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EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into this July 14, 1997 between GLOBAL TELESYSTEMS GROUP, INC., a
Delaware corporation (the "Company"), UNION BANK OF SWITZERLAND (the "Lead
Manager") on behalf of all the Managers pursuant to the Subscription Agreement
dated July 9, 1997 between the Company and the Managers (the "Subscription
Agreement"), and THE BANK OF NEW YORK, as Trustee (the "Trustee") pursuant to an
Indenture (the "Indenture"), dated as of July 14, 1997, between the Company and
the Trustee on behalf of the Bondholders (as defined therein).
The Subscription Agreement provides for the sale by the Company to the
Managers named therein of Senior Subordinated Convertible Bonds due 2000 of
the Company (the "Bonds") having an aggregate principal amount of up to
U.S.$155,250,000 (after giving effect to the over-allotment option) each of
which entitles the holder thereof to convert such Bond into shares of Common
Stock of the Company at the conversion price set forth in the Indenture. In
order to induce the Managers named therein to enter into the Subscription
Agreement and to induce the Trustee to enter into the Indenture, the Company
has agreed to provide for the benefit of the Managers and their direct and
indirect transferees and for the Trustee for the benefit of the Holders of
Bonds from time to time, the registration rights set forth in this Agreement.
The execution of this Agreement is a condition to the closing under the
Subscription Agreement and the Indenture.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, capitalized terms shall
have the meanings set forth below, or to the extent not set forth below,
capitalized terms shall have the meanings set forth in the Subscription
Agreement.
"Bonds" shall mean the Senior Subordinated Convertible Bonds due 2000
of the Company.
"Business Day" shall mean any day other than a day on which banking
institutions are authorized or
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obligated by law or executive order to close in London and New York.
"Common Stock" shall mean the Common Stock, par value $.OOO1 per
share, of the Company.
"Company" shall have the meaning set forth in the preamble and also
includes the Company's successors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"First Conversion Date" shall have the meaning set forth in Section
2(a) of this Agreement.
"Holder" shall mean the Managers, for so long as they own any Bonds
or Registrable Securities, and each of their successors, assigns and
direct and indirect transferees who become registered owners of Bonds or
Registrable Securities.
"Indenture" shall mean the Indenture relating to the Bonds, dated as
of July 14, 1997, between the Company and the Trustee, as the same may be
amended from time to time in accordance with the terms thereof.
"Issuance Registration Statement" shall have the meaning set forth in
Section 2(a) of this Agreement.
"Lead Manager" shall have the meaning set forth in the preamble to
this Agreement.
"Liquidated Damages" shall have the meaning set forth in Section 5(l)
of this Agreement.
"Majority Holders" shall mean the Holders holding a majority of the
Bonds or Registrable Securities; provided that whenever the consent or
approval of a specified percentage of Holders is required hereunder, Bonds
or Registrable Securities held by the Company or any of its affiliates (as
such term is defined in Rule 405 under the Securities Act, "Affiliates")
(other than the Managers or subsequent holders of Bonds or Registrable
Securities, if such subsequent holders are deemed to be such affiliates
solely by reason of their holding Bonds or Registrable Securities and
other than affiliates that control or are under common control with the
Company) shall not be counted in determining whether such consent or
approval
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was given by the Holders of such required percentage or amount.
"Managers" shall mean the Managers named in the Subscription
Agreement.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
"person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" shall mean the prospectus included in a Shelf
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement, and
all other amendments and supplements to such prospectus, including
post-effective amendments, and in each case including all material
incorporated by reference therein.
"Registration Securities" shall mean the Shares; provided, however,
that the Shares shall cease to be Registrable Securities when (i) an
Issuance Registration Statement with respect to all the Shares shall have
been declared effective; (ii) a Shelf Registration Statement with respect
to the Shares shall have been declared effective under the Securities Act
and all such Shares shall have been transferred or otherwise disposed of
pursuant to such Shelf Registration Statement; or (iii) the Shares may be
distributed to the public pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the Securities Act in
respect of all beneficial holders of Shares that are not Affiliates of the
Company.
"Registration Default" shall have the meaning set forth in Section
5(l) of this Agreement.
