EXHIBIT 2
REGISTRATION RIGHTS AGREEMENT
OF
VIATEL HOLDING (BERMUDA) LIMITED
REGISTRATION RIGHTS AGREEMENT, dated as of__________________, 2002,
among Viatel Holding (Bermuda) Limited, a company incorporated under the laws of
Bermuda (the "Company), and the other undersigned parties hereto (the
"Agreement").
Pursuant to the Joint Chapter 11 Plan of Reorganization of Viatel, Inc.
and certain of its subsidiaries (as amended or modified, the "Plan"), dated
February 28, 2002, the Company has agreed, among other things, to authorize 100
million shares new common shares, par value U.S. $0.01 per share (the "Common
Shares"), of which approximately 12.0 million Common Shares; will be issued in
connection with the Plan. This agreement shall become effective upon the
issuance of such Common Shares pursuant to the Plan (the "Effective Date").
Certain capitalized terms used in this agreement are defined in Article I
hereof. References to sections shall be to sections of this agreement.
WHEREAS, the Company has agreed to grant to each of the Affiliated
Shareholders the registration rights set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
(a) "Affiliate" shall have the meaning set forth in Rule 405
promulgated under the Securities Act.
(b) "Affiliated Shareholder" shall mean any holder or holders of
Registrable Securities, both on the date of effectiveness of the Plan and at the
time of the effectiveness of the
registration statement, holding at least ten-percent (10%) of the Registrable
Securities (by number of Common Shares at the time issued and outstanding).
(c) "Board" shall mean the board of directors of the Company.
(d) "Commission" shall mean the United States Securities and
Exchange Commission or any successor agency.
(e) "Common Shares" shall have the meaning set forth in the
Preamble hereof.
(f) "Company" shall have the meaning set forth in the Preamble
hereof.
(g) "Demand" shall have the meaning set forth in Section 2.1(a)
hereof.
(h) "Demand Registration" shall have the meaning set forth in
Section 2.1(a) hereof.
(i) "Demanding Holder" shall have the meaning set forth in Section
2.1(b) hereof.
(j) "Effective Date" shall have the meaning set forth in the
Preamble hereof.
(k) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder, and any
successor act.
(l) "Foreign Private Issuer" shall have the meaning provided in
the Securities Act.
(m) "Internal Expenses" shall have the meaning set forth in
Section 2.6 hereof.
(n) "Losses" shall have the meaning set forth in Section 2.7(a)
hereof,
(o) "Market Price" for publicly traded Common Shares or any other
class of capital stock or other security of the Company or any other issuer for
any trading day shall mean the last reported sales price, regular way on such
day, or, if no sale takes place on such day, the average of the reported closing
bid and asked prices on such day, regular way, in either case as reported on the
securities exchange on which the Common Shares are listed for trading, or, if
listed or admitted for trading on Nasdaq, the last reported sales price, regular
way on such day, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either case
as reported on Nasdaq, or if not listed or admitted for
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trading on any securities exchange or Nasdaq, the average of the closing bid
and asked prices on such day in the over-the-counter market.
(p) "Maximum Demand Number" shall have the meaning set forth in
Section 2.1(g) hereof.
(q) "Maximum Piggyback Number" shall have the meaning set forth in
Section 2.2(b) hereof.
(r) "Nasdaq" shall mean the Nasdaq Stock Market.
(s) "Other Demand Rights" shall have the meaning set forth in
Section 2.2(b) hereof.
(t) "Other Demanding Seller" shall have the meaning set forth in
Section 2.2(b) hereof.
(u) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity, and shall include any
successor (by merger of otherwise) of such entity.
(v) "Piggyback Notice" shall have the meaning set forth in Section
2.2(a) hereof.
(w) "Piggyback Registration" shall have the meaning set forth in
Section 2.2(a) hereof.
(x) "Piggyback Seller" shall have the meaning set forth in Section
2.2(b) hereof.
(y) "Plan" shall have the meaning set forth in the Preamble
hereof.
(z) "Primary Offering" shall have the meaning set forth in Section
2.2(b)(i) hereof.
(aa) "Public Offering" shall mean a public offering of equity
securities of the Company pursuant to an effective registration statement under
the Securities Act, including a public offering in which Affiliated Shareholders
are entitled to sell Common Shares pursuant to the terms of this Agreement.
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(bb) "Registrable Securities" shall mean (i) any Common
Shares issued to the Affiliated Shareholders pursuant to the Plan, or (ii) any
Common Shares issued or issuable with respect to the securities referred to in
clause (i) by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, or other
reorganization. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when (x) a registration statement
registering such securities under the Securities Act has been declared effective
and such have been sold or otherwise transferred by the holder thereof pursuant
to such effective registration statement; or (y) such securities are sold in
accordance with Rule 144 (or any successor provision) promulgated under the
Securities Act.
(cc) "Registration Expenses" shall have the meaning set
forth in Section 2.6 hereof.
(dd) "Requisite Amount" shall mean 25% of the Registrable
Securities outstanding at any given time.
