writing
by such Holder of Transfer Restricted Securities or the Company, as the case may
be.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture with a copy to the Registrar under the
Indenture;
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(ii) if to the Company:
USN Communications, Inc.
00 X. Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
Telephone No.: (000) 000-0000
With copies to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx
Telephone No. (000) 000-0000
(iii) if to the Initial Purchasers:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
c/o Merrill Xxxxx & Co.
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxx
Telephone No.: (000) 000-0000
With copies to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxx Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxxx, P.C.
Xxxxxxx X. Older
Telephone No.: (000) 000-0000
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 is acknowledged, if
25
telecopied; and on the next business day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of the
Initial Purchasers, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Transfer Restricted Securities in violation of the terms of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall acquire
Transfer Restricted Securities, in any manner, whether by operation of law or
otherwise, such Transfer Restricted Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Transfer Restricted
Securities, such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement and such
Person shall be entitled to receive the benefits hereof.
(f) Third-Party Beneficiaries. Each of the Initial Purchasers and
each Holder shall be a third-party beneficiary of the agreements made hereunder
between the Company, on the one hand, and the Initial Purchasers, on the other
hand, and shall have the right to enforce such agreements directly to the extent
it deems such enforcement necessary or advisable to protect its rights or the
rights of the Holders hereunder.
(g) 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.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF. Specified times of day refer to New York City
time.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Notes Held by the Company or any of its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Transfer Restricted
Securities is required hereunder, Transfer Restricted Securities held by the
Company or any of their affiliates (as such
26
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.
(l) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
USN COMMUNICATIONS, INC.
By:
--------------------------------
Name:
Title:
Confirmed and accepted as
of the date first above
written.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
BY: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
-------------------------
Name:
Title:
28