"Registration Expenses" shall mean (a) any and all fees and expenses
incurred incident to the Company's performance of or compliance with this
Agreement (whether or not any Shelf Registration Statement is filed or
becomes effective and whether or not any securities are sold pursuant to
any Shelf Registration Statement), including, without limitation, (i) all
SEC registration and filing fees, all United States national stock
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exchange or NASDAQ listing fees and National Association of Securities
Dealers, Inc. registration and filing fees, (ii) all fees and expenses
incurred in connection with compliance with U.S. state securities or "blue
sky" laws (including, without limitation and in addition to that provided
in clause (vii) below, fees and disbursements of counsel for any
Underwriters in connection with "blue sky" qualification of any of the
Registrable Securities under the laws of such jurisdictions as the
managing underwriter of the Underwritten Offering, if any, or the Majority
Holders, as the case may be, may designate), (iii) all expenses of any
persons retained by the Company in preparing or assisting in preparing,
word processing, printing and distributing the Shelf Registration
Statement or any Prospectus, or, in each case, any amendments or
supplements thereto, (iv) the fees and expenses incurred by any
Underwriter in connection with the preparation of any underwriting
agreements, securities sales agreements and other documents relating to
the performance of and compliance with this Agreement, (v) the fees of any
listing agent, (vi) the fees and disbursements of the Trustee or any
paying, conversion or transfer agent retained by the Company, (vii) the
reasonable fees and disbursements of counsel (in addition to local
counsel) for the Company and the fees and disbursements of counsel (in
addition to local counsel) for the Holders in connection with such
Underwritten Offering (which counsel shall be Xxxxxxxxxx & Xxxxx LLP
unless and until another counsel is selected by the Majority Holders (or,
in the case of an Underwritten Offering, a majority of the Holders
participating in such Underwritten Offering) and which counsel also may be
counsel for the Lead Manager) (viii) the fees and disbursements of the
independent public accountants of the Company and any partnership or joint
venture in which the Company or any of its subsidiaries has an ownership
interest, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, (ix)
fees and expenses of all other persons retained by the Company, and (x)
the Company's internal expenses, but (b) excluding underwriting discounts
and commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by a Holder.
"SEC" shall mean the Securities and Exchange Commission.
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"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Shares" means the shares of Common Stock issuable upon the
conversion of the Bonds.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(a)
of this Agreement covering the resale of all of the Registrable
Securities by the holders thereof (but no other securities, unless
approved by the Majority Holders) on an appropriate form in
connection with an offering to be made on a continuous basis pursuant
to 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, and in
each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"Subscription Agreement" shall have the meaning set forth in the
first paragraph of this Agreement.
"Underwriter" shall have the meaning set forth in Section 2(c)
of this Agreement.
"Underwritten Offering" shall mean a registration in which
Registrable Securities are sold to an Underwriter for reoffering to
the public.
2. Registration Under the Securities Act.
(a) To the extent not prohibited by any applicable law or
interpretation of the Staff of the SEC, the Company shall use its best efforts
to cause to be filed a Registration Statement (the "Issuance Registration
Statement") covering the issuance of the Shares upon conversion of the Bonds
prior to the first date upon which the Bonds become convertible (the "First
Conversion Date") and shall use its best efforts to cause such Issuance
Registration Statement to become effective by the First Conversion Date. The
Company shall use its best efforts to keep such Issuance Registration Statement
continuously effective until such time as all Bonds have been converted or
redeemed. The Company further agrees to supplement or amend the Issuance
Registration Statement if required by the rules, regulations or instructions
applicable to the
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registration form used by the Company for such Issuance Registration Statement
or by the Securities Act or by any other rules and regulations thereunder, and
to use its best efforts to cause any such amendment or supplement to become
effective and such Issuance Registration Statement to become usable as soon as
thereafter practicable.
