NOTES REGISTRATION RIGHTS AGREEMENT
Dated as of April 2, 1998
among
Convergent Communications, Inc.,
Issuer
and
Xxxxxxx Xxxxx & Co.,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated,
Bear, Xxxxxxx & Co. Inc.,
BT Alex. Xxxxx Incorporated
Initial Purchasers
TABLE OF CONTENTS
PAGE
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1933 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1934 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Exchange Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Exchange Offer Registration. . . . . . . . . . . . . . . . . . . . . . . 2
Exchange Offer Registration Statement. . . . . . . . . . . . . . . . . . 2
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Majority Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Original Issue Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Registrable Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Registration Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . 4
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Shelf Registration Statement . . . . . . . . . . . . . . . . . . . . . . 4
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. Registration Under the 1933 Act . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Exchange Offer Registration . . . . . . . . . . . . . . . . . . . . 4
(b) Shelf Registration. . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Effective Registration Statement. . . . . . . . . . . . . . . . . . 8
(e) Accrual and Payment of Additional In. . . . . . . . . . . . . . . . 9
(f) Specific Enforcement. . . . . . . . . . . . . . . . . . . . . . . . 10
3. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4. Underwritten Registrations. . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. Indemnification and Contribution. . . . . . . . . . . . . . . . . . . . . . . 18
6. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Rule 144 and Rule 144A. . . . . . . . . . . . . . . . . . . . . . . 22
(b) No Inconsistent Agreements. . . . . . . . . . . . . . . . . . . . . 22
(c) Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . 22
(d) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(e) Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 23
(f) Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . 23
(g) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(h) Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(i) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
NOTES REGISTRATION RIGHTS AGREEMENT
THIS NOTES REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and
entered into as of April 2, 1998, by and among CONVERGENT COMMUNICATIONS, INC.,
a Colorado corporation (the "COMPANY"), and XXXXXXX XXXXX & CO., XXXXXXX LYNCH,
PIERCE, XXXXXX & XXXXX INCORPORATED ("XXXXXXX XXXXX"), BEAR, XXXXXXX & CO.
INC.("BEAR, XXXXXXX") and BT ALEX. XXXXX INCORPORATED ("BT" and, together with
Xxxxxxx Xxxxx and Bear, Xxxxxxx, the "INITIAL PURCHASERS").
This Agreement is made pursuant to the Purchase Agreement dated March
26, 1998 among the Company and the Initial Purchasers (the "PURCHASE
AGREEMENT"), with respect to the issue and sale by the Company and the purchase
by the Initial Purchasers of the respective number of the Company's Units (the
"UNITS"), each Unit consisting of $1,000 principal amount of the Company's 13%
Senior Notes due 2008 (the "NOTES") and four warrants (the "WARRANTS"), each
Warrant initially entitling the holder thereof to purchase 2.7 shares of common
stock, no par value (the "COMMON STOCK"), of the Company. In order to induce
the Initial Purchasers to enter into the Purchase Agreement, the Company has
agreed to provide to the Initial Purchasers and their respective direct and
indirect transferees and assigns the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
closing under the Purchase 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:
"1933 ACT" shall mean the Securities Act of 1933, as amended from time
to time, and the rules and regulations of the SEC promulgated thereunder.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"DEPOSITARY" shall mean The Depository Trust Company, or any other
depositary appointed by the Issuer; PROVIDED, HOWEVER, that any such
depositary must have an address in the Borough of Manhattan, in the City of
New York.
"EXCHANGE NOTES" shall mean 13% Series B Senior Notes due 2008 of the
Company, issued under the Indenture containing terms identical to the
respective Notes (except that (i) interest on the Exchange Notes shall
accrue from the last date on which interest was paid on the Notes or, if no
such interest has been paid, from April 2,
1998, (ii) the transfer restrictions thereon shall be eliminated and
(iii) certain provisions relating to payment of additional interest
shall be eliminated) to be offered to Holders of Notes in exchange for
Notes pursuant to the Exchange Offer.
"EXCHANGE OFFER" shall mean the exchange offer by the Company of
Exchange Notes for Registrable Notes 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.
"HOLDERS" shall mean the Initial Purchasers, for so long as they own
any Registrable Notes, and each of their respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Notes under the Indenture.
"INDENTURE" shall mean the Indenture relating to the Notes dated as of
April 2, 1998, between the Company and Norwest Bank Colorado, N.A., as
trustee (the "TRUSTEE"), and as the same may be amended from time to time
in accordance with the terms thereof.
"INITIAL PURCHASERS" shall have the meaning set forth in the preamble
of this Agreement.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of Registrable Notes outstanding; PROVIDED that
whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by the
Company or any of its affiliates (as such term is defined in Rule 405 under
the 0000 Xxx) shall be disregarded in determining whether such consent or
approval was given by the Holders of such required percentage or amount.
"ORIGINAL ISSUE DATE" shall mean the date of original issuance of the
Notes.
"PERSON" shall mean any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
2
"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 Notes covered by a Shelf Registration Statement,
and by all other amendments and supplements to a prospectus, including
post-effective amendments, and in each case including all material
incorporated by reference therein.
"PURCHASE AGREEMENT" shall have the meaning set forth in the preamble
of this Agreement.
