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Exhibit 10.2
EXECUTION COPY
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WARRANTS REGISTRATION RIGHTS AGREEMENT
between
LONG DISTANCE INTERNATIONAL INC.
and
THE BANK OF NEW YORK,
as Warrant Agent
Dated as of April 7, 1998
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WARRANTS REGISTRATION RIGHTS AGREEMENT
WARRANTS REGISTRATION RIGHTS AGREEMENT, dated as of April 7, 1998
(this "Agreement"), between LONG DISTANCE INTERNATIONAL INC., a Florida
corporation (the "Company"), and THE BANK OF NEW YORK, as warrant agent (the
"Warrant Agent").
Pursuant to the terms of a Purchase Agreement dated April 7, 1998
(the "Purchase Agreement"), among the Company, Xxxxxx Xxxxxxx & Co. Incorporated
and SBC Warburg Dillon Read Inc. (the "Initial Purchasers"), the Company has
agreed to issue and sell to the Initial Purchasers an aggregate of 225,000
warrants (each, a "Warrant"), each Warrant initially entitling the holder
thereof to purchase 15.0874shares of Common Stock (as defined below) of the
Company at an exercise price of $.01 per Common Share, as part of 225,000 units
(the "Units"), each Unit consisting of one 12 1/4% Senior Note due 2008 of the
Company (each a "Note" and collectively, the "Notes") to be issued pursuant to
the provisions of an Indenture dated as of the date hereof (the "Indenture")
between the Company, as issuer, and The Bank of New York, as trustee, and one
Warrant. The Note and the Warrant included in each Unit will become separately
transferable at the close of business upon the earliest to occur of (i) the date
that is six months after the Closing Date (as defined below), (ii) the
commencement of an exchange offer with respect to the Notes undertaken pursuant
to the Notes Registration Rights Agreement (as defined below), and (iii) the
effectiveness of a shelf registration statement with respect to resales of the
Notes.
In consideration of the foregoing and of the mutual agreements
contained herein and in the Purchase Agreement, the Company and the Warrant
Agent hereby agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Auditors" means, at any time, the independent auditors of the
Company at such time.
"Board" means the board of directors of the Company from time to
time.
"Closing Date" means the date hereof.
"Comfort Letter" has the meaning specified in Section 3 hereof.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the common stock, par value $0.001 per share,
of the Company.
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"Common Shares" means the shares of the Common Stock of the Company.
"Company" has the meaning specified in the preamble to this
Agreement.
"Company IPO Shares" has the meaning specified in Section 2 hereof.
"Cutback Notice" has the meaning specified in Section 2 hereof.
"Expiration Date" means the tenth anniversary of the date hereof.
"Holders" means the record holders of the Warrants and the holders
of Common Shares (or other securities) received upon exercise thereof.
"Includible Secondary Shares" has the meaning specified in Section 2
hereof.
"Indenture" has the meaning specified in the recitals to this
Agreement.
"Initial Purchasers" has the meaning specified in the recitals to
this Agreement.
"managing underwriter" has the meaning specified in Section 2
hereto.
"Notes" has the meaning specified in the recitals to this Agreement.
"Opinion" has the meaning specified in Section 3 hereof.
"Other IPO Shares" has the meaning specified in Section 2 hereof.
"Piggy-back Registration Rights" has the meaning specified in
Section 2 hereof.
"Purchase Agreement" has the meaning specified in the recitals to
this Agreement.
"Registration Statement" has the meaning specified in Section 2
hereof.
"Resales Registration Statement" has the meaning specified in
Section 9 hereof.
"Resale Shelf" has the meaning specified in Section 3 hereof.
"Securities Act" means the United States Securities Act of 1933, as
amended.
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"Underlying Securities" means the Common Shares issuable upon
exercise of the Warrants or such other securities as shall be issuable upon the
exercise of the Warrants, pursuant to the Warrant Agreement.
"Units" has the meaning specified in the recitals to this Agreement.
"Warrant" has the meaning specified in the recitals to this
Agreement.
"Warrant Agent" has the meaning specified in the preamble to this
Agreement.