(ee) "Restricted Securities" shall mean any Registrable
Securities that are restricted from trading under the securities laws because
the holder of such Registrable Securities is deemed an "underwriter" or
"affiliate" as those terms are defined under the Securities Act and the
Bankruptcy Code.
(ff) "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder, and any
successor act.
(gg) "Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of Registrable
Securities and any other securities of the Company being sold in the same
registration as the Registrable Securities by Other Shareholders.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Demand Registration.
(a) Registration. At any time after the first date on
which the Company qualifies with the Commission as an S-3 registrant (or its
equivalent should the Company qualify as a Foreign Private Issuer). Affiliated
Shareholders holding the Requisite Amount of Registrable Securities shall be
entitled to make a written request of the Company (a "Demand") for registration
under the Securities Act of all or part of their Registrable Securities (a
"Demand
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Registration") and thereupon the Company will, subject to the terms of this
Agreement, use its reasonable efforts to effect the registration under the
Securities Act of:
(i) the Registrable Securities which the Company
has been so requested to register by such Affiliated Shareholders for
disposition in accordance with the intended method of disposition stated in such
request;
(ii) all other Registrable Securities which the
Company has been requested to register pursuant to Section 2.1(b) hereof; and
(iii) all Common Shares which the Company may
elect to register in connection with any offering of Registrable Securities
pursuant to this Section 2.1;
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof) of the Registrable Securities and the additional
Common Shares, if any, so to be registered; provided that the Company shall not
be required to effect a Demand Registration unless (x) a single holder of
Registrable Securities has requested the registration of a number of shares of
Registrable Securities held by such holder which is equal to or greater than 10%
of the Common Shares at the time outstanding, and (y) the aggregate number of
shares of Registrable Securities requested to be registered by all holders of
Registrable Securities in such Demand Registration is equal to or greater than
25% of the number of Common Shares at the time outstanding;
(b) Demands. A Demand shall specify: (i) the aggregate
number of Registrable Securities requested to be registered in such Demand
Registration, (ii) the intended method of disposition in connection with such
Demand Registration, to the extent then known, and (iii) the identity of the
Affiliated Shareholder or Affiliated Shareholders (each, a "Demanding Holder")
requesting such Demand. Within twenty (20) days after receipt of a Demand, the
Company shall give written notice of such Demand to all other Affiliated
Shareholders. Subject to Section 2.1(h), the Company shall include in such
registration all Registrable Securities with respect to which the Company has
received a written request for inclusion therein within fifteen (15) days after
the Company's notice required by this paragraph has been given. Such written
notice shall comply with the requirements of a Demand as set forth in this
Section 2.1(b).
(c) Number of Demands. Each Affiliated Shareholder shall
be entitled to one (1) Demand Registration (s); provided that, in the aggregate,
Affiliated Shareholders shall be entitled to no more than two (2) Demand
Registrations.
(d) Effective Registration Statement. A Demand
Registration shall not be deemed to have been effected (i) unless a registration
statement with respect thereto has become effective under the Securities Act;
provided that a registration which does not become effective
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under the Securities Act after the Company has filed a registration statement
with respect thereto solely by reason of the refusal to proceed of the
Affiliated Shareholders (other than a refusal to proceed based upon the advice
of counsel relating to a matter with respect to the Company) shall be deemed to
have been effected by the Company at the request of such Affiliated Shareholders
unless the Affiliated Shareholders shall have elected to pay all Registration
Expenses in connection with such registration, (ii) if, after it has become
effective, and as a direct result of the actions of the Company, such
registration becomes subject to any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason, or (iii) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied, other than by reason of some act or omission by
such Affiliated Shareholders.
(e) Satisfaction of Obligations. A registration shall not
be treated as a permitted Demand for a Demand Registration until (i) the
applicable registration statement under the Securities Act has been filed with
the Commission with respect to such Demand Registration (which shall include any
registration statement that is not withdrawn by holders of Registrable
Securities in the circumstances contemplated by Section 2.3), and (ii) such
registration statement shall have been maintained continuously effective for a
period of forty-five (45) days or such shorter period in the case where all
Registrable Securities included therein have been disposed of thereunder in
accordance with the manner of distribution set forth in such registration
statement.
(f) Restrictions on Demand Registrations. The Company
shall not be obligated to (i) maintain the effectiveness of a registration
statement under the Securities Act, filed pursuant to a Demand Registration, for
a period longer than forty-five (45) days, or (ii) effect any Demand
Registration (A) within six (6) months of a "firm commitment" underwritten
registration in which all Affiliated Shareholders were given "piggyback" rights
pursuant to Section 2.2 hereof and at least 50% of the number of Registrable
Securities requested by such Affiliated Shareholders to be included in such
registration were included, (B) within six (6) months of any other Demand
Registration, or (C) if, in the Company's reasonable judgment, it is not
feasible for the Company to proceed with the Demand Registration because of the
unavailability of audited financial statements. In addition, the Company shall
be entitled to postpone (upon written notice to all Affiliated Shareholders) for
up to one hundred twenty (120) days the filing or the effectiveness of a
registration statement for a Demand Registration (but no more than twice in any
period of twelve (12) consecutive months) if the Board determines in good faith
and in its reasonable judgment that the Demand Registration or the disclosure of
material, non-public information in connection therewith would have a material
adverse affect on the Company or on any proposal or plan by the Company or any
of its subsidiaries to engage in any debt or equity offering, material
acquisition or disposition of assets, merger, consolidation, tender offer or
other similar transaction. In the event of a postponement by the Company of the
filing or effectiveness of a registration statement for a Demand Registration,
the holders of a majority of Registrable Securities held for all Demanding
Holders shall have the right to withdraw such
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Demand in accordance with Section 2.3 hereof.
