EXHIBIT 4.3
EXECUTION COPY
------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated February 18, 1998
between
ECONOPHONE, INC.
and
XXXXXX XXXXXXX & CO. INCORPORATED
--------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into February 18, 1998, between ECONOPHONE, INC., a Delaware
corporation (the "Company"), and XXXXXX XXXXXXX & CO. INCORPORATED (the
"Placement Agent").
This Agreement is made pursuant to the Placement Agreement, dated
February 12, 1998, between the Company and the Placement Agent (the
"Placement Agreement"), which provides for the sale by the Company to the
Placement Agent of an aggregate principal amount at maturity of $300,000,000
of the Company's 11% Senior Discount Notes due 2008 (collectively, the
"Notes"). In order to induce the Placement Agent to enter into the Placement
Agreement, the Company has agreed to provide to the Placement Agent and its
direct and indirect transferees the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing
under the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Accreted Value" shall have the meaning specified in the Indenture.
"Business Day" shall have the meaning specified in the Indenture.
"Closing Date" shall mean the Closing Date as defined in the
Placement Agreement.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities pursuant to Section 2(a)
hereof.
"Exchange Offer Registration" shall mean a registration under the
1933 Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Exchange Securities" shall mean securities issued by the Company
under the Indenture containing terms identical to the Notes (except that (i)
interest thereon shall accrue from the last date on which interest was paid
on the Notes or, if no such interest has been paid, from February 15, 2003,
and (ii) the Exchange Securities will not provide for an increase in the rate
of interest payable semiannually in cash and will not contain restrictions on
transfer) and to be offered to Holders of Notes in exchange for Notes
pursuant to the Exchange Offer.
"Holder" shall mean the Placement Agent, for so long as it owns any
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities
under the Indenture; provided that for purposes of Sections 4 and 5 of this
Agreement, the term "Holder" shall include Participating Broker-Dealers (as
defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the Notes dated as
of February 18, 1998 between the Company and The Bank of New York, as
trustee, and as the same may be amended from time to time in accordance with
the terms thereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount at maturity of outstanding Registrable Securities;
provided that whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or any of its affiliates (as such term is
defined in Rule 405 under the Securities Act) (other than the Placement Agent
or subsequent holders of Registrable Securities if such subsequent holders
are deemed to be such affiliates solely by reason of their holding of such
Registrable Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage or
amount.
"Person" shall mean an individual, partnership, corporation,
limited liability company, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Placement Agent" shall have the meaning set forth in the preamble.
"Placement Agreement" shall have the meaning set forth in the
preamble.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to such prospectus, and in each case
including all material incorporated by reference therein.
"Registrable Securities" shall mean the Notes; provided, however,
that the Notes shall cease to be Registrable Securities (i) when a
Registration Statement with respect to such Notes shall have been declared
effective under the Securities Act and such Notes shall have been disposed of
or exchanged pursuant to such Registration Statement, (ii) when such Notes
have been sold to the public pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the Securities Act or (iii)
when such Notes shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of one counsel for any
underwriters or Holders in connection with blue sky qualification of any of
the Exchange Securities or Registrable Securities), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements
and other documents relating to the performance of and compliance with this
Agreement, in each case to the extent not paid or payable by any other
person, (iv) all rating agency fees, (v) all fees and disbursements relating
to the qualification of the Indenture under applicable securities laws, (vi)
the fees and disbursements of the Trustee and its counsel, (vii) the fees and
disbursements of counsel for the Company and, in the case of a Shelf
Registration Statement, the reasonable fees and disbursements of one counsel
for the Holders (which counsel shall be selected by the Majority Holders and
which counsel may also be counsel for the Placement Agent) and (viii) the
fees and disbursements of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, but excluding
fees and expenses of counsel to the underwriters (other than fees and
expenses set forth in clause (ii) above) or the Holders (other than fees and
expenses set forth in clause (vii) above) or accountants to the Holders and
underwriting discounts and commissions and transfer taxes, if any, relating
to the sale, disposition or exchange of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of
the Company that covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement and all amendments
and supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Semi-Annual Accrual Date" shall have the meaning specified in the
Indenture.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the Registrable Securities (but no other
securities unless approved by the Majority Holders whose Registrable
Securities are covered by such Shelf Registration Statement) on an
appropriate form under Rule 415 under the Securities Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the Notes under
the Indenture.