"Warrant Agreement" means the Warrant Agreement dated the date
hereof between the Company and the Warrant Agent.
"Warrant Shares" has the meaning specified in Section 2 hereof.
"Warrant Registration Statement" has the meaning specified in
Section 3 hereof.
2. Piggy-Back Registration Rights.
(a) If the Company proposes to file a Registration Statement with
the Commission respecting an offering of any shares of Common Stock (or other
securities) issuable upon exercise of the Warrants (other than an offering
registered solely on Form S-4 or S-8 or any successor form thereto and other
than the initial public offering of shares of Common Stock (or other securities)
issuable upon exercise of the Warrants if no shareholder of the Company
participates therein), the Company shall give prompt written notice to all the
Holders of Warrants or Common Shares or such other securities received upon
exercise of Warrants at least 30 days prior to the initial filing of the
registration statement relating to such offering (the "Registration Statement").
Each such Holder shall have the right, within 20 days after delivery of such
notice, to request in writing that the Company include all or a portion of such
of the Common Shares issuable upon exercise of such Holder's Warrants, such
other securities as shall be issuable upon the exercise of the Warrants, or the
Common Shares or such other securities received upon the exercise thereof,
pursuant to the Warrant Agreement ("Warrant Shares") in such Registration
Statement ("Piggy-back Registration Rights"). The Company shall include in the
public offering all of the Warrant Shares that a Holder has requested be
included, unless the underwriter for the public offering or the underwriter
managing the public offering (in either case, the "managing underwriter")
delivers a notice (a "Cutback Notice") pursuant to Section 2(b) or 2(c) hereof.
The managing underwriter may deliver one or more Cutback Notices at any time
prior to the execution of the underwriting agreement for the public offering.
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(b) If a proposed public offering includes both securities to be
offered for the account of the Company ("Company IPO Shares") and shares to be
sold by shareholders, the provisions of this Section 2(b) shall be applicable if
the managing underwriter delivers a Cutback Notice stating that, in its opinion,
the number of Common Shares that selling shareholders propose to sell therein,
whether or not such selling shareholders have the right to include shares
therein (the "Other IPO Shares"), plus the number of Warrant Shares that the
Holders have requested to be sold therein, plus the Company IPO Shares, exceeds
the maximum number of shares specified by the managing underwriter in such
Cutback Notice that may be distributed without adversely affecting the price,
timing or distribution of the Company IPO Shares. Such maximum number of shares
that may be so sold, excluding the Company IPO Shares, are referred to as the
"Includible Shares."
If the managing underwriter delivers such Cutback Notice, the
Company shall be entitled to include all of the Company IPO Shares in the public
offering and each requesting Holder shall be entitled to include in the public
offering up to its pro rata portion of the Includible Shares and in priority to
the inclusion of any Other IPO Shares that are proposed to be sold in such
public offering. No shareholder that proposes to sell Other IPO Shares in the
proposed initial public offering may sell any such shares therein unless all
Warrant Shares requested by the Holders to be sold therein are so included.
(c) If a proposed public offering is entirely a secondary offering,
the provisions of this Section 2(c) shall be applicable if the managing
underwriter delivers a Cutback Notice stating that, in its opinion, the
aggregate number of Warrant Shares and Other IPO Shares proposed to be sold
therein exceeds the maximum number of shares (the "Includible Secondary Shares")
specified by the managing underwriter in such Cutback Notice that may be
distributed without adversely affecting the price, timing or distribution of the
Common Shares being distributed. If the managing underwriter delivers such
Cutback Notice, each requesting Holder shall be entitled to include in the
public offering up to its pro rata portion of the Includible Secondary Shares
and in priority to the inclusion of any Other IPO Shares that are proposed to be
sold in such public offering. No shareholder that proposes to sell Other IPO
Shares in the proposed public offering may sell any such shares therein unless
all Warrant Shares requested by the Holders to be sold therein are so included.
Notwithstanding the foregoing, to the extent shareholders that
propose to sell Other IPO Shares in the proposed initial public offering have
registration rights under agreements entered into prior to the date of this
Agreement that provide registration parity or priority for such Other IPO
Shares, and to the extent such registration rights have not been waived or
otherwise subordinated to the registration rights of Holders hereunder, such
Other IPO Shares shall be includible in the public offering on a pro rata basis
with the Registrable Securities.