(g) Participation in Demand Registrations. The Company
shall not include any securities other than Registrable Securities and Common
Shares included at the Company's election in a Demand Registration, except with
the written consent of the holders of thirty percent (30%), by number of shares,
of the Registrable Securities held by all the Demanding Holders. If, in
connection with a Demand Registration, any managing underwriter (or, if such
Demand Registration is not an underwritten offering, a nationally recognized
independent underwriter selected by the Company and reasonably acceptable to the
holders of thirty percent (30%) of the Registrable Securities held by all the
Demanding Holders and whose fees and expenses shall be borne solely by the
Company) advises the Company, in writing, that, in its opinion, the inclusion of
all of the securities, including securities of the Company which are not
Registrable Securities, sought to be registered in connection with such Demand
Registration would adversely affect the marketability of the Registrable
Securities sought to be sold pursuant thereto, then the Company shall include in
such registration statement only such securities as the Company is advised by
such underwriter can be sold without such adverse effect (the "Maximum Demand
Number") as follows and in the following order of priority: (i) first,
Registrable Securities requested to be included in such registration by
Affiliated Shareholders, pro rata among such Affiliated Shareholders requesting
such registration on the basis of the number of such securities requested to be
included by such Affiliated Shareholders; (ii) second, Common Shares that the
Company proposes to sell; and (iii) third, all other securities of the Company
duly requested to be included in such registration statement, pro rata on the
basis of the amount of such other securities requested to be included.
(h) Selection of Underwriters. If the Demand Registration
involves an underwritten offering, the underwriter or underwriters thereof shall
be selected by the Company and shall be reasonably acceptable to the holders of
thirty percent (30%), by number of shares, of the Registrable Securities held by
all of the Demanding Holders.
Section 2.2 Piggyback Registrations.
(a) Right to Piggyback. Subject to the terms and
conditions hereof, whenever the Company proposes to register any of its
securities under the Securities Act (other than a registration by the Company on
a registration statement on Form S-4 or a registration statement on Form S-8 or
any successor form, or such equivalent forms as may be utilized should the
Company be a Foreign Private Issuer) (a "Piggyback Registration"), the Company
shall give all Affiliated Shareholders prompt written notice thereof (but not
less than twenty (20) days prior to the filing by the Company with the
Commission of any registration statement with respect thereto). Such notice (a
"Piggyback Notice") shall specify, at a minimum, the number of securities
proposed to be registered, the proposed date of filing of such registration
statement with the Commission, the proposed means of distribution, the proposed
managing underwriter or
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underwriters (if any and if known), and a good faith estimate by the Company of
the proposed minimum offering price of such securities. Upon the written request
of an Affiliated Shareholder (which written request shall specify the number of
Registrable Securities intended to be disposed of by such Affiliated Shareholder
and the intended method of distribution thereof) given within ten (10) business
days after such Piggyback Notice is sent to such Affiliated Shareholder, the
Company, subject to the terms and conditions of this Agreement, shall include in
such registration all Registrable Securities held by Affiliated Shareholders
with respect to which the Company has received such written requests for
inclusion.
(b) Priority on Piggyback Registrations. If, in
connection with a Piggyback Registration, any managing underwriter (or, if such
Piggyback Registration is not an underwritten offering, a nationally recognized
independent underwriter selected by the Company reasonably acceptable to the
holders of thirty percent (30%), by number of shares, of the Registrable
Securities sought to be included in such Piggyback Registration and whose fees
and expenses shall be borne solely by the Company) advises the Company, in
writing, that, in its opinion, the inclusion of all the securities sought to be
included in such Piggyback Registration by the Company, any Persons who have
sought to have shares registered thereunder pursuant to rights to demand (other
than pursuant to so-called, "piggyback" or other incidental or participation
registration rights) such registration (such demand rights being "Other Demand
Rights" and such Persons being "Other Demanding Sellers"), any holders of
Registrable Securities seeking to sell such Registrable Securities in such
Piggyback Registration ("Piggyback Sellers") and any other proposed sellers, as
the case may be, would adversely affect the marketability of the securities
sought to be sold pursuant thereto, then the Company shall include in the
registration statement applicable to such Piggyback Registration only such
securities as the Company is so advised by such underwriter can be sold without
such an adverse effect (the "Maximum Piggyback Number"), as follows and in the
following order of priority:
(i) if the Piggyback Registration relates to an
offering for the Company's own account (a "Primary Offering"), then (A) first,
such number of securities to be sold by the Company as the Company, in its
reasonable judgment and acting in good faith and in accordance with sound
financial practice, shall have determined, (B) second, Registrable Securities of
Piggyback Sellers in an amount sufficient to reduce the amount of such Piggyback
Sellers' Registrable Securities held after the offering to a level that would
cause such Piggyback Sellers to each hold less than ten-percent (10%) of the
total issued and outstanding Common Shares; provided that the Company shall, at
the Company's discretion, include Registrable Securities in this category so as
to maximize the number of Piggyback Sellers whose post-offering ownership of
Common Shares is less than ten percent (10%) of the total issued and outstanding
Common Shares; (C) third, such Registrable Securities duly requested to be
included in such registration statement by any Piggyback Seller (consisting of
the remaining Registrable Securities held by such Piggyback Sellers after
application of the immediately preceding priority category), pro rata on the
basis of the amount of such Registrable Securities held by such
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Piggyback Sellers.