(b) In the event that (i) the Company determines that, notwithstanding
its beat efforts, the Issuance Registration Statement provided for in Section
2(a) above is not available or would not be declared effective by the SEC on or
before the First Conversion Date because it would violate applicable law or the
applicable interpretations of the Staff of the SEC or (ii) in the opinion of
counsel for the Managers or the Holders, as applicable, which shall be given
reasonably promptly, a Shelf Registration Statement must be filed and a
Prospectus must be delivered by a Manager or a Holder in connection with any
offering or sale of Shares then the Company shall file and shall use its best
efforts to cause a Shelf Registration Statement pertaining to the Shares to be
declared effective by the SEC prior to the First Conversion Date. The Company
shall not permit any securities other than the Registrable Securities to be
included in the Shelf Registration Statement. In the event the Company is
required to file a Shelf Registration Statement solely as a result of the
matters referred to in clause (ii) of the first sentence of this Section 2(b),
the Company shall file and have declared effective by the SEC both an Issuance
Registration Statement pursuant to Section 2(a) with respect to all Shares and
a Shelf Registration Statement (which may be a combined Shelf Registration
Statement with the Issuance Registration Statement) with respect to offers and
sales of Shares after the First Conversion Date. The Company agrees to use its
best efforts to keep the Shelf Registration Statement continuously effective
for so long as any of the Shares covered thereby (without regard to whether
such Shares actually have been issued) shall constitute 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 the 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 in order to accurately reflect information
regarding such Holder or such Holder's plan of distribution as required by the
Shelf Registration
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Statement, and to use its best efforts to cause any such amendment to become
effective and the Prospectus contained in such Shelf Registration Statement to
become usable as soon as thereafter practicable; provided, however, that the
Company shall not be required to supplement or amend the Shelf Registration
Statement to update information relating to any new Holder on more than one
occasion in each calendar month in respect of a Holder or Holders who in the
aggregate hold $10,000,000 or more in value of Registrable Securities or on
more than one occasion in each calendar quarter in respect of a Holder or
Holders who hold in the aggregate less than such value of Registrable
Securities. The Company agrees to furnish to the Holders copies of any such
supplement or amendment promptly after its being made available for use or
filed with the SEC.
(c) (i) Subject to the proviso in Section 3 (o), the Holders whose
Registrable Securities are covered by a Shelf Registration Statement who desire
to do so may sell Registrable Securities in an Underwritten Offering. 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 (subject to the Company's approval which shall not be unreasonably
withheld) by the Holders holding a majority of the Registrable Securities
(determined on an as-converted basis) included in such offering.
Notwithstanding anything to the contrary set forth herein, the Company may
suspend a Holder's use of a Prospectus which is part of the Shelf Registration
Statement for up to two periods not to exceed 45 consecutive days (but not more
than 60 days in any 365-day period) if the Company in its reasonable judgment
believes it possesses material non-public information the disclosure of which
would have an adverse effect on the Company, or any of its Subsidiaries or any
Significant Joint Venture (each as defined in the Indenture).
(ii) Each Holder whose Registrable Securities are covered by the Shelf
Registration Statement and are of the same class or type as any Registrable
Securities being sold in an Underwritten Offering agrees, upon the request of
the Underwriter(s) in any Underwritten Offering permitted pursuant to this
Agreement, not to effect any public sale or distribution of securities of the
Company of the same class or type as the Registrable Securities included in
such Shelf Registration Statement (except as part of such Underwritten
Offering), including a sale pursuant to Rule 144 under the Securities Act,
during the 10-day period prior to, and during
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the 90-day period beginning on, the closing date of any such Underwritten
Offering made pursuant to such Shelf Registration Statement, provided that the
Company or such Underwriter(s) shall have given such Holder timely notice in
writing of such closing date.
The foregoing provision shall not apply to any Holder if such Holder
is prevented by applicable statute or regulation from entering into any such
agreement; provided, however, that any such Holder shall undertake, in its
request to participate in any such Underwritten Offering, not to affect any
public sale or distribution of any of its Registrable Securities not sold in
such Underwritten Offering, commencing on the date of sale of Registrable
Securities pursuant to such Underwritten Offering and ending on the date that
is 90 days after the closing date of such Underwritten Offering, unless it has
provided 45 days, prior written notice of such sale or distribution to the
Underwriter(s).