"Underwritten Registration" or "Underwritten Offering" shall mean a
registration in which Registrable Securities are sold to an Underwriter (as
defined in Section 3 hereof) for reoffering to the public.
2. Registration Under the Securities Act.
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the Staff of the SEC, the Company shall use its
best efforts to cause to be filed an Exchange Offer Registration Statement
covering the offer by the Company to the Holders to exchange all of the
Registrable Securities for Exchange Securities and to have such Registration
Statement remain effective until the closing of the Exchange Offer. The
Company shall commence the Exchange Offer promptly after the Exchange Offer
Registration Statement has been declared effective by the SEC and use its
best efforts to have the Exchange Offer consummated not later than 60 days
after such effective date. The Company shall commence the Exchange Offer by
mailing the related exchange offer Prospectus and accompanying documents to
each Holder stating, in addition to such other disclosures as are required by
applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities
validly tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a period
of at least 20 Business Days from the date such notice is mailed) (the
"Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Security exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Security, together with the enclosed letters of transmittal,
to the institution and at the address (located in the Borough of
Manhattan, The City of New York) specified in the notice prior to the
close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election, not
later than the close of business on the last Exchange Date, by sending
to the institution and at the address (located in the Borough of
Manhattan, The City of New York) specified in the notice a telegram,
telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount at maturity of Registrable Securities
delivered for exchange and a statement that such Holder is withdrawing
his election to have such Notes exchanged.
As soon as practicable after the last Exchange Date, the Company
shall:
(i) accept for exchange Registrable Securities or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted
for exchange by the Company and issue, and cause the Trustee to promptly
authenticate and mail to each Holder, an Exchange Security equal in
principal amount at maturity to the principal amount at maturity of the
Registrable Securities surrendered by such Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the
Securities Act, the Exchange Act and other applicable laws and regulations in
connection with the Exchange Offer. The Exchange Offer shall not be subject
to any conditions, other than that the Exchange Offer does not violate
applicable law or any applicable interpretation of the Staff of the SEC. The
Company shall inform the Placement Agent of the names and addresses of the
Holders to whom the Exchange Offer is made, and the Placement Agent shall
have the right, subject to applicable law, to contact such Holders and
otherwise facilitate the tender of Registrable Securities in the Exchange
Offer.
(b) In the event that (i) the Company determines that the Exchange
Offer Registration provided for in Section 2(a) above is not available or may
not be consummated as soon as practicable after the last Exchange Date
because it would violate applicable law or the applicable interpretations of
the Staff of the SEC, (ii) the Exchange Offer is not for any other reason
consummated by the date that is six months after the Closing Date or (iii)
the Exchange Offer has been completed and in the written opinion of counsel
for the Placement Agent a Registration Statement must be filed and a
Prospectus must be delivered by the Placement Agent in connection with any
offering or sale of Registrable Securities (other than in situations covered
by Section 2(f) below), the Company shall use its best efforts to cause to be
filed as soon as practicable after such determination, date or notice of such
opinion of counsel is given to the Company, as the case may be, a Shelf
Registration Statement providing for the sale by the
Holders of all of the Registrable Securities, in the case of clause (i) or
(ii) above, or by the Placement Agent, in the case of clause (iii) above, and
to have such Shelf Registration Statement declared effective by the SEC.
Subject to the penultimate paragraph of Section 3 hereof, the Company agrees
to use its best efforts to keep the Shelf Registration Statement continuously
effective until the second anniversary of the Closing Date or such shorter
period that will terminate when all of the Registrable Securities covered by
the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or all of the Notes cease to be Registrable
Securities. The Company further agrees to supplement or amend the Shelf
Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration or if reasonably requested by a
Holder with respect to information relating to such Holder, and, subject to
the penultimate paragraph of Section 3 hereof, to use its best efforts to
cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as thereafter practicable. The Company
agrees to furnish to the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(c) The Company shall pay all Registration Expenses in connection
with the registration pursuant to Section 2(a) or Section 2(b). Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section
2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that, if, after it has been declared
effective, the offering of Registrable Securities pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or
court, such Registration Statement will be deemed not to have become
effective during the period of such interference until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume. If by the date that is six months after the Closing Date the Company
has not consummated the Exchange Offer or caused the Shelf Registration
Statement to be declared effective, interest (in addition to the amount of
original issue discount accruing during the period ending February 15, 2003
and in addition to interest otherwise due on the Notes after such date) will
accrue from August 18, 1998, at a rate of .5% per annum of the Accreted Value
on the preceding Semi-Annual Accrual Date, on the Notes and be payable in
cash semi-annually on February 15 and August 15 of each year, commencing
February 15, 1999, until the consummation of an Exchange Offer or the
effectiveness of the Shelf Registration Statement.
(e) Without limiting the remedies available to the Placement Agent
and the Holders, the Company acknowledges that any failure by the Company to
comply with its obligations under Section 2(a) and Section 2(b) hereof may
result in material irreparable injury to the Placement Agent or the Holders
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any
such
failure, the Placement Agent or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 2(a)
and Section 2(b) hereof.
(f) In the event that, at any time after consummation of the
Exchange Offer or the effectiveness of the Shelf Registration Statement, the
Placement Agent, or any successor thereto, in its opinion, becomes an
Affiliate (as such term is defined in Rule 144 under the Securities Act) of
the Company, or any successor thereto, the Company (or its successor) shall
use its best efforts to cause to be filed as soon as practicable after
receiving notice thereof from the Placement Agent (or its successor) a shelf
registration statement (the "Resales Registration Statement") under the
Securities Act providing for the sale by the Placement Agent (or its
successor) of all Notes or Exchange Securities it acquires from time to time
in connection with market-making activities and to have such shelf
registration statement declared effective by the SEC. The provisions of this
Agreement concerning the Shelf Registration Statement shall apply to any
Resales Registration Statement as if such Resales Registration Statement were
the Shelf Registration Statement filed pursuant to Section 2(b) hereof
(except that the Company (or its successor) will use its best efforts to keep
the Resales Registration Statement effective until the earlier of (i) the
date on which no Notes or Exchange Securities remain outstanding and (ii)
such time as the Placement Agent shall, in its opinion, have ceased to be an
Affiliate of the Company, as evidenced by written notice, which shall be sent
promptly upon such event). Notwithstanding the foregoing, the Company shall
not be required to maintain the effectiveness of any Resales Registration
Statement if the Placement Agent shall have ceased to make a market in the
Notes or the Exchange Securities.
3. Registration Procedures.
In connection with the obligations of the Company with respect to
the Registration Statements pursuant to Section 2(a) and Section 2(b) hereof,
the Company shall as expeditiously as is practicable:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form (x) shall be
selected by the Company and (y) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Securities by
the selling Holders thereof and (z) shall comply as to form in all
material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed
therewith, and use its best efforts to cause such Registration Statement
to become effective and remain effective in accordance with Section 2
hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period and cause each Prospectus to be supplemented by any
required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424 under the Securities Act; to keep each Prospectus
current during the period described under Section 4(3) and Rule 174
under the Securities Act that is
applicable to transactions by brokers or dealers with respect to the
Registrable Notes or Exchange Notes;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to counsel for the Placement Agent, to counsel
for the Holders and to each Underwriter of an Underwritten Offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or
Underwriter may reasonably request, in order to facilitate the public
sale or other disposition of the Registrable Securities; and the Company
consents to the use of such Prospectus and any amendment or supplement
thereto in accordance with applicable law by each of the selling holders
of Registrable Securities and any such Underwriters in connection with
the offering and sale of the Registrable Securities covered by and in
the manner described in such Prospectus or any amendment or supplement
thereto in accordance with applicable law;
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing by the time
the applicable Registration Statement is declared effective by the SEC,
to cooperate with such Holders in connection with any filings required
to be made with the National Association of Securities Dealers, Inc. and
do any and all other acts and things which may be reasonably necessary
or advisable to enable such Holder to consummate the disposition in each
such jurisdiction of such Registrable Securities owned by such Holder;
provided, however, that the Company shall not be required to (i) qualify
as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (ii) file any general consent to service of process
or (iii) subject itself to taxation in any such jurisdiction if it is
not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for the Holders and counsel for the
Placement Agent promptly and, if requested by any such Holder or
counsel, confirm such advice in writing (i) when a Shelf Registration
Statement has become effective and when any post-effective amendment
thereto has been filed and becomes effective, (ii) of any request by the
SEC or any state securities authority for amendments and supplements to
a Shelf Registration Statement and Prospectus or for additional
information after the Shelf Registration Statement has become effective,
(iii) of the issuance by the SEC or any state securities authority of
any stop order suspending the effectiveness of a Shelf Registration
Statement or the initiation of any proceedings for that purpose, (iv)
if, between the effective date of a Shelf Registration Statement and the
closing of any sale of Registrable Securities covered thereby, the
representations and warranties of the Company contained in any
underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to the offering 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 Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose, (v) of the happening of
any event during the period a Shelf Registration Statement is effective
which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which requires the
making of any changes in such Registration Statement or Prospectus in
order to make the statements therein not misleading and (vi) of any
determination by the Company that a post-effective amendment to a
Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment and provide notice as promptly as practicable
to each Holder of the withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of
each Registration Statement and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits
thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
sold and not bearing any restrictive legends and enable such Registrable
Securities to be in such denominations (consistent with the provisions
of the Indenture) and registered in such names as the selling Holders
may reasonably request at least two business days prior to the closing
of any sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 3(e)(v) hereof, use its best efforts to
prepare and file with the SEC a supplement or post-effective amendment
to a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus 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. The Company agrees to notify the Holders to
suspend use of the Prospectus as promptly as practicable after the
occurrence of such an event, and the Holders hereby agree to suspend use
of the Prospectus until the Company has amended or supplemented the
Prospectus to correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of such
document to the Placement Agent and its counsel (and, in the case of a
Shelf Registration Statement, the Holders and their joint counsel) and
make such of the representatives of the Company as shall be reasonably
requested by the Placement Agent
or its counsel (and, in the case of a Shelf Registration Statement, the
Holders or their joint counsel) available for discussion of such
document, and shall not at any time file or make any amendment to the
Registration Statement, any Prospectus or any amendment of or supplement
to a Registration Statement or a Prospectus or file any document which
is to be incorporated by reference into a Registration Statement or a
Prospectus, of which the Placement Agent and its counsel (and, in the
case of a Shelf Registration Statement, the Holders and their counsel)
shall not have previously been advised and furnished a copy or to which
the Placement Agent or its counsel (and, in the case of a Shelf
Registration Statement, the Holders or their counsel) shall reasonably
object without unreasonable delay;
(k) obtain a CUSIP number for all Exchange Securities or
Registrable Securities, as the case may be, not later than the effective
date of a Registration Statement;
(l) cause the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), in connection with the registration
of the Exchange Securities or Registrable Securities, as the case may
be, cooperate with the Trustee and the Holders to effect such changes to
the Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and execute, and use its best
efforts to cause the Trustee to execute, all documents as may be
required to effect such changes and all other forms and documents
required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable
Securities, any Underwriter participating in any disposition pursuant to
such Shelf Registration Statement, and one firm of attorneys and
accountants designated by the Holders, at reasonable times and in a
reasonable manner, all financial and other records, pertinent documents
and properties of the Company as shall reasonably be requested, and
cause the respective 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 Shelf
Registration Statement; provided, however, that any such representative,
Underwriter, attorney or accountant agrees to keep confidential any
records, documents or other information (collectively, "Information")
received from the Company and designated by the Company as confidential
and to use such Information obtained pursuant to this provision only in
connection with the transaction for which such Information was obtained,
and not for any other purpose; provided further, however, that the
foregoing confidentiality obligation shall not apply to the extent that
(i) such Information (x) is available to the public, (y) subject to
clause (z) below, is already in such representative's, Underwriters',
attorney's or accountant's possession prior to receipt from the Company
and such person does not otherwise have any obligation to keep such
Information confidential or (z) is obtained by such representative,
Underwriter, attorney or accountant from a third person who, insofar as
is known to such representative, Underwriter, attorney or accountant
after due inquiry, is not required to keep such Information confidential
or
(ii) disclosure of such Information is required by court or
administrative order after the exhaustion of all appeals therefrom;
(n) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Securities 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 Majority Holders, to the
extent such Registrable Securities satisfy applicable listing
requirements;
(o) if reasonably requested by any Holder of Registrable Securities
covered by a Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information with
respect to such Holder as such Holder reasonably requests to be included
therein and (ii) make all required filings of such Prospectus supplement
or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in
such filing; and
(p) in the case of a Shelf Registration, enter into such customary
agreements and take all such other customary actions in connection
therewith (including those requested by the Holders of a majority of the
Registrable Securities being sold) in order to expedite or facilitate
the disposition of such Registrable Securities including, but not
limited to, an Underwritten Offering and in such connection, (i) to the
extent possible, make such representations and warranties to the Holders
and any Underwriters of such Registrable Securities with respect to the
business of the Company and its subsidiaries, the Registration
Statement, Prospectus and documents incorporated by reference or deemed
incorporated by reference, if any, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested, (ii) obtain
opinions of counsel to the Company (which counsel and opinions, in form,
scope and substance, shall be reasonably satisfactory to the Holders of
a majority in principal amount at maturity of the Registrable Securities
to be sold in such Underwritten Offering and any Underwriters and their
respective counsel) addressed to each selling Holder and Underwriter of
Registrable Securities, covering the matters customarily covered in
opinions requested in underwritten offerings, (iii) obtain "cold
comfort" letters from the independent certified public accountants of
the Company (and, if necessary, any other certified public accountant of
any subsidiary of the Company, or of any business acquired by the
Company for which financial statements and financial data are or are
required to be included in the Registration Statement) addressed to each
selling Holder and Underwriter of Registrable Securities, such letters
to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten
offerings, and (iv) deliver such documents and certificates as may be
reasonably requested by the Holders of a majority in principal amount at
maturity of the Registrable Securities being sold or the Underwriters,
and which are customarily delivered in underwritten offerings, to
evidence the continued validity of the representations and warranties of
the Company made pursuant to clause (i) above and to evidence compliance
with any customary conditions contained in an underwriting agreement;
provided that the Company shall be required to
use its best efforts to make an Underwritten Offering only upon the
request of Holders of at least (1) 25% of the aggregate principal amount
at maturity of the Registrable Securities outstanding at the time such
request is delivered to the Company and (2) 10% of the aggregate
principal amount at maturity of the Notes outstanding on the date
hereof. In the case of any Underwritten Offering, the Company shall
provide written notice to the Holders of all Registrable Securities of
such Underwritten Offering at least 30 days prior to the filing of a
prospectus supplement for such Underwritten Offering, (y) specifying a
date, which shall be no earlier than 10 days following the date of such
notice, by which each such Holder must inform the Company of its intent
to participate in such Underwritten Offering and (z) including the
instructions such Holder must follow in order to participate in such
Underwritten Offering.
In the case of a Shelf Registration Statement, the Company may
require each Holder of Registrable Securities to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder
of such Registrable Securities as the Company may from time to time
reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e)(v) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to a
Shelf Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and,
if so directed by the Company, such Holder will deliver to the Company (at
its expense) all copies in its possession, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. If the Company
shall give any such notice to suspend the disposition of Registrable
Securities pursuant to a Shelf Registration Statement, the Company shall
extend the period during which the Shelf Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during
the period from and including the date of the giving of such notice to and
including the date when the Holders shall have received copies of the
supplemented or amended Prospectus necessary to resume such dispositions. In
addition, the Company may, for a good-faith business purpose, provide the
Holders with notice of the suspension of the disposition of Registrable
Securities pursuant to a Shelf Registration Statement. The Company may give
any such notice pursuant to the preceding sentence only twice during any 365
day period and any such suspensions may not exceed 30 days for each
suspension and there may not be more than two suspensions in effect during
any 365 day period (which may be cumulative).
The Holders of Registrable Securities covered by a Shelf
Registration Statement who desire to do so may sell such Registrable
Securities in an Underwritten Offering, subject to such terms and conditions
as shall be established by the Underwriters thereof. In any such
Underwritten Offering, the investment banker or investment bankers and
manager or managers (the "Underwriters") that will administer the offering
will be selected by the Majority Holders of the Registrable Securities
included in such offering, subject to the approval of the Company, which
approval shall not be unreasonably withheld.
4. Participation of Broker-Dealers in Exchange Offer.
(a) The Staff of the SEC has taken the position that any
broker-dealer that receives Exchange Securities for its own account in the
Exchange Offer in exchange for Notes that were acquired by such broker-dealer
as a result of market-making or other trading activities (a "Participating
Broker-Dealer"), may be deemed to be an "underwriter" within the meaning of
the Securities Act and must deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such Exchange Securities.
The Company understands that it is the position of the Staff of the
SEC that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers may resell the
Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus
may be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligation under the Securities Act in connection with resales of
Exchange Securities for their own accounts, so long as the Prospectus
otherwise meets the requirements of the Securities Act.
(b) In light of the above, notwithstanding the other provisions of
this Agreement, the Company agrees that the provisions of this Agreement as
they relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such reasonable modifications thereto as
may be, reasonably requested by the Placement Agent or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below,
in order to expedite or facilitate the disposition of any Exchange Securities
by Participating Broker-Dealers consistent with the positions of the Staff
recited in Section 4(a) above; provided that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as
would otherwise be contemplated by Section 3(i), for a period exceeding
180 days after the last Exchange Date (as such period may be extended
pursuant to the penultimate paragraph of Section 3 of this Agreement)
and Participating Broker-Dealers shall not be authorized by the Company
to deliver and shall not deliver such Prospectus after such period in
connection with the resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set forth
in Section 3 of this Agreement to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the
Securities Act and the rules and regulations thereunder, will be in
conformity with the reasonable request to the Company by the Placement
Agent or with the reasonable request in writing to the Company by one or
more broker-dealers who certify to the Placement Agent and the Company
in writing that they anticipate that they will be Participating
Broker-Dealers; and provided further that, in connection with such
application of the Shelf Registration procedures set forth in Section 3
to an Exchange Offer Registration, the Company shall be obligated (x) to
deal only with one entity representing the Participating Broker-Dealers
as a whole, which shall be the Placement Agent unless it elects not to
act as such representative, (y) to pay the
fees and expenses of only one counsel representing the Participating
Broker-Dealers, which shall be counsel to the Placement Agent unless
such counsel elects not to so act and (z) to cause to be delivered only
one, if any, "cold comfort" letter with respect to the Prospectus in the
form existing on the last Exchange Date and with respect to each
subsequent amendment or supplement, if any, effected during the period
specified in clause (i) above.
(c) The Placement Agent shall have no liability to the Company or
any Holder with respect to any request that it may make pursuant to Section
4(b) above.
5. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the
Placement Agent, each Holder and each person, if any, who controls the
Placement Agent or any Holder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, or is under common control
with, or is controlled by, the Placement Agent or any Holder, from and
against all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by the Placement
Agent, any Holder or any such controlling or affiliated person in connection
with defending or investigating any such action or claim) caused by any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement (or any amendment thereto) pursuant to which
Exchange Securities or Registrable Securities were registered under the
Securities Act, including all documents incorporated therein by reference, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or caused by any untrue statement or alleged untrue statement of
a material fact contained in any Prospectus (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
necessary to make the statements therein in light of the circumstances under
which they were made not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to the
Placement Agent or any Holder furnished to the Company in writing by the
Placement Agent or any selling Holder expressly for use therein. In
connection with any Underwritten Offering permitted by Section 3, the Company
will also indemnify the Underwriters, if any, selling brokers, dealers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons
(within the meaning of the Securities Act and the Exchange Act) to the same
extent as provided above with respect to the indemnification of the Holders,
if requested in connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Placement Agent and the other selling
Holders, and each of their respective directors, officers who sign the
Registration Statement and each Person, if any, who controls the Company, the
Placement Agent and any other selling Holder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to the Placement
Agent and the Holders, but only
with reference to information relating to such Holder furnished to the
Company in writing by such Holder expressly for use in any Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b)
above, such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for (a) the reasonable fees and expenses of
more than one separate firm (in addition to any one firm of local counsel in
each applicable jurisdiction) for the Placement Agent and all persons, if
any, who control the Placement Agent within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, (b) the reasonable
fees and expenses of more than one separate firm (in addition to one firm of
local counsel in each applicable jurisdiction) for the Company, its
directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section
and (c) the reasonable fees and expenses of more than one separate firm (in
addition to one firm of local counsel in each applicable jurisdiction) for
all Holders and all persons, if any, who control any Holders within the
meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred, to the extent not being contested by the
indemnifying party in good faith. In such case involving the Placement Agent
and persons who control the Placement Agent, such firm shall be designated in
writing by the Placement Agent. In such case involving the Holders and such
persons who control Holders, such firm shall be designated in writing by the
Majority Holders. In all other cases, such firm shall be designated by the
Company. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for reasonable fees
and expenses of counsel as contemplated by the second and third sentences of
this paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party for such fees and expenses of
counsel in
accordance with such request prior to the date of such settlement, unless
such fees and expenses of counsel are disputed by the indemnifying party in
good faith. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which such indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company and the Holders shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the
Holders and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Holders' respective obligations to contribute pursuant to this Section 5(d)
are several in proportion to the respective principal amount at maturity of
Registrable Securities of such Holder that were registered pursuant to a
Registration Statement.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro
rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at
which Registrable Securities were sold by such Holder exceeds the amount of
any damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. 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 guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 5 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any indemnified party
at law or in equity.
The indemnity and contribution provisions contained in this Section
5 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Placement Agent, any Holder or any person
controlling the Placement Agent or any Holder, or by or on behalf of the
Company, its officers or directors or any person controlling the Company,
(iii) acceptance of any of the Exchange Securities and (iv) any sale of
Registrable Securities pursuant to a Shelf Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered into,
and on or after the date of this Agreement will not enter into, any agreement
which is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions
hereof. 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 such
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 has obtained the written consent
of Holders of at least a majority in aggregate principal amount at maturity
of the outstanding Registrable Securities affected by such amendment,
modification, supplement, waiver or consent; provided, however, that no
amendment, modification, supplement, waiver or consents to any departure from
the provisions of Section 5 hereof shall be effective as against any Holder
of Registrable Securities unless consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, 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 6(c), which address initially is, with respect to the
Placement Agent, the address set forth in the Placement Agreement; and (ii)
if to the Company, initially at the Company's address set forth in the
Placement Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 6(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 answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next business day if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the person giving the same to the Trustee, at
the address specified in the Indenture.
(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 and without the need for
an express assignment, subsequent Holders; provided that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the
Placement Agreement. If any transferee of any Holder shall acquire
Registrable Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable
Securities such person shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement and
such person shall be entitled to receive the benefits hereof. The Placement
Agent (in its capacity as Placement Agent) shall have no liability or
obligation to the Company with respect to any failure by any other Holder to
comply with, or any breach by any other Holder of, any of the obligations of
such Holder under this Agreement.
(e) Purchases and Sales of Notes. 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 Notes.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the
one hand, and the Placement Agent, on the other hand, and shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
ECONOPHONE, INC.
By /s/ XXXX X. XXXX
---------------------------
Name: Xxxx X. Xxxx
Title: President and Chief Operating Officer
Confirmed and accepted as of
the date first above written:
XXXXXX XXXXXXX & CO. INCORPORATED
By /s/ XXXXX X. XXXXX
-------------------------------
Name: Xxxxx X. Xxxxx
Title: Principal