(ii) if the Piggyback Registration relates to
other than a Primary Offering, then (A) first, such number of securities sought
to be registered by each Other Demanding Seller, pro rata in proportion to the
number of securities sought to be registered by all such Other Demanding
Sellers, (B) second, Registrable Securities of Piggyback Sellers in an amount
sufficient to reduce the amount of such Piggyback Sellers' Registrable
Securities held after the offering to a level that would cause such Piggyback
Sellers to hold less than ten-percent (10%) of the total issued and outstanding
Common Shares; provided that the Company shall, at the Company's discretion,
include Registrable Securities in this category so as to maximize the number of
Piggyback Sellers whose post-offering ownership of Common Shares is less than
ten-percent (10%) of the total issued and outstanding Common Shares; and (C)
third, such Registrable Securities duly requested to be included in such
registration statement by any Piggyback Seller (consisting of remaining
Registrable Securities held by such Piggyback Seller after application of the
immediately preceding priority category), pro rata on the basis of the amount
of such Registrable Securities held by such Piggyback Sellers.
(c) Withdrawal by the Company. If, at any time after
giving written notice of its intention to register any of its securities as set
forth in this Section 2.2 and prior to the time the registration statement filed
in connection with such registration is declared effective, the Company shall
determine for any reason not to register such securities, the Company may, at
its election, give written notice of such determination to each Affiliated
Shareholder and thereupon shall be relieved of its obligation to register any
Registrable Securities in connection with such particular withdrawn or abandoned
registration (but not from its obligation to pay the Registration Expenses in
connection therewith as provided herein). In the event that the Piggyback
Sellers of such a registration hold the Requisite Amount of Registrable
Securities, such holders may continue the registration as a Demand Registration
pursuant to the terms of Section 2.1 hereof.
Section 2.3 Withdrawal Rights. Any Affiliated Shareholder
having notified or directed the Company to include any or all of its Registrable
Securities in a registration statement under the Securities Act shall have the
right to withdraw any such notice or direction with respect to any or all of the
Registrable Securities designated by it for registration by giving written
notice to such effect to the Company prior to the effective date of such
registration statement. In the event of any such withdrawal, the Company shall
not include such Registrable Securities in the applicable registration and such
Registrable Securities shall continue to be Registrable Securities for all
purposes of this Agreement. No such withdrawal shall affect the obligations of
the Company with respect to the Registrable Securities not so withdrawn;
provided that in the case of a Demand Registration, if such withdrawal shall
reduce the number of Registrable Securities sought to be included in such
registration below the Requisite Amount, then the Company shall, as promptly as
practicable, give each holder of Registrable Securities sought to be registered
9
notice to such effect and, within ten (10) business days following the mailing
of such notice, either the Company or the holders of thirty percent (30%), in
number of shares, of the Registrable Securities sought to be registered may, by
written notices made to the Company and each holder of Registrable Securities
sought to be registered, elect that such registration statement not be filed or,
if theretofore filed, be withdrawn. During such ten (10) business day period,
the Company shall not file such registration statement if not theretofore filed
or, if such registration statement has been theretofore filed, the Company shall
not seek, and shall use its reasonable efforts to prevent, the effectiveness
thereof. Any registration statement withdrawn or not filed (a) in accordance
with an election by the Company, (b) in accordance with an election by the
holders of thirty percent (30%), in number of shares, of the Registrable
Securities sought to be registered pursuant to such Demand Registration pursuant
to Section 2.1(f) hereof, or (c) in accordance with an election by the holders
of thirty percent (30%) of the Registrable Securities sought to be registered
pursuant to such Demand Registration subsequent to the effectiveness of the
applicable Demand Registration Statement because any post-effective amendment or
supplement to the applicable Demand Registration Statement contains information
regarding the Company which the Company deems adverse to the Company, shall not
be counted as a Demand, Except as set forth in clause (c) of the previous
sentence, any Demand withdrawn in accordance with an election by the Demanding
Holders subsequent to the effectiveness of the applicable Demand Registration
Statement shall be counted as a Demand unless the Demanding Holders reimburse
the Company for its reasonable out-of-pocket expenses (but, without implication
that the contrary would otherwise be true, not including any Internal Expenses,
as defined in Section 2.6 hereof) related to the preparation and filing of such
registration statement (in which event such registration statement shall not be
counted as a Demand hereunder). Upon the written request of thirty percent
(30%), by number of shares, of such Demanding Holders, the Company shall
promptly prepare a definitive statement of such out-of-pocket expenses in
connection with such registration statement in order to assist such Demanding
Holders with a determination in accordance with the preceding sentence.
