EXHIBIT 10.36
AMENDMENT OF REGISTRATION RIGHTS AGREEMENT
(Borislow and Trust II)
THIS AMENDMENT OF REGISTRATION RIGHTS AGREEMENT (this "Amendment") is
entered into as of the 18th day of March, 1999, by and among XXX-XXXX.xxx, INC.,
a Delaware corporation (the "Company"), XXXXXX X. XXXXXXXX, a former director,
officer, and shareholder of the Company ("Borislow"), and XXXX XXXXXX, as
Trustee of that certain D&K Grantor Retained Annuity Trust dated August 18, 1998
("Trust II").
RECITALS:
A. The parties hereto and XXXX XXXXX, as Trustee of that certain D&K
Grantor Retained Annuity Trust dated June 15, 1998 (the "Trust") have entered
into that certain Registration Rights Agreement dated as of December 31, 1998
(the "Registration Rights Agreement").
B. The parties hereto, the Trust, and certain other parties have entered
into that certain Agreement dated March 15, 1999, pertaining, among other
things, to the modification of certain promissory notes issued by Communications
TeleSystems International, and it is a condition to that Agreement that the
parties hereto agree to enter into this Amendment.
C. The Company and the Trust have agreed to a separate Amendment of
Registration Rights Agreement (The Trust).
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Terms in this Agreement with initial capital letters and
not otherwise defined herein shall have the meanings defined for such terms in
the Registration Rights Agreement.
2. Amendment of Section 7(a) of the Registration Rights Agreement. Section
7(a) of the Registration Rights Agreement is hereby amended to read in full as
follows:
"(a) The Company agrees that in the event that it makes a public or private
offering of its debt securities in exchange for cash, to the extent
permitted by law the Company will, at the option of Borislow or (subject to
the terms stated herein) Trust II, utilize up to forty percent (40%) of the
net cash proceeds of that offering to the Company after payment of the
expenses relating to the offering that are to be borne by the Company (the
"Net
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Cash Proceeds") to repurchase at the then fair market value convertible
subordinated notes of the Company then owned of record and beneficially by
Borislow or Trust II; provided, however, that the rights of Trust II
hereunder are subject and subordinate to the rights of Borislow in this
Section 7(a). Notwithstanding the foregoing, this Section 7(a) shall not
apply to any debt offering by the Company to a bank or financial
institution or in a commercial context. Borislow may exercise his option
set forth in this Section 7(a) by delivering notice to the Company within
five (5) days after the receipt by Borislow of written notice from the
Company, such notice to be sent by Registered or Certified Mail with Return
Receipt Requested, that the Company intends to make a public or private
offering of its debt securities in exchange for cash. To the extent that
any Net Cash Proceeds remain after Borislow's exercise or failure to
exercise timely his option set forth in this Section 7(a), Trust II may
exercise its rights under this Section 7(a) to the extent of such remaining
balance of Net Cash Proceeds. Trust II may exercise its option set forth in
this Section 7(a) by delivering notice to the Company within five (5) days
after the receipt by Trust II of written notice from the Company, such
notice to be sent by Registered or Certified Mail with Return Receipt
Requested, that the Company intends to make a public or private offering of
its debt securities in exchange for cash.
3. Amendment of Section 7(d) of the Registration Rights Agreement. Section
7(d) of the Registration Rights Agreement is hereby amended to read in full as
follows:
"(d) For the period commencing January 1, 1999, through June 30, 2000, the
Company shall not make any offer or sale of any of its capital stock
(including its Common Stock) unless and until Borislow has sold or
otherwise disposed of all shares of Common Stock now held by him; provided,
however, that this Section 7(d) shall not prohibit the Company from
offering or selling shares of its Common Stock in connection with any
employee benefit plan or stockholder rights distribution; and, provided
further, that up to the entire proceeds from the sale of shares of Common
Stock in connection with such employee benefit plans or stockholder rights
distributions ("Sale Proceeds") during the eighteen (18) month period
referred to above in this Section 7(d) shall be used, at Borislow's option
and if permitted by applicable law and as provided herein, to purchase
Common Stock then owned by Borislow. Notwithstanding the foregoing, and
without in any way prejudicing any other rights of Borislow, Borislow
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hereby: (1) irrevocably waives the rights provided to him under Section
7(d) of the Registration Rights Agreement with respect only to those
proceeds ("Proceeds") generated upon the exercise of options through March
18, 1999; and (2) agrees that the option set forth in Section 7(d) of the
Registration Rights Agreement with respect to the Proceeds generated
through March 18, 1999, has terminated.