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(d) The underwriting agreement for such public offering shall
provide that each requesting Holder shall have the right to sell its Warrant
Shares to the underwriters and that the underwriters shall purchase the Warrant
Shares at the price paid by the underwriters for the Common Shares sold by the
Company and/or selling shareholders, as the case may be.
3. Shelf Registration.
(a) If only the Company sells Common Shares in an initial public
offering or all of the Warrant Shares have not been sold in a public offering,
the Company shall use its best efforts to cause to be filed pursuant to Rule 415
under the Securities Act a shelf registration statement on the appropriate form
(the "Warrant Registration Statement") covering the issuance of the Warrant
Shares upon exercise of the Warrants and shall use its best efforts to cause the
Warrant Registration Statement to become effective under the Securities Act
within 180 days after the closing date of the initial public offering; provided,
however, that (1) in no event may the Warrant Registration Statement be declared
effective prior to the first anniversary of the Closing Date and (2) if the
Commission shall request that the Company register the resale of the Warrant
Shares instead of the issuance thereof, the Warrant Registration Statement shall
register such resale as opposed to such issuance. The Company shall use
reasonable efforts to keep the Warrant Registration Statement continuously
effective until such time as all Warrants have been exercised or have expired in
the case of clause (2), until such time as all Warrant Shares have been resold.
Prior to filing the Warrant Registration Statement or any amendment thereto, the
Company shall provide a copy thereof to Xxxxxx Xxxxxxx & Co. Incorporated and
its counsel and afford them a reasonable time to comment thereon.
(b) If the Warrant Registration Statement shall register the sale of
the Warrant Shares (a "Resale Shelf") as provided in Section 3(a)(2) above, the
Company agrees to:
(i) make available for inspection by a representative of the
Holders, any underwriter participating in any disposition pursuant to such
Resale Shelf and attorneys and accountants designated by the Holders, at
reasonable times and in a reasonable manner, financial and other records,
documents and properties of the Company that are pertinent to the conduct
of due diligence customary for an underwritten offering, and cause the
officers, directors and employees of the Company to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with a Resale Shelf; provided, however, that such
persons shall first agree in writing with the Company that any information
that is reasonably and in good faith designated by the Company in writing
as confidential at the time of delivery of such information shall be kept
confidential by such persons, unless and to the extent that disclosure of
such information is required by law or such information becomes
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generally available to the public other than as a result of a disclosure
or failure to safeguard such information by such person;
(ii) use its best efforts to cause all Warrant Shares sold under a
Resale Shelf to be listed on any securities exchange or any automated
quotation system on which similar securities issued by the Company are
then listed if requested by the Holders of Warrant Shares representing a
majority of the Warrants originally issued, to the extent such Warrant
Shares satisfy applicable listing requirements;
(iii) provide a reasonable number of copies of the prospectus
included in such Resale Shelf to Holders that are selling Warrant Shares
pursuant to such Resale Shelf;
(iv) cause to be provided to the Warrant Agent, on behalf of the
Holders and beneficial owners of Warrant Shares, upon the effectiveness of
such Resale Shelf, a customary "10b-5" opinion of independent counsel (an
"Opinion") and a customary "cold comfort" letter of independent auditors
(a "Comfort Letter");
(v) cause to be provided to Holders and beneficial owners of Warrant
Shares an Opinion and Comfort Letter with respect to each Form 10-K and
Form 10-Q, including any amendments thereto, that is incorporated by
reference in such Resale Shelf; and
(vi) notify the Warrant Agent, for distribution to the Holders, (A)
when the Resale Shelf has become effective and when any post-effective
amendment thereto has been filed and becomes effective, (B) of any request
by the Commission or any state securities authority for amendments and
supplements to the Resale Shelf or of any material request by the
Commission or any state securities authority for additional information
after the Resale Shelf has become effective, (C) of the issuance by the
Commission or any state securities authority of any stop order suspending
the effectiveness of the Resale Shelf or the initiation of any proceedings
for that purpose, (D) if, between the effective date of the Resale Shelf
and the closing of any sale of Warrant Shares covered thereby, the
representations and warranties of the Company contained in any
underwriting agreement, securities sales agreement or other similar
agreement, including this Agreement, relating to disclosure cease to be
true and correct in all material respects or if the Company receives any
notification with respect to the suspension of the qualification of the
Warrant Shares for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (E) of the happening of any event during the
period the Resale Shelf is effective such that such Resale Shelf or the
related prospectus contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary
to make statements therein not misleading and (F) of any determination by
the Company that a post-effective amendment to a
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Registration Statement would be appropriate. The Holders hereby agree to
suspend use of the prospectus contained in a Resale Shelf upon receipt of
such notice under clause (E) or (F) above until the Company has amended or
supplemented such prospectus to correct such misstatement or omission.