Section 2.4 Holdback Agreements. Each Affiliated Shareholder
agrees not to effect any public sale or distribution (including sales pursuant
to Rule 144) of any equity securities of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, during the
one hundred eighty (180) day period following the effective date of a Public
Offering, Demand Registration or Piggyback Registration (in each case, except as
part of such registration), or, in each case, a later date required by any
underwriting agreement with respect thereto.
Section 2.5 Registration Procedures.
(a) Registration. If and whenever the Company is required
to use its reasonable efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1 and 2.2 (subject
to its right to withdraw such registration as contem-
10
plated by Sections 2.2(c) and 2.3) the Company shall as expeditiously as
reasonably possible:
(i) prepare and file with the Commission a
registration statement to effect such registration and thereafter use reasonable
efforts to cause such registration statement to become and remain effective,
pursuant to the terms of this Agreement; provided however that the Company may
discontinue any registration of its securities which are not Registrable
Securities (and, under the circumstances specified in Section 2.1, its
securities which are Registrable Securities) at any time prior to the effective
date of the registration statement relating thereto; provided further that
before filing such registration statement or any amendments thereto, the Company
will furnish to the counsel selected by the holders of Registrable Securities
which are to be included in such registration copies of all such documents
proposed to be filed, to the extent specifically requested by such counsel,
which documents will be subject to the review of such counsel, and such review
to be conducted with reasonable promptness;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement until the earlier of such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement or in the case of a
registration pursuant to Sections 2.1 and 2.2, the expiration of forty-five (45)
days after such registration statement becomes effective;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement and each underwriter, if any,
of the securities being sold by such seller such number of conformed copies of
such registration statement and of each amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents as such seller and underwriter, if any, may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities owned by such seller;
(iv) use reasonable efforts to register or
qualify such Registrable Securities covered by such registration statement under
such other securities laws or blue sky laws of such jurisdictions as any seller
thereof and any underwriter of the securities being sold by such seller shall
reasonably request, and take any other action which may be reasonably necessary
or advisable to enable such seller and underwriter to consummate the disposition
in such jurisdictions of the Registrable Securities owned by such seller, except
that the Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this subdivision (iv) be
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obligated to be so qualified, to subject itself to taxation in any such
jurisdiction or to file a general consent to service of process in any such
jurisdiction;
(v) use its reasonable efforts to cause such
Registrable Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed and, if no such securities are
so listed, use its reasonable efforts to cause such Registrable Securities to be
listed on Nasdaq;
(vi) use its reasonable efforts to cause such
Registrable Securities covered by such registration statement to be registered
with, or approved by, such other governmental agencies or authorities (including
any applicable Bermuda authority) as may be necessary to enable the seller or
sellers thereof to consummate the disposition of such Registrable Securities;
(vii) in connection with an underwritten offering,
obtain for each seller of Registrable Securities and underwriter:
(1) an opinion of counsel for the
Company, covering the matters customarily covered in opinions requested
in underwritten offerings and such other matters as may be reasonably
requested by such sellers and underwriters, and
(2) a "comfort" letter (or, in the case
of any such Person which does not satisfy the conditions for receipt of
a "comfort" letter specified in Statement on Auditing Standards No. 72,
an "agreed upon procedures" letter) signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement;
(vii) promptly notify the holders of Registrable
Securities and the underwriters, if any, of the following events and, if
requested by any such holder or underwriter, confirm such notification in
writing:
(1) the filing of the registration
statement, the prospectus or any prospectus supplement related thereto
or post-effective amendment to the registration statement, and, with
respect to the registration statement or any post-effective amendment
thereto, when the same has become effective;
(2) any request by the Commission for
amendments or supplements to the registration statement or the
prospectus or for additional information;
(3) the issuance by the Commission of
any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings by
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any Person for that purpose; and
(4) the receipt by the Company of any
notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue sky laws
of any jurisdiction or the initiation or threat of any proceeding for
such purpose;
(viii) notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and, at the request of any such
seller, promptly prepare and furnish to such seller a reasonable number of
copies of a supplement to, or an amendment of, such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include 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 in the light of the circumstances
then existing;
(ix) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement;
(x) otherwise use its reasonable efforts to
comply with all applicable rules and regulations of the Commission, and make
available to holders of Registrable Securities, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve
months, but not more than eighteen months, beginning with the first day of the
Company's first full quarter after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section 11
(a) of the Securities Act and Rule 158 thereunder.
The Company may require each seller of Registrable Securities
as to which any registration is being effected and each underwriter, if any, to
furnish the Company in writing such information regarding each seller or
underwriter and the distribution of such Registrable Securities as the Company
may from time to time reasonably request to complete or amend the information
required by the registration statement.
(b) Underwriting. Without limiting any of the foregoing,
in the event that the offering of Registrable Securities is to be made by or
through an underwriter, the Company shall enter into an underwriting agreement
with a managing underwriter or underwriters containing representations,
warranties, indemnities and agreements customarily included (but not
inconsistent with the agreements contained herein) by an issuer of common stock
in underwriting
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agreements with respect to offerings of common stock for the account of, or on
behalf of, such issuers. In connection with any offering of Registrable
Securities registered pursuant to this Agreement, the Company shall (i) furnish
to the underwriter, if any (or, if no underwriter, the sellers of such
Registrable Securities), unlegended certificates representing ownership of the
Registrable Securities being sold, in such denominations as requested and (ii)
instruct any transfer agent and registrar of the Registrable Securities to
release any stop transfer order with respect thereto.
(c) Return of Prospectuses. Each seller of Registrable
Securities hereunder agrees that upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 2.5(a)(viii), such
seller shall forthwith discontinue such seller's disposition of Registrable
Securities pursuant to the applicable registration statement and prospectus
relating thereto until such seller's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 2.5(a)(viii) and, if so directed
by the Company, deliver to the Company, at the Company's expense, all copies,
other than permanent file copies, then in such seller's possession of the
prospectus current at the time of receipt of such notice relating to such
Registrable Securities. In the event the Company shall give such notice, any
applicable forty-five (45) day period during which such registration statement
must remain effective pursuant to this Agreement shall be extended by the number
of days during the period from the date of giving of a notice regarding the
happening of an event of the kind described in Section 2.5(a)(viii) to the date
when all such sellers shall receive such a supplemented or amended prospectus
and such prospectus shall have been filed with the Commission.
Section 2.6 Expenses of Registration. All expenses incident to
the Company's performance of, or compliance with, its obligations under this
Agreement including, without limitation, all registration and filing fees, all
fees and expenses of compliance with securities and "blue sky" laws, all
printing and copying expenses, all messenger and delivery expenses, all fees and
expenses of the Company's independent certified public accountants and counsel
(including, without limitation, with respect to "comfort" letters and opinions)
(collectively, the "Registration Expenses") shall be borne by the Company. The
Company will pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties, the expense of any annual audit and the expense of any
liability insurance) (collectively, "Internal Expenses") and the expenses and
fees for listing the securities to be registered on each securities exchange and
included in each established over-the-counter market on which similar securities
issued by the Company are then listed or traded; and all Selling Expenses shall
be borne by the Affiliated Shareholders, the sellers of the securities so
registered and the Company, to the extent of securities registered on its
behalf, pro rata on the basis of the number of their shares so registered;
provided, however, that the Company shall not be required to pay any
Registration Expenses if, as a result of the withdrawal of a request for
registration by the Demanding Holders, the registration statement does not
become effective, in which case the Affiliated Shareholders and other sellers
requesting
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registration shall bear such Registration Expenses pro rata on the basis of the
number of their shares so included in the registration request (except for the
fees of any counsel for the Affiliated Shareholders, which shall be borne only
by the persons whom such counsel represented, pro rata on the basis of the
number of their shares so included in the registration request); provided,
further, that such registration shall not be counted as a registration pursuant
to Subsection 2.1 hereof; and provided, further, that if any jurisdiction in
which the securities shall be qualified shall require that expenses incurred in
connection with the qualification of the securities in that jurisdiction be
borne by the selling Shareholders, then such expenses shall be payable by the
selling Shareholders pro rata to the extent required by such jurisdiction.
SECTION 2.7 INDEMNIFICATION.
(a) By the Company. The Company agrees to indemnify and
hold harmless, to the fullest extent permitted by law, each holder of
Registrable Securities being sold, its officers, directors, employees, managers
and agents and each Person who controls (within the meaning of the Securities
Act) such holder or such other indemnified Person from and against all losses,
claims, damages, liabilities and expenses (collectively, the "Losses") caused
by, resulting from or relating to any untrue or alleged untrue statement of a
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except insofar as the same are caused by any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of a current prospectus or
any amendments or supplements thereto (which does not contain any such material
misstatements or omissions) after the Company has furnished such holder with
copies of the same. In connection with an underwritten offering and without
limiting any of the Company's other obligations under this Agreement, the
Company shall indemnify such underwriters, their officers, directors, employees
and agents and each Person who controls (within the meaning of the Securities
Act) such underwriters or such other indemnified Person to the same extent as
provided above with respect to the indemnification (and exceptions thereto) of
the holders of Registrable Securities being sold.
(b) By the Shareholders. In connection with any
registration statement in which a holder of Registrable Securities is
participating, each such holder will furnish to the Company in writing
information regarding such holder's ownership of Registrable Securities and its
intended method of distribution thereof and, to the extent permitted by law,
shall, severally and not jointly, indemnify the Company, its directors,
officers, employees and agents and each Person who controls (within the meaning
of the Securities Act) the Company or such other indemnified Person against all
Losses caused by any untrue or alleged untrue statement of
15
material fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, but only to the extent that such untrue statement or
omission is caused by and contained in such information so furnished in writing
by such holder expressly for use therein; provided, however, that each holder's
obligation to indemnify the Company hereunder shall, to the extent more than one
holder is subject to the same indemnification obligation, be apportioned between
each holder based upon the net amount received by each holder from the sale of
Registrable Securities, as compared to the total net amount received by all of
the holders of Registrable Securities sold pursuant to such registration
statement. Notwithstanding the foregoing, no holder shall be liable to the
Company for amounts in excess of the lesser of (i) such apportionment and (ii)
the amount received by such holder in the offering giving rise to such
liability.
(c) Notice. Any Person entitled to indemnification
hereunder shall give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification; provided, however, the
failure to give such notice shall not release the indemnifying party from its
obligation, except to the extent that the indemnifying party has been
materially prejudiced by such failure to provide such notice on a timely basis.
(d) Defense of Actions. In any case in which any such
action is brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not (so long as it shall
continue to have the right to defend, contest, litigate and settle the matter in
question in accordance with this paragraph) be liable to such indemnified party
hereunder for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, supervision and monitoring (unless (i) such indemnified
party reasonably objects to such assumption on the grounds that there may be
defenses available to it which are different from or in addition to the defenses
available to such indemnifying party or (ii) the indemnifying party shall have
failed within a reasonable period of time to assume such defense and the
indemnified party is or is reasonably likely to be prejudiced by such
unreasonable delay, in either event the indemnified party shall be reimbursed by
the indemnifying party for the expenses incurred in connection with retaining
separate legal counsel). An indemnifying party shall not be liable for any
settlement of an action or claim effected without its consent. The indemnifying
party shall lose its right to defend, contest, litigate and settle a matter if
it shall fail to diligently contest such matter (except to the extent settled in
accordance with the next following sentence). No matter shall be settled by an
indemnifying party without the consent of the indemnified party (which
16
consent shall not be unreasonably withheld).
(e) Survival. The indemnification provided for under this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified Person and will survive the transfer of
the Registrable Securities and the termination of this Agreement.
(f) Contribution. If recovery is not available under the
foregoing indemnification provisions for any reason or reasons other than as
specified therein, any Person who would otherwise be entitled to indemnification
by the terms thereof shall nevertheless be entitled to contribution with respect
to any Losses with respect to which such Person would be entitled to such
indemnification but for such reason or reasons. In determining the amount of
contribution to which the respective Persons are entitled, there shall be
considered the Persons' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and other equitable
considerations appropriate under the circumstances. It is hereby agreed that it
would not necessarily be equitable if the amount of such contribution were
determined by pro rata or per capita allocation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not found guilty of
such fraudulent misrepresentation. Notwithstanding the foregoing, no Affiliated
Shareholder shall be required to make a contribution in excess of the net amount
received by such holder from its sale of Registrable Securities in connection
with the offering that gave rise to the contribution obligation.
Section 2.8 Restrictions on Transfer.
(a) Restrictive Legends. Except as otherwise permitted by
this Section 2.8, each certificate or other instrument evidencing any
Registrable Securities (including each such certificate or other instrument
issued upon the transfer of any Registrable Securities) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The Common Shares represented by this certificate have not
been registered under the Securities Act of 1933, as amended, or any other
applicable securities law and may not be transferred, sold or otherwise disposed
of except pursuant to an effective registration or an exemption therefrom under
such Act and applicable state securities laws."
(b) Notice of Proposed Transfer; Opinions of Counsel.
Prior to any transfer of any Restricted Securities which are not registered
under an effective registration statement under the Securities Act, the holder
thereof will give written notice to the Company of such holder's intention to
effect such transfer and to comply in all other respect with this Section
2.8(b). Each such notice (i) shall describe the manner and circumstances of the
proposed transfer
17
in sufficient detail to enable counsel to render the opinions referred to below,
and (ii) shall designate in such notice and the Company will promptly submit a
copy thereof to its counsel. The following provisions shall then apply:
(i) If (A) in the opinion of such counsel for
the holder the proposed transfer may be effected without registration of such
Restricted Securities under the Securities Act, and (B) counsel for the Company
shall not have rendered an opinion within twenty (20) business days after the
receipt by the Company of such written notice that such registration is
required, such holder shall thereupon be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered by such holder
to the Company. Each certificate, if any, issued upon or in connection with such
transfer shall bear the appropriate restrictive legend set forth in Section
2.8(a), unless in the opinion of each such counsel such legend is no longer
required to ensure compliance with the Securities Act; and
(ii) If in the opinion of either or both of such
counsel the proposed transfer may not legally be effected without registration
of such Restricted Securities under the Securities Act (such opinion or opinions
to state the basis of the legal conclusions reached therein), the Company will
promptly so notify the holder thereof and thereafter such holder shall not be
entitled to transfer such Restricted Securities until receipt of a further
notice from the Company under clause (i) above or until registration of such
Restricted Securities under the Securities Act has become effective.