(iii) Unless otherwise agreed to by the Underwriter(s), the Company
agrees not to effect any public or private offer, sale or distribution of
securities of the same class and type as the Registrable Securities being sold
in the Underwritten Offering, including a sale pursuant to Regulation D under
the Securities Act, during the 10-day period prior to, and during the 90-day
period beginning on, the closing date of each Underwritten Offering permitted
pursuant to Section 3(o) hereof made pursuant to the Shelf Registration
Statement, provided that the Underwriter(s) shall have given the Company timely
notice in writing of such closing date. Notwithstanding the foregoing, the
Company may effect a private offer, sale or distribution of securities of the
same class or type as the Registrable Securities being sold in the
Underwritten Offering to the extent that, at the time that the price of such
securities is determined, the price of such securities is in excess of the
market price of the Registrable Securities; provided that the limitation on
private offers, sales and distributions set forth in this sentence shall apply
only to the extent so requested by the Underwriter(s) in the Underwritten
Offering within three Business Days following notice of such proposed offer,
sale or distribution by the Company (which notice shall be provided by the
Company at least seven Business Days prior to any such proposed offer, sale or
distribution).
(d) The Company shall promptly pay upon incurrence all Registration
Expenses in connection with any registration pursuant to Section 2. Each Holder
shall pay all underwriting
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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.
(e) Upon the occurrence or failure to occur of certain events
described in this Agreement, Liquidated Damages will accrue on the Bonds as
provided in this Agreement.
(f) Without limiting the remedies available to the Managers and
Holders, the Company acknowledges that any failure by the Company to comply
with its obligations under Section 2 hereof may result in material irreparable
injury to the Managers and/or 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 Managers or any
Holder may obtain such relief as may be required to specifically enforce the
Company's obligations under Section 2 hereof.
(g) If after the Shelf Registration Statement is declared effective by
the SEC, the offering of Registrable Securities pursuant thereto is interfered
with by any stop order, injunction or other order or requirement of the SEC or
any other governmental agency or court, such Shelf 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 Shelf
Registration Statement may legally resume.
3. Registration Procedures. In connection with the obligations of
the Company with respect to Section 2(a) hereof, the Company shall, to the
extent required by Section 2, as expeditiously as practicable:
(a) prepare and file with the SEC a Shelf Registration Statement on
the appropriate form under the Securities Act, which form shall, (x) be
selected by the Company and (y) comply as to form in all material respects
with the requirements of the applicable form (including, without
limitation, the requirement pursuant Item 7 of Form S-3 and Item 507 of
Regulation S-K under the Securities Act that the Prospectus identify and
describe Holders that sell Registrable Securities under the Shelf
Registration Statement as selling security holders) and include all
financial statements required by the SEC to be filed therewith, and use
its best efforts to cause such Shelf Registration Statement to become
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effective and remain effective for the applicable period in accordance
with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Shelf Registration Statement as may be necessary to (x)
keep such Shelf Registration Statement effective for the applicable period
in accordance with Section 2 hereof, and (y) 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
and (z) 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 securities covered
by such Prospectus;
(c) furnish to each Holder of securities registered thereunder, to
counsel for such Holders, to counsel for the Managers, to each
Underwriter, if any, and to counsel for each such Underwriter, 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; the Company consents to the use of such Prospectus and any
amendment or supplement thereto in accordance with applicable law by each
of the Holders selling 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 U.S. state securities or "blue sky" laws
of such U.S. jurisdictions as any Holder with Registrable Securities
covered by the Shelf Registration Statement shall reasonably request in
writing by the time the Shelf 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 to do any and all other acts and things which may be necessary or
advisable to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Securities; provided, however, that the
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Company shall not be required, as a result of compliance herewith, to (i)
qualify as a foreign entity 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 jurisdiction if it is not so
subject;
(e) notify each Holder, counsel for the Holders and counsel for the
Managers promptly upon the Company's obtaining actual knowledge thereof
and, if requested by any such Holder or the Managers, confirm such advice
in writing, (i) when the Shelf Registration Statement has become effective
and when any post-effective amendments and supplements thereto have been
filed and become effective, (ii) of any request by the SEC or any state
securities authority for amendments and supplements to the Shelf
Registration Statement and related 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 the Shelf Registration
Statement or the initiation of any proceedings for that purpose, (iv) if,
between the effective date of the 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 such 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 which makes
any statement made in the Shelf Registration Statement or the related
Prospectus untrue in any material respect or which requires the making of
any changes in the Shelf Registration Statement or the Prospectus in order
to make the statements therein not misleading and (vi) of any
determination by the Company that a post-effective amendment to the Shelf
Registration Statement would be appropriate (in which event the Company
shall forthwith prepare and have declared effective such post-effective
amendment and make the Prospectus therein available to selling Holders);
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(f) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Shelf Registration Statement at the
earliest practicable moment and provide prompt notice to each Holder and
the Managers of the withdrawal of any such order;
(g) furnish to each Holder and the Managers, without charge, at least
one conformed copy of the Shelf Registration Statement and any
post-effective amendment thereto, together with any documents incorporated
therein by reference (in each case, without exhibits thereto, unless
requested);
(h) cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates
representing such Registrable Securities not bearing any restrictive
legends and to enable such certificates to be in such amounts and
registered in such names as such Holders may reasonably request at least
two business days prior to the closing of any sale of Registrable
Securities;
(i) upon the occurrence of any event contemplated by Section 3(e)(v)
hereof, use its best efforts to prepare a supplement or post-effective
amendment to the Shelf 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 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 each Holder and the
Managers and Underwriters to suspend use of the Prospectus included in a
Shelf Registration Statement as promptly as practicable after the Company
becomes aware of 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;
(j) within a reasonable time prior to the filing of the Shelf
Registration Statement, the Prospectus to be included therein, or
amendment or supplement to either of the foregoing, provide copies of such
document to the Managers and their counsel, and the Holders and
Underwriters and their counsel, and make
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such of the representatives of the Company as shall be reasonably
requested by the Managers or their counsel and the Holders and
Underwriters or their counsel available for discussion of such document,
and shall not at any time file or make any amendment or supplement to any
such document of which the Managers and their counsel and the Holders and
their counsel, shall not have previously been advised and furnished a copy
or in a form to which the Managers or their counsel and the Majority
Holders or their counsel shall reasonably object; provided, however, that
any document incorporated by reference in any such Prospectus by any
amendment or supplement shall be provided to the Managers and their
counsel and to the Holders and Underwriters and their counsel at the time
that such amendment or supplement is filed with the SEC;
(k) obtain a CUSIP number for the Registrable Securities covered by
the Shelf Registration Statement not later than the effective date
thereof;
(l) make available for inspection by a representative of all of the
Holders, any Underwriter participating in any disposition pursuant to the
Shelf Registration Statement and attorneys and accountants designated by
the Holders or any Underwriter, at reasonable times and in a reasonable
manner, all financial and other records, documents and properties of the
Company, 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 the
Shelf Registration Statement; provided, however, that such Underwriters,
representatives, attorneys or accountants agree to keep confidential any
records, information or documents that are designated by the Company in
writing 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, unless (i) such
records, information or documents (x) are available to the public, (y)
were already in such Underwriters', representatives', attorneys' or
accountants' possession prior to their receipt from the Company and they
do not otherwise have any obligation to keep such records, information or
documents confidential or (z) are obtained by such Underwriters,
representatives, attorneys or accountants from a third
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person who, insofar as is known to such Underwriters, representatives,
attorneys or accountants, is not prohibited from transmitting the
information to such Underwriters, representatives, attorneys or
accountants by a contractual, legal or fiduciary obligation to the Company
or a third party, or (ii) disclosure of such records, information or
documents is required by (A) any regulatory agency or (B) any court or
administrative order, in the case of (A) or (B), after the exhaustion of
appeals therefrom;
(m) list all Registrable Securities covered by the Shelf Registration
Statement on all securities exchanges or quotation systems on which the
Common Stock is then listed, or if not so listed, cause such Registrable
Securities to be quoted on the NASDAQ National Market System at the time
of resale or issuance, as applicable;
(n) if reasonably requested by any Holder of Registrable Securities
covered by the Shelf Registration Statement in order to accurately reflect
information regarding such Holder or such Holder's plan of distribution as
required by such Shelf 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 the Company has received
satisfactory notification of the matters to be incorporated in such
filing; provided, however, that the Company shall not be required to
supplement or amend the Shelf Registration Statement to update information
relating to any new Holder on more than one occasion in each calendar
month in respect of a Holder or Holders who in the aggregate hold
$10,000,000 or more in value of Registrable Securities and more than one
occasion in each calendar quarter in respect of a Holder or Holders who
hold in the aggregate less than such value of Registrable Securities; and
(o) use its best efforts to enter into such customary agreements and
take all such other reasonable actions in connection therewith (including
those requested by the Holders holding a majority of the Registrable
Securities (determined on an as-converted basis) being sold) in order to
expedite or facilitate the disposition of such Registrable Securities
including, but
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not limited to, one Underwritten Offering and in connection with such
Underwritten Offering, (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 and its or its subsidiaries' Joint Ventures, the Shelf
Registration Statement, the 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
reasonably requested, (ii) use its best efforts to 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
of the Registrable Securities to be sold in such Underwritten Offering
(determined on an as-converted basis) and their counsel and any
Underwriters and their counsel) addressed to each selling Holder and any
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 any Significant Joint Venture of the
Company (each as defined in the Indenture) or of any business acquired by
the Company for which financial statements and financial data are or are
required to be included in the Shelf Registration Statement) addressed to
each selling Holder and any 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 of the
Registrable Securities being sold by any Underwriter, 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 facilitate an
Underwritten Offering only upon the request of Holders of at least 25% of
the Registrable Securities outstanding (determined on an as-converted
basis) at the time such request is delivered to the Company (determined
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on an as-converted basis after giving effect to any stock splits,
combinations or reclassifications). In the case of any Underwritten
Offering, the Company shall (x) provide written notice of such
Underwritten Offering to the Managers and each of the Holders at least 30
days prior to the filing of a prospectus supplement for such Underwritten
Offering, (y) specify 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) include the instructions such Holder must follow in order to
participate in such Underwritten Offering.
Each Holder shall, as a pre-condition to the exercise of its right to
sell Registrable Securities pursuant to the Shelf Registration Statement,
furnish to the Company such information regarding the Holder and the proposed
distribution by such Holder of Registrable Securities pursuant to the Shelf
Registration Statement as shall be required by the Staff of the SEC or the
rules and regulations under the Securities Act. Each such Holder shall provide
the Company with any such information within five business days after such
information is requested by the Company and shall provide to the Company,
within five Business Days after such Holder receives a draft of the Shelf
Registration Statement or amendment thereto in which such information is
included, comments on such Shelf Registration Statement or amendment thereto;
provided that no Holder shall be required to comment on any information not
provided to the Company by such Holder.
Each Holder, as pre-condition to the exercise of its right to sell
Registrable Securities pursuant to the Shelf Registration Statement, agrees to
notify the Company no later than three Business Days prior to any proposed sale
by such Holder of Registrable Securities pursuant to the Shelf Registration
Statement, which notice shall be effective for five Business Days. In addition,
each Holder shall, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 3(e)(iii), (v) or (vi) hereof,
forthwith discontinue disposition of Registrable Securities pursuant to the
Shelf Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof.
4. Indemnification and Contribution. (a) The Company shall indemnify
and hold harmless the Managers, each Holder, each person, if any, who controls
the Managers or any
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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
Managers or any Holder and any investment advisor otherwise affiliated with any
Holder and each of their respective directors and officers (each a "Non-Company
Indemnitee") and each of their respective counsel from and against any and all
losses, claims, damages, liabilities and expenses (including, without
limitation, any legal or other expenses reasonably incurred by the Non-Company
Indemnitee in connection with defending or investigating any such action or
claim) arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement (or
any amendment or supplement thereto), including all documents incorporated
therein by reference, or arising out of or based upon 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 arising out of or
based upon 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, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with information relating to the
Managers or any Holder furnished to the Company in writing by the Managers or
any selling Holder expressly for use therein; provided, however, that the
indemnification provided for in this paragraph (a) shall not inure to the
benefit of any Non-Company Indemnitee with respect to any sale or disposition of
Registrable Securities by such Holder in violation of the provisions of the
last paragraph of Section 3 hereof. In connection with any Underwritten
Offering contemplated by Section 3(o), the Company also shall 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 the Shelf
Registration Statement. The indemnification obligation of the Company set forth
in this paragraph (a) shall be in addition to any liability which
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the company may otherwise have, including, without limitation, for any breach
of any covenant contained in this Agreement.
(b) Each Holder shall, severally and not jointly, to identify and
hold harmless the Company, the Managers, the other selling Holders, each of
their respective directors and officers, each person, if any, who controls the
Company, the Managers, or any other selling 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 Company, the Managers or any other
selling Holder and any investment advisor affiliated with any of the foregoing
to the same extent as the foregoing indemnity from the Company to the Managers
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 the
Shelf Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto).
(c) If any action, suit or proceeding shall be instituted involving
any person in respect of which such person is entitled to indemnity pursuant to
either paragraph (a) or (b) above, such person (the "indemnified party") shall
promptly notify the parties against whom indemnification is being sought (each
an "indemnifying party") and such indemnifying parties shall assume the defense
thereof, including the employment of counsel and payment of all fees and
expenses. Such indemnified party, shall have the right to counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying parties have agreed in writing to pay such fees and
expenses, (ii) the indemnifying parties shall have failed to assume the defense
and employ counsel or (iii) the named parties to any such action, suit, or
proceeding (including any impleaded parties) include both such indemnifying
parties and such indemnified party and such indemnified party shall have been
advised by its counsel that representation of such indemnified party and any
indemnifying party by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed due to actual or potential differing interests
between them (in which case the indemnifying parties shall not have the right
to assume the defense of such action, suit or proceeding on behalf of the
indemnified party)). It is understood, however, that the indemnifying parties
shall, in connection with any one such action, suit or proceeding, or
substantially similar action, suit or proceeding or related actions, suits or
proceedings in
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the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
the Managers and all persons, if any, who control the Managers 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 Managers,
any investment advisor affiliated with any of the foregoing and each of their
respective directors and officers, and the reasonable fees and expenses of only
one separate firm of attorneys (in addition to any local counsel) at any time
for all other Holders and all persons, if any, who control any such Holders
within the meaning of either such Section, or are under common control with or
are controlled by such Holders, any investment advisor affiliated with any of
the foregoing and each of their respective directors and officers. In such case
involving the Managers, persons who control, are controlled by or under common
control with the Managers, or their respective directors or officers, such firm
shall be designated in writing by the Managers. In such case involving other
Holders and such persons who control, are controlled by or under common control
with such Holders, any investment advisor affiliated with any of the foregoing
or their respective directors or officers, such firm shall be designated in
writing by such Holders holding a majority of the Registrable Securities sold
under the Shelf Registration Statement by all such Holders. The indemnifying
parties shall not be liable for any settlement of any action, suit or
proceeding effected without their written consent, but if settled with such
written consent or if there be a final judgment for the plaintiff, the
indemnifying parties agree to indemnify and hold harmless the indemnified party
from and against any loss, action, damage, liability or expense by reason of
such settlement or judgment.
(d) If the indemnification provided for in this Section 4 is
unavailable to an indemnified party under paragraphs (a) or (b) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses 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 such statements or omissions that resulted
in such losses, claims, damages,
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liabilities or expenses as well as any other relevant equitable consideration.
The relative fault of the Company, on the one hand, and any Holder, on the
other hand, 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, on the one hand, or by such Holder, on the other hand, 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 4(d) are several in
proportion to the respective number of Registrable Securities of such Holders
that were registered pursuant to the Shelf Registration Statement.
(e) The Company, the Managers and each Holder agree that it would not
be just or equitable if contribution pursuant to this Section 4 were determined
by a 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 any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 4, no Holder shall
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities 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 4 are not exclusive and shall not limit
any rights or remedies that may otherwise be available to any indemnified party
at law or in equity.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 4 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained
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in this section 4 shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf any indemnified party,
(ii) any sale of Registrable Securities by an indemnified party and (iii) any
termination of this Agreement. A successor to any indemnified party shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 4.
(g) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any 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 action, suit or proceeding.
5. 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 that is inconsistent with the rights granted to the Holders
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 currently 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 the
Majority Holders affected by such amendment, modification, supplement, waiver
or departure; provided, however, that no amendment, modification, supplement,
waiver or consent to the departure with respect to the provisions of Section 4
hereof shall be effective as against any person unless consented to in writing
by such person.
(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 5(c), which address initially is, with respect to the Managers,
the address set
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forth in the Subscription Agreement; and (ii) if to the Company, initially at
the Company's address set forth in the Subscription Agreement, and, thereafter,
at such other address, notice of which is given in accordance with the
provisions of this Section 5(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 Subscription Agreement. The Company shall not
assign its rights or obligations hereunder without the prior written consent of
each Holder other than by operation of law pursuant to a merger or
consolidation to which the Company is a party. 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 transferee shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement and,
as a result, such person shall be entitled to receive the benefits hereof. The
Managers 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 other Holder under this Agreement. In
the event the Bonds become convertible into common stock of another person
pursuant to the Indenture, the Company shall cause such person to assume the
Company's obligations hereunder.
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(e) Purchases and Sale of Bonds. The Company shall not, and shall use
its best efforts to cause its Affiliates not to, purchase and then resell or
otherwise transfer any Bonds.
(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 Managers, on the other hand, and the Managers and the Holders
shall have the right to enforce such agreements directly to the extent they
deem such enforcement necessary or advisable to protect the rights of the
Managers or the Holders hereunder.
(g) Counterparts. This Agreement may be signed in various counterparts
which constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
(h) Headings. The headings of the Sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York applicable to
contracts made and to be performed in the State of New York.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Submission to Jurisdiction. The Company irrevocably submits to
the jurisdiction of any United States or State court located in the State of
New York in any suit or proceeding based on or arising under this Agreement and
irrevocably agrees that all claims in respect of such suit or proceeding may be
determined in any such court. The Company irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
hereby agrees to designate and appoint The United States Corporation Company as
an agent upon whom process may be served in any suit or proceeding based on or
arising under this Agreement. The Company further agrees that service of
process upon the
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Company, or upon an agent appointed pursuant to the preceding sentence
accompanied with written notice of said service to the Company, as the case may
be, mailed by first class mail shall be deemed in every respect effective
service of process upon the Company in any such suit or proceeding. Nothing
herein shall affect the Managers' or any Holder's right to serve process in any
other manner permitted by law. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall he conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
(1) Liquidated Damages. If a Shelf Registration Statement has not been
filed and does not remain in effect with the SEC as required by Section 2 of
this Agreement or the prospectus therein is not available for use by a Holder
entitled to such use in accordance with the terms of this Agreement (a
"Registration Default"), additional interest ("Liquidated Damages") will accrue
on the Bonds from and including the day following the Registration Default to
but excluding the day on which the Registration Default has been cured.
Liquidated Damages will be paid semi-annually in arrears, with the first
semi-annual payment due on the first date on which interest is payable under
the Indenture following the date on which such Liquidated Damages begin to
accrue. Liquidated Damages will accrue at a rate per annum of one quarter of
one per cent. (.25%) of the principal amount, to and including the 90th day
following such Registration Default and at a rate per annum of one half of one
per cent. (.5%) of the principal amount, from and after the 91st day following
the Registration Default. In no event will the Liquidated Damages accrue at a
rate per annum exceeding one half of one per cent. (.5%).
(m) No Adverse Action. The Company will not take any action with
respect to the Registrable Securities which would adversely affect the ability
of any Holder to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
GLOBAL TELESYSTEMS GROUP,
INC.
By: /s/ [ILLEGIBLE]
---------------------------------
Name:
--------------------------
Title:
-------------------------
Confirmed and accepted as of
the date first above written:
UBS Securities LLC, on behalf
of the Managers
BY: [ILLEGIBLE]
-------------------------------
Name: [ILLEGIBLE]
--------------------------
Title: DIRECTOR
-------------------------
THE BANK OF NEW YORK,
as Trustee under the
Indenture
BY: /s/ XXXXXX X. XXXXXXXX
-------------------------------
Name: XXXXXX X. XXXXXXXX
--------------------------
Title: Assistant Vice President
-------------------------
25