"(i) Borislow may exercise his option by giving timely notice of such
exercise to the Company. Such notice shall be timely if it is received by
the Company either: (A) within five (5) days after the receipt by Borislow
of a written Receipt Notice (hereinafter defined) sent to Borislow by
Registered or Certified Mail with Return Receipt Requested; or (B) within
five (5) days after the receipt by Borislow of a written Quarterly Notice
(hereinafter defined) sent to Borislow by Registered or Certified Mail with
Return Receipt Requested.
"(ii) The Company agrees to give Borislow written notice within five
(5) calendar days after the Company's receipt of any Sale Proceeds, such
notice to be sent by Registered or Certified Mail with Return Receipt
Requested and such notice to state such receipt and the amount of such Sale
Proceeds (the "Receipt Notice"). The Company agrees to give Borislow
written notice within five (5) calendar days after the end of each calendar
quarter of the amount of any Sale Proceeds as to which the option set forth
in this Section 7(d) shall remain unexercised and unterminated at the time
of such notice, such notice to be sent by Registered or Certified Mail with
Return Receipt Requested (the "Quarterly Notice"). Borislow's option set
forth in this Section 7(d) shall terminate as to any Sale Proceeds as to
which he shall have failed to exercise such option pursuant to a proper
Receipt Notice and a proper Quarterly Notice.
"(iii) The purchase price of any Common Stock purchased pursuant to an
option exercised in response to a Receipt Notice shall be the average of
the daily closing prices (or of the closing bid and asked prices) for the
ten (10) trading days immediately preceding either the date of the receipt
by the Company of the notice of the exercise of such option or the date of
the exercise of such option with respect to Common Stock that is listed on
a national securities exchange or traded on the over-the-counter market or
quoted on NASDAQ.
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"(iv) The purchase price of any Common Stock purchased pursuant to an
option exercised in response to a Quarterly Notice shall be the average of
the daily closing prices (or of the closing bid and asked prices) for the
last ten (10) trading days of the calendar quarter then most recently ended
with respect to Common Stock that is listed on a national securities
exchange or traded on the over-the-counter market or quoted on NASDAQ."
"(v) The valuation of the Common Stock and the closing of the purchase
and sale shall take place as expeditiously as practicable after the
exercise by Borislow of his option set forth in this Section 7(d)."
4. Amendment of Section 7(e) of the Registration Rights Agreement. Section
7(e) of the Registration Rights Agreement is hereby amended to read in full as
follows:
"(e) The Company agrees to make available to Borislow, upon reasonable
notice from Borislow, in connection with one (1) securities offering to be
made by Borislow on or prior to June 30, 2000, the following Company
employees to participate in a standard securities offering "road show" of
not longer than ten (10) days' duration regarding that offering: the Chief
Executive Officer of the Company; and certain other appropriate employees
of the Company as designated by such Chief Executive Officer. The Company
may delay such participation if the time of such participation requested by
Borislow would cause undue hardship on the Company; in the event of such a
delay, the June 30, 2000, date set forth above in this Section 7(e) shall
be extended by one day for each day of such delay. The Company shall pay
for the reasonable out of pocket expenses incurred by the Company and its
officers in complying with this Section."
5. Amendment of Section 9(a) of the Registration Rights Agreement. Section
9(a) of the Registration Rights Agreement is hereby amended to read in full as
follows:
"(a) Borislow holds and owns, of record and beneficially, not less than two
percent (2%) of the outstanding Common Stock, calculated on a fully-diluted
basis, including shares that are issuable upon exercise of convertible
securities or other derivative securities of the Company; provided,
however, that if Borislow owns, of record and beneficially, less than such
amount of Common Stock, this Agreement, as amended, shall be of no force or
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effect; and provided further, that if Borislow later holds two percent (2%)
or more of such Common Stock, solely as a result his ownership at that time
of shares of Common Stock now owned of record and beneficially by Borislow
plus shares of Common Stock then owned of record and beneficially by
Borislow as a result of distributions from the Trust or Trust II, then the
provisions of this Agreement, as amended, shall again be of force and
effect; and provided further, that the running of any time periods set
forth in this Agreement, as amended, shall not be tolled as a result of any
period during which this Agreement shall not have been in force or effect."