Notwithstanding the foregoing provisions of this Section 2.8(b), the purchaser
of the Common Shares shall be permitted to transfer any Restricted Securities
to a limited number of institutional investors, provided that (A) each such
investor represents in writing that it is acquiring such Restricted Securities
for investment and not with a view to the distribution thereof (subject,
however, to any requirement of law that the disposition thereof shall at all
times be within the control of such transferee), (B) each such investor agrees
in writing to be bound by all the restrictions on transfer of such Restricted
Securities contained in this Section 2.8(b) and (C) the purchaser of the Common
Shares delivers to the Company an opinion of counsel satisfactory to the
Company, stating that such transfer may be effected without registration under
the Securities Act.
ARTICLE III
MISCELLANEOUS
Section 3.1 Headings. The heading in this Agreement are for
convenience of reference only and shall not control or effect the meaning or
construction of any provisions hereof.
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Section 3.2 Entire Agreement. This Agreement constitutes the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants, conditions or undertakings with respect
to the subject matter hereof, other than those expressly set forth or referred
to herein. This Agreement supersedes all prior agreements and understandings
between the parties hereto with respect to the subject matter hereof.
Section 3.3 Termination of Certain Rights. The rights and
obligations hereunder of each Affiliated Shareholder will terminate with respect
to such Affiliated Shareholder at such time when it is no longer an Affiliated
Shareholder under this Agreement; provided, however, that the provisions of
Section 2.5 hereof, the rights of any Affiliated Shareholder with respect to
breach of any provision hereof, and any obligation accrued as of the date of
termination shall survive termination of this Agreement.
Section 3.4 Rule 144. The Company covenants that it will file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the Commission thereunder (or, if
it is not required to file such reports, it will, upon the request of any holder
of Registrable Securities, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 under the Securities Act), and it
will take such further reasonable action, to the extent required from time to
time to enable such holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the Commission.
Upon the reasonable request of any holder of Registrable Securities, the Company
will deliver to such holder a written statement as to whether it has complied
with such information and filing requirements.
Section 3.5 Notices. All notices and other communications
hereunder shall be in writing and shall be delivered personally or by next-day
courier, at the address specified below (or at such other address for a party as
shall be specified by like notice; provided that notices of change of address
shall be effective only upon receipt thereof). Any such notice shall be
effective upon receipt, if personally delivered, or one business day after
delivery to a courier for next-day delivery.
If to Company:
Viatel Holding (Bermuda) Limited
c/o VTL (UK) Limited
Xxxxxxx Xxxxx
Xxxx Xxxx
Xxxxx, Xxxxxx XX00 OHR
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Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Shareholders:
At the addresses listed
on the signature pages hereto.
Section 3.6 Applicable Law. The substantive laws of the State
of New York shall govern the interpretation, validity and performance of the
terms of this Agreement, without regard to conflicts of law doctrines. THE
PARTIES HERETO WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO DISPUTES
HEREUNDER.
Section 3.7 Severability. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in any
jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement, including any such provisions, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
Section 3.8 Successors; Assigns. The provisions of this
Agreement shall be binding upon the parties hereto and their respective heirs,
successors and assigns whether so expressed or not. In addition, whether or not
any express assignment has been made, the provisions of this Agreement which are
for the benefit of purchaser or holder of Registrable Securities are also for
the benefit of, and enforceable by, any subsequent holder of Registrable
Securities.
Section 3.9 Amendments. This Agreement may not be amended,
modified or supplemented unless such amendment, modification or supplement is in
writing and signed by
20
the Company and the holders of at least sixty (60%) of the Registrable
Securities outstanding on the date thereof (and, in the case of any amendment,
modification or supplement that materially adversely affects any particular
Affiliated Shareholder or group of Affiliated Shareholders, with the written
consent of such Affiliated Shareholder or group of Affiliated Shareholders).
Section 3.10 Waiver. Any waiver (express or implied) of any
default or breach of this Agreement shall not constitute a waiver of any other
or subsequent default or breach.
Section 3.11 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same Agreement.
Section 3.12 SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND APPELLATE COURTS
FROM ANY THEREOF. EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF TO SUCH PARTY BY REGISTERED OR CERTIFIED MAIL
TO SUCH PARTY AT ITS ADDRESS SPECIFIED IN THIS ARTICLE III. THE PARITIES HERETO
HEREBY IRREVOCABLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
21
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly as of the
date first above written.
Viatel Holding (Bermuda) Limited
By:_________________________________
Name:
Title:
[Shareholders]
_______________________________
Name:
Address
Attention:
Telephone:
Facsimile:
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