4. Suspension.
Notwithstanding the foregoing, during any consecutive 365-day
period, the Company shall have the privilege to suspend availability of the
Warrant Registration Statement and the related prospectus for up to two
30-consecutive-day periods, except during the 30 days immediately prior to the
Expiration Date, if the Board determines in good faith that there is a valid
purpose for such suspension and provides notice of such determination to the
Holders at their addresses appearing in the register of Warrants maintained by
the Warrant Agent and (b) five additional, non-consecutive three day periods,
except during the 30 day period immediately prior to the Expiration Date, if the
Board determines in good faith that the Company cannot provide adequate
disclosure during such period due to circumstances beyond its control. Notice of
such suspension shall be given promptly to the Warrant Agent.
5. Blue Sky.
The Company shall use its reasonable best efforts to register or
qualify the Underlying Securities proposed to be sold or issued pursuant to the
Registration Statement or the Warrant Registration Statement under all
applicable securities or "blue sky" laws of all jurisdictions in the United
States in which any Holder of Warrants may or may be deemed to purchase
Underlying Securities upon the exercise of Warrants or resale of the Warrant
Shares, as the case may be, and shall use its reasonable best efforts to
maintain such registration or qualification through the earlier of (A) the date
upon which all Warrants have been exercised or all Warrant Shares have been
resold, as the case may be, under the Warrant Shelf Registration Statement and
(B) the Expiration Date; provided, however, that the Company shall not be
required to (i) qualify as a foreign corporation or as a broker or a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Section 5, (ii) file any general consent to service of
process or (iii) subject itself to taxation in any jurisdiction if it is not
otherwise so subject.
6. Accuracy of Disclosure.
The Company (and its successors) represents and warrants to each
Holder (and each beneficial owner of a Warrant or Warrant Share) and agrees for
the benefit of each Holder (and each beneficial owner of a Warrant or Warrant
Share) that, except during any period in which the availability of the Warrant
Registration Statement has been suspended, (i) the Warrant Registration
Statement and the documents incorporated by reference therein will
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not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading; and (ii) the
prospectus delivered to such Holder upon its exercise of Warrants or pursuant to
which such Holder sells its Warrant Shares, as the case may be, and the
documents incorporated by reference therein will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
7. Indemnity.
The Company hereby agrees to indemnify each beneficial owner of a
Warrant and each person, if any, who controls any beneficial owner of a Warrant
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Securities Exchange Act of 1934 (the "Exchange Act"), or is under common
control with, or is controlled by, any beneficial owner of a Warrant (whether or
not it is, at the time the indemnity provided for in this Section 7 is sought,
such a beneficial owner), from and against all losses, damages or liabilities
which such beneficial owner or any such controlling or affiliated person suffers
as a result of any breach, on the date of any exercise of a Warrant by such
beneficial owner or the resale of any Warrant Share by such Holder, in either
case pursuant to the Warrant Registration Statement, of the representations,
warranties or agreements contained in Section 6. Each beneficial owner of a
Warrant Share sold pursuant to a Resale Shelf, by accepting its beneficial
ownership of a Warrant, hereby (i) agrees to provide the Company with
information with respect to it that the Company reasonably requests in
connection with any Resale Shelf and (ii) agrees, severally and not jointly, to
indemnify the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act against any liability incurred by it or
such controlling person as a result of any misstatement of information provided
by such beneficial owner to the Company in writing expressly for inclusion in
the Resale Shelf.