6. Additional Agreements.
(a) The Company agrees to accept and Borislow agrees to transfer to
the Company, concurrently with the execution and delivery of this Amendment,
$4,940,000 principal amount of the Company's 5% Convertible Subordinated Notes
due 2004 (the "Notes") in complete satisfaction of Borislow's outstanding
obligation to the Company in the amount of $4,312,500 related to the exercise on
March 3, 1999, by Borislow of an option to purchase 750,000 shares of Common
Stock of the Company. Borislow represents and warrants to the Company that the
Notes are owned by Borislow of record and beneficially and that, immediately
prior to the transfer of the Notes to the Company, the Notes will be free and
clear of any and all liens, claims, and encumbrances. Concurrently with the
execution and delivery hereof, Borislow is delivering to the Company evidence
satisfactory to the Company as to the transfer of the Notes from Borislow to the
Company.
(b) The Company agrees to purchase from Borislow, and Borislow agrees
to sell to the Company, $6,537,000 principal amount of the Company's 5%
Convertible Subordinated Notes due 2004 (the "Additional Notes") for a cash
payment to Borislow of $5,706,690. Borislow represents and warrants to the
Company that the Notes are owned by Borislow of record and beneficially and
that, immediately prior to the transfer of the Notes to the Company, the Notes
will be free and clear of any and all liens, claims, and encumbrances created by
the Company. Concurrently with the execution and delivery hereof: (1) Borislow
is delivering to the Company evidence satisfactory to the Company as to the
transfer of the Additional Notes from Borislow to the Company; and (2) the
Company is delivering $5,706,690 to Borislow.
7. Miscellaneous.
(a) Each of the parties hereto represents and warrants to, and agrees
with, each of the other parties hereto that, at the date hereof: (i) such
representing and warranting party is not in default under the Registration
Rights Agreement; (b) such party
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has not suffered any damage under the Registration Rights Agreement and has
no cause of action, right of set-off or counterclaim, or any other claim of
any nature whatsoever against any of the other parties hereto or any
director, officer, attorney, agent, employee, or affiliate of any of such
other parties under the Registration Rights Agreement or otherwise
(collectively, "Claims"); and (c) such party hereby waives and relinquishes
any and all Claims. Each such party further hereby agrees to indemnify and
hold harmless each of the other parties and their respective officers,
directors, attorneys, agents, employees, and affiliates harmless from any
loss, damage, judgment, liability, and expense (including counsel fees)
suffered by or rendered against the other parties or any of them on account
of anything arising out of the Registration Rights Agreement, this
Amendment, or any other document delivered pursuant hereto.
(b) Except as expressly modified by this Amendment, the Registration
Rights Agreement continues in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
day and year first above written.
Xxx-Xxxx.xxx, Inc.
Witness
By:
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Xxxxxxxx X. Lawn, Secretary Name:
Title:
Address: Borislow
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Address: Trust II
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Xxxx Xxxxxx, as Trustee of that certain D&K
Grantor Retained Annuity Trust dated
_______, 1998
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has not suffered any damage under the Registration Rights Agreement and has no
cause of action, right of set-off or counterclaim, or any other claim of any
nature whatsoever against any of the other parties hereto or any director,
officer, attorney, agent, employee, or affiliate of any of such other parties
under the Registration Rights Agreement or otherwise (collectively, "Claims");
and (c) such party hereby waives and relinquishes any and all Claims. Each such
party further hereby agrees to indemnify and hold harmless each of the other
parties and their respective officers, directors, attorneys, agents, employees,
and affiliates harmless from any loss, damage, judgment, liability, and expense
(including counsel fees) suffered by or rendered against the other parties or
any of them on account of anything arising out of the Registration Rights
Agreement, this Amendment, or any other document delivered pursuant hereto.
(c) Except as expressly modified by this Amendment, the Registration
Rights Agreement continues in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
day and year first above written.
Xxx-Xxxx.xxx, Inc.
Witness
By:
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Xxxxxxxx X. Lawn, Secretary Name:
Title:
Address: Borislow
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