"REGISTRABLE NOTES" shall mean the Notes; PROVIDED, HOWEVER, that the
Notes shall cease to be Registrable Notes when (i) a Registration Statement
with respect to such Notes shall have been declared effective under the
1933 Act and such Notes shall have been disposed of pursuant to such
Registration Statement, (ii) such Notes shall have been sold to the public
pursuant to Rule 144 (or any similar provision then in force, but not Rule
144A) under the 1933 Act, (iii) such Notes shall have ceased to be
outstanding or (iv) such Notes have been exchanged for Exchange Notes upon
consummation of the Exchange Offer.
"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. ("NASD") registration and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state or
other securities or blue sky laws and compliance with the rules of the NASD
(including, without limitation, reasonable fees and disbursements of United
States and local counsel for any underwriters and Holders in connection
with state or other securities or blue sky qualification of any of the
Exchange Notes or Registrable Notes), (iii) all expenses (including without
limitation all word processing, duplicating and printing expenses,
messenger and delivery expenses) of any Persons in preparing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales
agreements, certificates representing the Exchange Notes and other
documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) all fees and expenses incurred
in connection with the listing, if any, of any of the Registrable Notes on
any securities exchange or exchanges, (vi) all fees and disbursements
relating to the qualification of the Indenture under applicable securities
laws, (vii) the reasonable fees and disbursements of counsel for the Issuer
and of the independent public accountants of the Issuer, including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance, (viii) premiums and other
costs of policies of insurance against liabilities arising out of the
public offering of the
3
Registrable Notes being registered, (ix) the fees and expenses of a
"qualified independent underwriter" as defined by Conduct Rule 2720 of
the NASD, if required by the NASD rules, in connection with the offering
of the Registrable Notes, and (x) the reasonable fees and expenses of
the Trustee, including its counsel, and any escrow agent or custodian.
Notwithstanding the foregoing, the holders of the Registrable Notes
being registered shall pay all agency or brokerage fees and commissions
and underwriting discounts and commissions attributable to the sale of
such Registrable Notes and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or
jointly), other than in the case of a Shelf Registration Statement under
Section 2(b) hereof, the reasonable fees and disbursements of (A) one
counsel for the Holders (which counsel shall be selected by a majority
of the Holders and may be counsel for the Initial Purchasers) and (B)
experts retained by the Company in connection with any Registration
Statement, transfer taxes on resale of any of the Registrable Notes by
such holders and any advertising expenses customarily required to be
paid by issuers or sellers of securities.
"REGISTRATION STATEMENT" shall mean any registration statement of the
Issuer which covers any of the Exchange Notes or Registrable Notes 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.
"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 Notes on an appropriate form
under Rule 415 under the 1933 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 under the Indenture.
2. REGISTRATION UNDER THE 1933 ACT. (a) EXCHANGE OFFER
REGISTRATION. To the extent not prohibited by any applicable law or applicable
interpretation of the staff of the SEC, the Company shall (A) file an Exchange
Offer Registration Statement with the SEC within 90 days after the Original
Issue
4
Date covering the offer by the Company to the Holders to exchange Exchange
Notes for all of their Registrable Notes, (B) use its best efforts to cause
such Exchange Offer Registration Statement to be declared effective under the
1933 Act within 150 days after the Original Issue Date and (C) use its best
efforts to consummate the Exchange Offer within 180 days after the Original
Issue Date. Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Exchange Offer, it being
the objective of such Exchange Offer to enable each Holder (other than
Participating Broker-Dealers (as defined in Section 3(f))) eligible and
electing to exchange Registrable Notes for Exchange Notes (assuming that such
Holder is not an affiliate of the Issuer within the meaning of Rule 405 under
the 1933 Act, acquires the Exchange Notes in the ordinary course of such
Holder's business and has no arrangements or understandings with any person
to participate in the Exchange Offer for the purpose of distributing the
Exchange Notes) to trade such Exchange Notes from and after their receipt
without any limitations or restrictions under the 1933 Act and without
material restrictions under the securities laws of a substantial proportion
of the several states of the United States.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Exchange Offer open for not less than 20 business days
after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) use the services of the Depositary for the Exchange Offer
with respect to Notes evidenced by global certificates;
(iv) permit Holders to withdraw tendered Registrable Notes at any
time prior to the close of business, New York City time, on the last
business day on which the Exchange Offer shall remain open, by sending
to the institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Registrable Notes delivered for exchange, and a statement that
such Holder is withdrawing its election to have such Notes exchanged; and
(v) otherwise comply with all applicable laws relating to the
Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the
Company shall:
(i) accept for exchange Registrable Notes duly tendered and not
validly
5
withdrawn pursuant to the Exchange Offer in accordance with the
terms of the Exchange Offer Registration Statement and the letter of
transmittal which is an exhibit thereto;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes so accepted for exchange by the Company;
and
(iii) cause the Trustee promptly to authenticate and deliver
Exchange Notes to each Holder of Registrable Notes equal in principal
amount to the principal amount of the Registrable Notes of such Holder so
accepted for exchange.
Interest will accrue on each Exchange Note exchanged for a Note
from the last date on which interest was paid on the Notes surrendered in
exchange therefor. The Exchange Offer shall not be subject to any conditions,
other than (i) that the Exchange Offer, or the making of any exchange by a
Holder, does not violate applicable law or any applicable interpretation of
the staff of the SEC and (ii) the tendering of Registrable Notes in
accordance with the Exchange Offer. Each Holder of Registrable Notes (other
than Participating Broker-Dealers) who wishes to exchange such Registrable
Notes for Exchange Notes in the Exchange Offer shall have represented that
(i) it is not an affiliate (as defined in Rule 405 under the 0000 Xxx) of the
Company, (ii) any Exchange Notes to be received by it were acquired in the
ordinary course of its business, (iii) at the time of the commencement of the
Exchange Offer it has no arrangement with any person to participate in the
distribution (within the meaning of the 0000 Xxx) of the Exchange Notes and
(iv) it shall have made such other representations as may be reasonably
necessary under applicable SEC rules, regulations or interpretations to
render the use of Form S-4 or another appropriate form under the 1933 Act
available. To the extent permitted by law and ascertainable by the Company,
the Company shall inform the Initial Purchasers of the names and addresses of
the Holders to whom the Exchange Offer is made, and the Initial Purchasers
shall have the right to contact such Holders and otherwise facilitate the
tender of Registrable Notes in the Exchange Offer.
(b) SHELF REGISTRATION. (i) If, because of any change in law or
applicable interpretations thereof by the staff of the SEC, the Company is
not permitted to effect the Exchange Offer as contemplated by Section 2(a)
hereof, or (ii) if for any other reason the Exchange Offer is not consummated
within 180 days following the Original Issue Date, or (iii) if any Holder
(other than an Initial Purchaser) is not eligible to participate in the
Exchange Offer or (iv) upon the request of any Initial Purchaser following
the consummation of the Exchange Offer if such Initial Purchaser shall hold
Registrable Notes which it acquired directly from the Company and if such
Initial Purchaser was not permitted, in the opinion of counsel to such
Initial Purchaser, pursuant to applicable law or applicable interpretation of
the staff of the SEC to participate in the Exchange Offer, the Company shall,
at its cost:
(A) as promptly as practicable, file with the SEC a Shelf
Registration Statement relating to the offer and sale of the Registrable
Notes by the Holders
6
from time to time in accordance with the methods of distribution elected
by the Majority Holders of such Registrable Notes and set forth in such
Shelf Registration Statement, and use its best efforts to cause such
Shelf Registration Statement to be declared effective under the Securities
Act within 180 days after the Original Issue Date, PROVIDED THAT, with
respect to Exchange Notes received by a broker-dealer in exchange for any
securities that were acquired by such broker-dealer as a result of market
making or other trading activities, the Company may, if permitted by
current interpretations by the Commission's staff, file a post-effective
amendment to the Exchange Offer Registration Statement containing the
information required by Regulation S-K Items 507 and/or 508, as
applicable, in satisfaction of its obligations under this paragraph (A)
solely with respect to broker-dealers who acquired their Notes as a result
of market making or other trading activities, and any such Exchange Offer
Registration Statement, as so amended, shall be referred to herein as, and
governed by the provisions herein applicable to, a Shelf Registration
Statement. In the event that the Company is required to file a Shelf
Registration Statement upon the request of any Holder (other than an
Initial Purchaser) not eligible to participate in the Exchange Offer
pursuant to clause (iii) above or upon the request of any Initial Purchaser
pursuant to clause (iv) above, the Company shall file and use its best
efforts to have declared effective by the SEC both an Exchange Offer
Registration Statement pursuant to Section 2(a) with respect to all
Registrable Notes and a Shelf Registration Statement (which may be a
combined Registration Statement with the Exchange Offer Registration
Statement) with respect to offers and sales of Registrable Notes held by
such Holder or such Initial Purchaser, as applicable, after completion of
the Exchange Offer;
(B) use its best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of two years after its
effective date (or until one year after the effective date of the Shelf
Registration Statement if such Shelf Registration Statement is filed upon
the request of any Initial Purchaser pursuant to clause (iv) above) or such
shorter period which will terminate when all of the Registrable Notes
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement; and
(C) notwithstanding any other provisions hereof, use its best efforts
to ensure that (i) any Shelf Registration Statement and any amendment
thereto and any Prospectus forming a part thereof and any supplement
thereto complies in all material respects with the 1933 Act and the rules
and regulations thereunder, (ii) any Shelf Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and (iii) any Prospectus forming part of any Shelf Registration
Statement, and any supplement to such Prospectus (as amended or
supplemented from time to time), does not include an untrue statement of a
material fact or omit to state a material fact necessary in order
7
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
The Company further agrees, if necessary, to supplement or amend
the Shelf Registration Statement if reasonably requested by the Majority
Holders with respect to information relating to the Holders and otherwise as
required by Section 3(b) below, to use all reasonable efforts to cause any
such amendment to become effective and such Shelf Registration to become
usable as soon as practicable thereafter and to furnish to the Holders of
Registrable Notes copies of any such supplement or amendment promptly after
its being used or filed with the SEC.
(c) EXPENSES. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) and 2(b) and, in the
case of any Shelf Registration Statement, will reimburse the Holders or the
Initial Purchasers for the reasonable fees and disbursements of one counsel (in
addition to any local counsel) designated in writing by the Majority Holders to
act as counsel for the Holders of the Registrable Notes in connection therewith.
Each Holder shall pay all expenses of its counsel other than as set forth in the
preceding sentence, underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable Notes
pursuant to the Shelf Registration Statement.
(d) EFFECTIVE REGISTRATION STATEMENT. (i) The Company will be
deemed not to have used its best efforts to cause a Registration Statement to
become, or to remain, effective during the requisite periods set forth herein
if the Company takes any action that could reasonably be expected to result
in any such Registration Statement not being declared effective or in the
Holders of Registrable Notes covered thereby not being able to exchange or
offer and sell such Registrable Notes during that period unless (A) such
action is required by applicable law or (B) such action is taken by the
Company in good faith and for valid business reasons (but not including
avoidance of the Company's obligations hereunder), including a material
corporate transaction, so long as the Company promptly complies with the
requirements of Section 3(k) hereof, if applicable.
(ii) 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 Notes pursuant to a 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 been effective during the
period of such interference, until the offering of Registrable Notes pursuant
to such Registration Statement may legally resume.
8
(iii) During any 365-day period, the Company may suspend the
availability of a Shelf Registration Statement and the use of the related
Prospectus, as provided in Section 3(e)(vi) and the penultimate paragraph of
Section 3 hereof, for up to two periods of up to 45 consecutive days (except
for the consecutive 45-day period immediately prior to maturity of the
Notes), but no more than an aggregate 60 days during any 365-day period, if
any event shall occur as a result of which it shall be necessary, in the good
faith determination of the board of directors of the Company, to amend the
Shelf Registration Statement or amend or supplement any prospectus or
prospectus supplement thereunder in order that each such document not include
any untrue statement of fact or omit to state a material fact necessary to
make the statements therein not misleading in light of the circumstances
under which they were made.
(e) ACCRUAL AND PAYMENT OF ADDITIONAL INTEREST. In the event that
(i) the Exchange Offer Registration Statement is not filed with the SEC on or
prior to the 90th calendar day following the Original Issue Date, (ii) the
Exchange Offer Registration Statement is not declared effective on or prior
to the 150th calendar day following the Original Issue Date, (iii) the
Exchange Offer is not consummated or, if required, a Shelf Registration
Statement with respect to the Notes is not declared effective on or prior to
the 180th calendar day following the Original Issue Date or (iv) the Exchange
Offer Registration Statement or the Shelf Registration Statement is declared
effective but thereafter ceases to be effective or usable except in
accordance with Section 2(d)(iii) hereof (each event referred to in clauses
(i) through (iv) above, a "REGISTRATION DEFAULT"), then the Company shall pay
additional interest on the Notes (in addition to the interest otherwise due
on the Notes) in cash in arrears on each Interest Payment Date (as defined in
the Indenture) in an amount equal to one-half of one percent (0.5%) per annum
of the principal amount of the Notes, with respect to the first 90-day period
following such Registration Default. The amount of such additional interest
will increase by an additional one-half of one percent (0.5%) to a maximum of
one and one-half percent (1.5%) per annum for each subsequent 90-day period
until such Registration Default has been cured. Upon (w) the filing of the
Exchange Offer Registration Statement after the 90-day period described in
clause (i) above, (x) the effectiveness of the Exchange Offer Registration
Statement after the 150-day period described in clause (ii) above, (y) the
consummation of the Exchange Offer or the effectiveness of a Shelf
Registration Statement, as the case may be, after the 180-day period
described in clause (iii) above, or (z) the cure of any Registration Default
described in clause (iv) above, such additional interest shall cease to
accrue on the Notes from the date of such filing, effectiveness, consummation
or cure, as the case may be, if the Company is otherwise in compliance with
this paragraph; PROVIDED, HOWEVER, that if, after any such additional
interest ceases to accrue, a different event specified in clause (i), (ii),
(iii) or (iv) above occurs, such additional interest shall begin to accrue
again pursuant to the foregoing provisions.
The Company shall notify the Trustee within five business days after
each event specified in clause (i), (ii), (iii) or (iv) above. The Company
shall pay the additional interest
9
due on the Registrable Notes by depositing with the Trustee, in trust, for
the benefit of the Holders thereof, by 12:00 noon, New York City time, on or
before the applicable semi-annual Interest Payment Date for the Registrable
Notes, immediately available funds in sums sufficient to pay the additional
interest then due. The additional interest amount due shall be payable on
each Interest Payment Date to the record Holder of Registrable Notes entitled
to receive the interest payment to be made on such date as set forth in the
Indenture
(f) SPECIFIC ENFORCEMENT. Without limiting the remedies available
to the Initial Purchasers and the Holders, the Company acknowledges that any
failure by it to comply with its obligations under Sections 2(a) and 2(b)
hereof may result in material irreparable injury to the Initial Purchasers 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 Initial Purchasers or any Holder may obtain
such relief as may be required to specifically enforce the Company's
obligations under Sections 2(a) and 2(b).
3. REGISTRATION PROCEDURES. In connection with the obligations
of the Company with respect to the Registration Statements pursuant to
Sections 2(a) and 2(b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement, within
the time period specified in Section 2, on the appropriate form under the
1933 Act, which form (i) shall be selected by the Company, (ii) shall, in
the case of a Shelf Registration, be available for the sale of the
Registrable Notes by the selling Holders thereof and (iii) shall comply as
to form in all material respects with the requirements of the applicable
form and include or incorporate by reference 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 under
applicable law to keep such Registration Statement effective for the
applicable period; cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 under the 1933 Act; and comply with the provisions of the 1933 Act with
respect to the disposition of all securities covered by each Registration
Statement during the applicable period in accordance with the intended
method or methods of distribution by the selling Holders thereof;
10
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Notes, at least ten days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Notes is being filed
and advising such Holders that the distribution of Registrable Notes will
be made in accordance with the method elected by the Majority Holders; and
(ii) furnish to each Holder of Registrable Notes, to counsel for the
Initial Purchasers, to counsel for the Holders and to each underwriter of
an underwritten offering of Registrable Notes, 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, including financial statements and
schedules and, if the Holder so requests, all exhibits (including those
incorporated by reference) in order to facilitate the public sale or other
disposition of the Registrable Notes; and (iii) subject to the penultimate
paragraph of this Section 3, hereby consent to the use of the Prospectus,
including each preliminary Prospectus, or any amendment or supplement
thereto by each of the selling Holders of Registrable Notes in connection
with the offering and sale of the Registrable Notes covered by the
Prospectus or any amendment or supplement thereto;
(d) use its reasonable best efforts to register or qualify the
Registrable Notes under all applicable state securities or "blue sky" laws
of such jurisdictions as any Holder of Registrable Notes covered by a
Registration Statement and each underwriter of an underwritten offering of
Registrable Notes shall reasonably request by the time the Registration
Statement is declared effective by the SEC, to cooperate with the Holders
in connection with any filings required to be made with the NASD 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 Notes 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) or (ii) take
any action which would subject it to general service of process or taxation
in any such jurisdiction if it is not then so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Notes and counsel for such Holders promptly and, if requested
by such Holder or counsel, confirm such advice in writing promptly (i) when
a Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by
the SEC or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the 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 Registration Statement or the initiation
of any proceedings for that purpose, (iv) if, during the period a
Registration Statement is effective, the representations and warranties of
the Company contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any,
11
relating to such offering cease to be true and correct in all material
respects, (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Notes
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (vi) of the happening of any event or the
discovery of any facts during the period a Shelf Registration Statement
is effective (including as contemplated in Section 2(d)(iii) hereof)
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 (vii) of any
determination by the Company that a post-effective amendment to a
Registration Statement would be appropriate;
(f) (A) in the case of the Exchange Offer, (i) include in the
Exchange Offer Registration Statement a "Plan of Distribution" section
covering the use of the Prospectus included in the Exchange Offer
Registration Statement by broker-dealers who have exchanged their
Registrable Notes for Exchange Notes for the resale of such Exchange Notes,
(ii) furnish to each broker-dealer who desires to participate in the
Exchange Offer, without charge, as many copies of each Prospectus included
in the Exchange Offer Registration Statement, including any preliminary
Prospectus, and any amendment or supplement thereto, as such broker-dealer
may reasonably request, (iii) include in the Exchange Offer Registration
Statement a statement that any broker-dealer who holds Registrable Notes
acquired for its own account as a result of market-making activities or
other trading activities (a "PARTICIPATING BROKER-DEALER"), and who
receives Exchange Notes for Registrable Notes pursuant to the Exchange
Offer, may be a statutory underwriter and must deliver a prospectus meeting
the requirements of the 1933 Act in connection with any resale of such
Exchange Notes, (iv) subject to the penultimate paragraph of Section 3,
hereby consent to the use of the Prospectus forming part of the Exchange
Offer Registration Statement or any amendment or supplement thereto, by any
broker-dealer in connection with the sale or transfer of the Exchange Notes
covered by the Prospectus or any amendment or supplement thereto, and (v)
include in the transmittal letter or similar documentation to be executed
by an exchange offeree in order to participate in the Exchange Offer the
following provision:
"If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes. If the undersigned is a broker-dealer
that will receive Exchange Notes for its own account in exchange for
Registrable Notes, it represents that the Registrable Notes to be
exchanged for Exchange Notes were acquired by it as a result of
market-making activities or other trading activities and acknowledges
that it will deliver a prospectus meeting the requirements of the 1933
Act in connection with any resale of such Exchange Notes pursuant to
the Exchange Offer; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the
12
meaning of the 1933 Act;"
(B) to the extent any Participating Broker-Dealer participates in the
Exchange Offer, the Company shall use its best efforts to cause to be
delivered at the request of an entity representing the Participating
Broker-Dealers (which entity shall be one of the Initial Purchasers, unless
it elects not to act as such representative) a "cold comfort" letter with
respect to the Prospectus in the form existing on the last date for which
exchanges are accepted pursuant to the Exchange Offer and with respect to
each subsequent amendment or supplement, if any, effected during the period
specified in clause (C) below; and
(C) to the extent any Participating Broker-Dealer participates in the
Exchange Offer, the Company shall use its best efforts to maintain the
effectiveness of the Exchange Offer Registration Statement for a period of
180 days following the closing of the Exchange Offer; and
(D) 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(b) hereof, or take any
other action as a result of this Section 3(f), for a period exceeding
180 days after the last date for which exchanges are accepted pursuant
to the Exchange Offer (as such period may be extended by the Company)
and Participating Broker-Dealers shall not be authorized by the Company
to, and shall not, deliver such Prospectus after such period in
connection with resales contemplated by this Section 3.
(g) (A) in the case of an Exchange Offer, furnish counsel for the
Initial Purchasers and (B) in the case of a Shelf Registration, furnish
counsel for the Holders of Registrable Notes copies of any request by the
SEC or any state securities authority for amendments or supplements to a
Registration Statement and Prospectus or for additional information;
(h) 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 immediate notice to each Holder of the
withdrawal of any such order;
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Notes, 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);
(j) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Notes to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold and not
bearing any restrictive legends; and
13
cause such Registrable Notes to be in such denominations (consistent
with the provisions of the Indenture) in a form eligible for deposit
with the Depositary and registered in such names as the selling Holders
or the underwriters, if any, may reasonably request in writing at least
one business day prior to the closing of any sale of Registrable Notes;
(k) in the case of a Shelf Registration, upon the occurrence of
any event or the discovery of any facts, each as contemplated by Section
3(e)(vi) hereof, use their best efforts to prepare 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 Notes, such Prospectus will not contain at
the time of such delivery 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 each Holder to suspend use of
the Prospectus as promptly as practicable after the occurrence of such
an event, and each Holder hereby agrees to suspend use of the Prospectus
until the Company has amended or supplemented the Prospectus to correct
such misstatement or omission. At such time as such public disclosure
is otherwise made or the Company determines that such disclosure is not
necessary, in each case to correct any misstatement of a material fact
or to include any omitted material fact, the Company agrees promptly to
notify each Holder of such determination and to furnish each Holder such
numbers of copies of the Prospectus, as amended or supplemented, as such
Holder may reasonably request;
(l) obtain CUSIP numbers for all Exchange Notes, or Registrable
Notes, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with printed certificates
for the Exchange Notes in a form eligible for deposit with the Depositary;
(m) (i) 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 Notes, or Registrable Notes, as the case may be,
(ii) 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 (iii) 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;
(n) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and
appropriate actions (including those reasonably requested by the holders of
a majority in principal amount of the Registrable Notes being sold) in
order to expedite or facilitate the disposition of such Registrable Notes
and in such connection, whether or not an underwriting
14
agreement is entered into and whether or not the registration is an
underwritten registration:
(i) make such representations and warranties to the Holders of
such Registrable Notes and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in similar underwritten offerings as may be reasonably requested by
them;
(ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any,
and the holders of a majority in principal amount of the Registrable
Notes being sold) addressed to each selling Holder and the
underwriters, if any, covering the matters customarily covered in
opinions requested in sales of securities or underwritten offerings
and such other matters as may be reasonably requested by such Holders
and underwriters;
(iii) obtain "cold comfort" letters and updates thereof from
the Company's independent certified public accountants addressed to
the underwriters, if any, and have such letters addressed to the
selling Holders of Registrable Notes, such letters to be in customary
form and covering matters of the type customarily covered in "cold
comfort" letters to underwriters in connection with similar
underwritten offerings and such other matters as may be reasonably
requested by such selling Holders and underwriters;
(iv) enter into a securities sales agreement with the Holders
and an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose
of soliciting purchases of Registrable Notes, which agreement shall
be in form, substance and scope customary for similar offerings;
(v) if an underwriting agreement is entered into in the case of
an underwritten offering, cause the same to set forth indemnification
provisions and procedures substantially equivalent to the
indemnification provisions and procedures set forth in Section 5
hereof with respect to the underwriters and all other parties to be
indemnified pursuant to Section 5 hereof; and
(vi) deliver such documents and certificates as may be
reasonably requested and as are customarily delivered in similar
offerings.
The above shall be done at (i) the effectiveness of such Registration
Statement (and, if appropriate, each post-effective amendment thereto) and
(ii) each closing under any underwriting or similar agreement as and to the
extent required thereunder. In the case
15
of any underwritten offering, the Company shall provide written notice
to the Holders of all Registrable Notes of such underwritten offering at
least 30 days prior to the filing of a prospectus supplement for such
underwritten offering. Such notice shall (x) offer each such Holder the
right to participate in such underwritten offering, (y) specify a date,
which shall be no earlier than 10 days following the date of such
notice, by which such Holder must inform the Company of its intent to
participate in such underwritten offering and (z) include the
instructions such Holder must follow in order to participate in such
underwritten offering;
(o) in the case of a Shelf Registration, make available for
inspection by representatives of the Holders of the Registrable Notes and
any underwriters participating in any disposition pursuant to a Shelf
Registration Statement and any special counsel or accountant retained by
such Holders or underwriters, all financial and other records, pertinent
corporate documents and properties of the Company reasonably requested by
any such Persons, and cause the respective officers, directors, employees,
and any other agents of the Company to supply all information reasonably
requested by any such representative, underwriter, special counsel or
accountant in connection with a Registration Statement; PROVIDED that the
foregoing inspection and informtation gathering shall be coordinated on
behalf of the Holders by Xxxxxxx Xxxxx; PROVIDED FURTHER that any such
records, documents, properties and such information that is designated in
writing by the Company, in good faith, as confidential at the time of
delivery of such records, documents, properties or information shall be
kept confidential by any such representative, underwriter, special counsel
or accountant and shall be used only in connection with such Registration
Statement, unless disclosure thereof is made in connection with a court
proceeding or required by law, or such information has become available
(not in violation of this agreement) to the public generally or through a
third party without an accompanying obligation of confidentiality, and the
Company shall be entitled to request that such representative, underwriter,
special counsel or accountant sign a confidentiality agreement to the
foregoing effect;
(p) (i) in the case of an Exchange Offer, a reasonable time prior to
the filing of any Exchange Offer Registration Statement, any Prospectus
forming a part thereof, any amendment to an Exchange Offer Registration
Statement or amendment or supplement to a Prospectus, provide copies of
such document to the Initial Purchasers, and make such changes in any such
document prior to the filing thereof as the Initial Purchasers or their
counsel may reasonably request; (ii) in the case of a Shelf Registration, a
reasonable time prior to filing any Shelf Registration Statement, any
Prospectus forming a part thereof, any amendment to such Shelf Registration
Statement or amendment or supplement to such Prospectus, provide copies of
such document to the Holders of Registrable Notes, to the Initial
Purchasers, to counsel on behalf of the Holders and to the underwriter or
underwriters of an underwritten offering of Registrable Notes, if any, and
make such changes in any such document prior to the filing thereof as
counsel to the Initial Purchasers or any underwriter may request; and
16
(iii) cause the representatives of the Company to be available for
discussion of such document as shall be reasonably requested by the Holders
of Registrable Notes, the Initial Purchasers on behalf of such Holders or
any underwriter, and shall not at any time make any filing of any such
document of which such Holders, the Initial Purchasers on behalf of such
Holders, their counsel or any underwriter shall not have previously been
advised and provided with an opportunity to review during the drafting of
any such document or to which such Holders, the Initial Purchasers on
behalf of such Holders, their counsel or any underwriter shall reasonably
object in writing during the preparation of any such document;
(q) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Notes to be listed on any securities exchange on
which similar debt securities issued by the Company are then listed if
requested by the Majority Holders or by the underwriter or underwriters of
an underwritten offering of Registrable Notes, if any;
(r) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable (but not until the end of the
first full fiscal quarter following effectiveness), an earnings statement
covering at least 12 months which shall satisfy the provisions of
Section 11(a) of the 1933 Act and Rule 158 thereunder; and
(s) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter and its counsel.
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Notes to furnish to the Company such information regarding
such Holder and the proposed distribution by such Holder of such Registrable
Notes 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 or the discovery of any facts, each of the kind described in Section
3(e)(ii)-(vii) hereof, such Holder will forthwith discontinue disposition of
Registrable Notes pursuant to a Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated
by Section 3(k) hereof, and, if so directed by the Company, such Holder will
deliver to the Company (at the Company's expense) all copies in its
possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Notes current at the
time of receipt of such notice. Each Holder agrees to keep confidential the
cause of any such notice of suspension or other information provided to them
by the Company with respect thereto or any other event which would materially
adversely affect the Company. If
17
the Company shall give any such notice to suspend the disposition of
Registrable Notes pursuant to a Shelf Registration Statement as a result of
the happening of any event or the discovery of any facts, each of the kind
described in Section 3(e)(vi) hereof, the Company shall be deemed to have
used its best efforts to keep the Shelf Registration Statement effective
during such period of suspension; PROVIDED that (i) such period of suspension
shall not exceed the time periods provided in Section 2(d)(iii) hereof and
(ii) the Company shall use its best efforts to file and have declared
effective (if an amendment) as soon as practicable an amendment or supplement
to the Shelf Registration Statement and shall extend the period during which
the 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.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (I) the insertion therein of language, in form and
substance satisfactory to such Holder, to the effect that the holding by such
Holder of such securities is not to be construed as a recommendation by such
Holder of the investment quality of the Company's securities covered thereby and
that such holding does not imply that such Holder will assist in meeting any
future financial requirements of the Company, or (II) in the event that such
reference to such Holder by name or otherwise is not required by the Securities
Act or any similar federal statute then in force, the deletion of the reference
to such Holder.
4. UNDERWRITTEN REGISTRATIONS. If any of the Registrable Notes
covered by any Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Majority Holders of such Registrable
Notes included in such offering, provided such banker or manager is acceptable
to the Company, acting reasonably.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
5. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, each Holder, including
Participating Broker-Dealers, each underwriter who participates in an offering
of Registrable Notes, their respective affiliates, and their respective
directors, officers, employees, agents and each Person, if any, who controls any
of such parties within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934
18
Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
(or any amendment thereto) pursuant to which Exchange Notes or Registrable
Notes were registered under the 1933 Act, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever, in each case, based upon any such untrue statement or omission,
or any such alleged untrue statement or omission; PROVIDED that (subject to
Section 5(d) below) any such settlement is effected with the written
consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including the reasonable fees and disbursements of one counsel chosen by
any indemnified party), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
court or governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) of this Section 5(a);
PROVIDED, HOWEVER, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent (i) arising out of an
untrue statement or omission or alleged untrue statement or omission (A) made
in or omitted from a preliminary Prospectus or registration statement and
corrected or included in a subsequent Prospectus or registration statement or
any amendment or supplement thereto made in reliance upon and in conformity
with written information furnished to the Company by the Initial Purchasers,
any Holder, including Participating Broker-Dealers, or any underwriter
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto) or (B) resulting from
the use of the Prospectus during a period when the use of the Prospectus has
been suspended in accordance with Section 2(d)(iii), Section 3(e)(vi) and the
penultimate paragraph of Section 3 hereof, provided, in each case, that
Holders received prior notice of such suspension.
19
(b) In the case of a Shelf Registration, each Holder agrees,
severally and not jointly, to indemnify and hold harmless the Company, each
Initial Purchaser, each underwriter who participates in an offering of
Registrable Notes and the other selling Holders and each of their respective
directors and officers (including each officer of the Company who signed the
Registration Statement) and each Person, if any, who controls the Company,
any Initial Purchaser, any underwriter or any other selling Holder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 5(a) hereof, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by such
Holder expressly for use in the Registration Statement (or any amendment
thereto), or the Prospectus (or any amendment or supplement thereto);
PROVIDED, HOWEVER, that no such Holder shall be liable for any claims
hereunder in excess of the amount of net proceeds received by such Holder
from the sale of Registrable Notes pursuant to such Shelf Registration
Statement.
(c) In case any action shall be commenced involving any Person in
respect of which indemnity may be sought pursuant to either paragraph (a) or
(b) above, such Person (the "INDEMNIFIED PARTY") shall give notice as
promptly as reasonably practicable to each Person against whom such indemnity
may be sought (the "INDEMNIFYING PARTY"), but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any
liability hereunder to the extent it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability which it may
have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action;
PROVIDED, HOWEVER, that counsel to the indemnifying party shall not (except
with the consent of the indemnified party) also be counsel to the indemnified
party. In no event shall the indemnifying party or parties be liable for the
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be
sought under this Section 5 (whether or not the indemnified parties are
actual or potential parties thereof), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from
all liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying
20
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 5(a)(ii) hereof effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by
such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with
such request prior to the date of such settlement.
(e) If the indemnification provided for in any of the indemnity
provisions set forth in this Section 5 is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party,
as incurred, in such proportion as is appropriate to reflect the relative
fault of such indemnifying party or parties on the one hand, and such
indemnified party or parties on the other hand, in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party or parties on the one hand, and
such indemnified party or parties on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or
parties or such indemnified party or parties and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Initial Purchasers and
the Holders of the Registrable Notes agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by PRO
RATA allocation (even if the Initial Purchasers were treated as one entity,
and the Holders were treated as one entity, for such purpose) or by another
method of allocation which does not take account of the equitable
considerations referred to above in Section 5. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 5 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any 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 0000
Xxx) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 5, each
Person, if any, who controls an Initial Purchaser or Holder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as such Initial Purchaser or Holder, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each Person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights to contribution as the Company.
Notwithstanding the provisions of this Section 5(e), no Holder shall be
required to contribute
21
any amount in excess of the amount by which the net proceeds received by such
Holder from the sale of Registrable Notes 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.
6. MISCELLANEOUS. (a) RULE 144 AND RULE 144A. For so long as
the Company is subject to the reporting requirements of Section 13 or 15(d)
of the 1934 Act, the Company covenants that it will file the reports required
to be filed by it under Section 13(a) or 15(d) of the 1934 Act and the rules
and regulations adopted by the SEC thereunder, and that if it ceases to be so
required to file such reports, it will upon the request of any Holder of
Registrable Notes (i) make publicly available such information as is
necessary to permit sales pursuant to Rule 144 under the 1933 Act, (ii)
deliver such information to a prospective purchaser as is necessary to permit
sales pursuant to Rule 144A under the 1933 Act and take such further action
as any Holder of Registrable Notes may reasonably request, and (iii) take
such further action that is reasonable in the circumstances, in each case, to
the extent required from time to time to enable such Holder to sell its
Registrable Notes without registration under the 1933 Act within the
limitation of the exemptions provided by (x) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, (y) Rule 144A under the 1933 Act,
as such Rule may be amended from time to time, or (z) any similar rules or
regulations hereafter adopted by the SEC. Upon the written request of any
Holder of Registrable Notes, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
(b) NO INCONSISTENT AGREEMENTS. The Company has not entered into
nor will it on or after the date of this Agreement enter into any agreement
which is inconsistent with the rights granted to the Holders of Registrable
Notes 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.
(c) 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 of the
outstanding Registrable Notes affected by such amendment, modification,
supplement, waiver or departure; PROVIDED, HOWEVER, that no amendment,
modification, supplement or waiver or consent to any departure from the
provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Notes unless consented to in writing by such Holder.
(d) NOTICES. All notices and other
22
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 (other than an
Initial Purchaser), at the most current address set forth on the records of
the Registrar under the Indenture, (ii) if to an Initial Purchaser, at the
most current address given by such Initial Purchaser to the Company by means
of a notice given in accordance with the provisions of this Section 6(d),
which address initially is the address set forth in the Purchase Agreement;
and (iii) if to the Company, initially at the address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 6(d).
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.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of
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 Notes in violation of the terms hereof or of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall acquire
Registrable Notes, in any manner, whether by operation of law or otherwise,
such Registrable Notes shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Notes, 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, including the restrictions on
resale set forth in this Agreement and, if applicable, the Purchase
Agreement, and such Person shall be entitled to receive the benefits hereof.
(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 Initial Purchasers, on the other hand, and shall have the right
to enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of 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.
23
(h) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(j) ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding between the Company and each other party hereto
relating to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
(k) 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.
[signature page follows]
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CONVERGENT COMMUNICATIONS, INC.
By /s/ Xxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxx Title: President
Confirmed and accepted as of
the date first above written:
XXXXXXX XXXXX & CO.,
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
BEAR, XXXXXXX & CO. INC.
BT ALEX. XXXXX INCORPORATED
By: XXXXXXX XXXXX & CO.,
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Authorized Signatory