8. Expenses.
All expenses incident to the Company's performance of or compliance
with its obligations under this Agreement will be borne by the Company,
regardless of whether a Registration Statement or Warrant Registration Statement
becomes effective, including without limitation (i) all Commission or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
reasonable fees and expenses incurred in connection with compliance with state
securities or "blue sky" laws, (iii) all reasonable expenses of any persons
incurred by or on behalf of the Company in preparing or assisting in preparing,
word processing, printing and distributing any registration statement, any
prospectus, any amendments or supplements thereto and other documents relating
to the performance of and compliance with this Agreement, (iv) the reasonable
fees (including legal fees and expenses) and disbursements of the Warrant Agent,
(v) the reasonable fees and disbursements of counsel for the Company and
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(vi) the fees and disbursements, if any, of the Auditors but excluding (x) fees
and disbursements of counsel retained by the participating Holders and (y) the
Holders' share of underwriting discounts and commissions.
9. Miscellaneous.
(a) No Inconsistent Agreements. Each of the Company and the Warrant
Agent represent to the other that it has not entered into, and agrees that on or
after the date of this Agreement it will not enter into, any agreement which is
inconsistent with the rights granted to the Holders of Warrants or Warrant
Shares in this Agreement or otherwise conflicts with the provisions hereof. The
Company represents that the rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's other issued and outstanding securities under any
agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company and the Warrant Agent have obtained the
written consent of Holders of at least a majority of the outstanding Warrants
affected by such amendment, modification, supplement, waiver or consent;
provided that any amendment, modification or supplement to this Agreement which,
in the good faith opinion of the Board of Directors of the Company (and
evidenced by a resolution of such board), does not adversely affect any Holder,
shall not be subject to such requirement for written consent.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or any courier guaranteeing overnight delivery (i)
if to a Holder, at the most current address given by such Holder to the Company
by means of a notice given in accordance with the provisions of this Section
9(c); (ii) if to the Company, initially at the Company's address set forth in
the Indenture and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 9(c); and (iii) if to the Warrant
Agent, initially at the Warrant Agent address set forth in the Indenture and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 9(c).
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 receipt is acknowledged, if telecopied; and on the next business day if
timely delivered to an air courier guaranteeing overnight delivery.
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(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation, subsequent Holders; provided that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Warrants in violation of the terms of the Purchase Agreement or
the Warrant Agreement. If any transferee of any Holder shall acquire Warrants,
in any manner, whether by operation of law or otherwise, such Warrants shall be
held subject to all of the terms of this Agreement and the Warrant Agreement,
and by taking and holding such Warrants 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 or the Warrant Agreement and such person shall be entitled to
receive the benefits hereof.
(e) Purchases and Sales of Warrants. The Company shall not, and
shall use its best efforts to cause its affiliates (as defined in Rule 405 under
the Securities Act) not to, purchase and then resell or otherwise transfer any
Warrants other than Warrants acquired and cancelled.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Warrant Agent, and each Holder 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 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 the laws of
the State of New York.
(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) Waiver of Immunity. To the extent that the Company has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgement,
attachment in aid of execution,
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execution or otherwise) with respect to itself or its property, it hereby
irrevocably waives such immunity in respect of their obligations under this
Agreement to the fullest extent permitted by law.
(l) Initial Public Offering. Notwithstanding anything to the
contrary herein contained, if the Company conducts an initial public offering of
equity securities (other than nonconvertible preferred shares), the Company will
give the Holders the opportunity to convert such Warrants into warrants to
purchase such equity securities (other than nonconvertible preferred shares) and
such Warrant Shares into such equity securities (other than nonconvertible
preferred shares). Such conversion opportunity will be on terms and conditions
determined to be fair and reasonable by the Company's Board of Directors.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
LONG DISTANCE INTERNATIONAL INC.
By ______________________________
Name:
Title:
THE BANK OF NEW YORK
By ______________________________
Name:
Title:
