PREFERRED STOCK EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
THIS PREFERRED STOCK EXCHANGE AND REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is made and entered into as of May 14, 1998 between Rural Cellular
Corporation, a Minnesota corporation (the "Company"), and TD Securities (USA)
Inc., NationsBanc Xxxxxxxxxx Securities LLC and BancBoston Securities Inc.
(collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated May 7,
1998 between the Company and the Initial Purchasers (the "Purchase Agreement"),
which provides for, in relevant part, the sale by the Company to the Initial
Purchasers of 125,000 shares of the Company's Exchangeable Preferred Stock (as
defined herein). 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 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.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Certificate of Designation" shall mean the Certificate of Designation
of Voting Power, Preferences and Relative Participating, Optional and Other
Special Rights and Qualifications, Limitations and Restrictions of the 11 3/8%
Senior Exchangeable Preferred Stock of Rural Cellular Corporation, as filed with
the Minnesota Secretary of State on May 13, 1998.
"Company" shall have the meaning set forth in the preamble of this
Agreement and also includes the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Company, PROVIDED, HOWEVER, that any such depositary
must have an address in the Borough of Manhattan, in New York City.
"Exchange Preferred Stock" shall mean new shares of preferred stock
issued by the Company under the Certificate of Designation having terms
identical in all respects to the Preferred Stock (except that (i) dividends
thereon shall accrue from the last date on which dividends were paid on the
Preferred Stock or, if no such dividends have been paid, from the Original Issue
Date (or, with respect to Additional Shares, the date of issuance thereof) ,
(ii) the transfer restrictions thereon shall be eliminated and (iii) certain
provisions relating to an increase in the stated dividend rate thereon shall be
eliminated) to be offered to Holders of Preferred Stock in exchange for
Registrable Preferred Stock pursuant to the Preferred Stock Exchange Offer.
"Exchangeable Preferred Stock" shall mean shares of the Company's
113/8% Senior Exchangeable Preferred Stock, liquidation preference $1,000 per
share, issued under the Certificate of Designation.
"Holders" shall mean the Initial Purchasers, for so long as they own
any Registrable Preferred Stock and each of their successors, assigns and direct
and indirect transferees who become registered owners of Registrable Preferred
Stock.
"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 liquidation preference of outstanding Registrable Preferred Stock;
PROVIDED that whenever the consent or approval of Holders of a specified
percentage of Registrable Preferred Stock is required hereunder, Registrable
Preferred Stock held by the Company or any of its affiliates (as such term is
defined in Rule 405 under the 0000 Xxx) (other than the Initial Purchasers or
subsequent holders of Registrable Preferred Stock if such subsequent holders are
deemed to be such affiliates solely by reason of their holding of such
Registrable Preferred Stock) 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 on which the Exchangeable
Preferred Stock is first issued to the Initial Purchasers under the Certificate
of Designation.
"Participating Broker-Dealer" shall have the meaning set forth in
Section 3(f) of this Agreement.
"Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"Preferred Stock" shall mean (i) the 125,000 shares of Exchangeable
Preferred Stock purchased by the Initial Purchasers pursuant to the Purchase
Agreement and (ii) shares of
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Exchangeable Preferred Stock which may be issued as dividends on the shares
of Exchangeable Preferred Stock referred to in clause (i) above in accordance
with the Certificate of Designation.
"Preferred Stock Exchange Offer" shall mean the exchange offer by the
Company of Exchange Preferred Stock for Registrable Preferred Stock pursuant to
Section 2(a) hereof.
"Preferred Stock Exchange Offer Registration" shall mean a
registration under the 1933 Act effected pursuant to Section 2(a) hereof.
"Preferred Stock 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.
"Preferred Stock 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 then Registrable Preferred Stock 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.
"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 Preferred Stock covered by a Preferred Stock 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 Preferred Stock" shall mean the Preferred Stock;
PROVIDED, HOWEVER, that certain Preferred Stock shall cease to be Registrable
Preferred Stock when (i) a Registration Statement with respect to such Preferred
Stock shall have been declared effective under the 1933 Act and such Preferred
Stock shall have been disposed of pursuant to such Registration Statement, (ii)
such Preferred Stock shall have been sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the 1933 Act,
(iii) such Preferred Stock shall have ceased to be outstanding, (iv) such
Preferred Stock shall have been exchanged by a Person other than a Broker-Dealer
for Exchange Preferred Stock upon consummation of the Preferred Stock Exchange
Offer or (v) following the exchange by a
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Participating Broker-Dealer in the Preferred Stock Exchange Offer of
Preferred Stock for Exchange Preferred Stock, that Exchange Preferred Stock
is sold to a purchaser who receives from that Participating Broker-Dealer on
or before the date of that sale a copy of the Prospectus.
"Registration Default" shall have the meaning set forth in Section
2(e).
"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
reasonable fees and disbursements of counsel for any underwriters or Holders in
connection with state or other securities or blue sky qualification of any of
the Exchange Preferred Stock or Registrable Preferred Stock), (iii) all expenses
of any Persons in preparing or assisting in preparing, word processing, printing
and distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements,
certificates representing the Registrable Preferred Stock or Exchange Preferred
Stock 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 Preferred
Stock or Exchange Preferred Stock on any securities exchange or exchanges, (vi)
the reasonable fees and disbursements of counsel for the Company and, in the
case of a Preferred Stock Shelf Registration Statement, the reasonable fees and
disbursements (including the expenses of preparing and distributing any
underwriting or securities sales agreement) of one counsel (in addition to
appropriate local counsel, if any) for the Holders (which counsel shall be
selected in writing by the Majority Holders), (vii) the fees and disbursements
of the independent public accountants of the Company, including the expenses of
any special audits or "cold comfort" letters required by or incident to such
performance and compliance, (viii) 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
Preferred Stock or Exchange Preferred Stock, (ix) the fees and expenses of the
Transfer Agent, including its counsel, and any escrow agent or custodian and (x)
any fees and disbursements of the underwriters customarily required to be paid
by issuers or sellers of securities and the reasonable fees and expenses of any
special experts retained by the Company in connection with any Registration
Statement, but excluding underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of Registrable Preferred
Stock by a Holder.
"Registration Statement" shall mean any registration statement of the
Company which covers any of the Exchange Preferred Stock or Registrable
Preferred Stock 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.
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"Rule 144A" means Rule 144A under the 1933 Act (or any successor
provision), as it may be amended from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Special Dividend" shall have the meaning set forth in Section 2(e).
"Transfer Agent" shall mean the transfer agent for the Preferred
Stock.
2. REGISTRATION UNDER THE 1933 ACT. (a) PREFERRED STOCK EXCHANGE
OFFER REGISTRATION. To the extent not prohibited by any applicable law or
applicable interpretation of the Staff of the SEC, the Company at its cost shall
(A) file on or prior to the 90th calendar day following the Original Issue Date
with the SEC a Preferred Stock Exchange Offer Registration Statement covering
the offer by the Company to the Holders to exchange all of the Registrable
Preferred Stock for Exchange Preferred Stock, (B) use its best efforts to cause
such Preferred Stock Exchange Offer Registration Statement to be declared
effective by the SEC on or prior to the 120th calendar day following the
Original Issue Date, (C) use its best efforts to cause such Preferred Stock
Exchange Offer Registration Statement to remain effective until 90 calendar days
after the closing of the Preferred Stock Exchange Offer and (D) use its best
efforts to keep the Preferred Stock Exchange Offer open for not less than 30
days after, and to consummate the Preferred Stock Exchange Offer on or prior to
the 45th calendar day following (or longer if required by applicable law), the
date that the Preferred Stock Exchange Offer Registration Statement is declared
effective. Upon the effectiveness of the Preferred Stock Exchange Offer
Registration Statement, the Company shall promptly commence the Preferred Stock
Exchange Offer, it being the objective of such Preferred Stock Exchange Offer to
enable each Holder (other than Participating Broker-Dealers (as defined in
Section 3(f) hereof)), eligible and electing to exchange Registrable Preferred
Stock for Exchange Preferred Stock (assuming that such Holder is not an
affiliate of the Company within the meaning of Rule 405 under the 1933 Act,
acquires the Exchange Preferred Stock in the ordinary course of such Holder's
business and has no arrangements or understandings with any Person to
participate in the Preferred Stock Exchange Offer for the purpose of
distributing the Exchange Preferred Stock) to trade such Exchange Preferred
Stock from and after its 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 Preferred Stock Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Preferred Stock Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
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(ii) use the services of the Depositary for the Preferred Stock
Exchange Offer with respect to Preferred Stock evidenced by global
certificates;
(iii) permit Holders to withdraw, in whole or in part, tendered
Registrable Preferred Stock at any time prior to the close of business, New
York City time, on the last business day on which the Preferred Stock
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
Preferred Stock delivered for exchange, and a statement that such Holder is
withdrawing, in whole or in part, his election to have such Preferred Stock
exchanged; and
(iv) otherwise comply in all respects with all applicable laws
relating to the Preferred Stock Exchange Offer.
As soon as practicable after the close of the Preferred Stock Exchange
Offer, the Company shall:
(i) accept for exchange Registrable Preferred Stock duly tendered
and not validly withdrawn pursuant to the Preferred Stock Exchange Offer
in accordance with the terms of the Preferred Stock Exchange Offer
Registration Statement and the letter of transmittal which is an exhibit
thereto;
(ii) deliver, or cause to be delivered, to the Transfer Agent for
cancellation of certificates representing all Registrable Preferred Stock
so accepted for exchange by the Company; and
(iii) cause the Transfer Agent promptly to authenticate and
deliver certificates representing Exchange Preferred Stock to each Holder
of Registrable Preferred Stock equal in amount to the Registrable Preferred
Stock of such Holder so accepted for exchange.
Dividends on Preferred Stock will accrue from the last date on
which dividends were paid on the Registrable Preferred Stock surrendered in
exchange therefor or, if no dividends have been paid on the Registrable
Preferred Stock, from the Original Issue Date. The Preferred Stock Exchange
Offer shall not be subject to any conditions, other than that the Preferred
Stock 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. Each Holder of Registrable Preferred Stock (other than Participating
Broker-Dealers) who wishes to exchange such Registrable Preferred Stock for
Exchange Preferred Stock in the Preferred Stock Exchange Offer shall have
represented that (i) any Exchange Preferred Stock to be received by it was
acquired in the ordinary course of business, (ii) at the time of the
commencement of the Preferred Stock Exchange Offer it has no arrangement with
any Person to participate in the distribution (within
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the meaning of the 0000 Xxx) of the Exchange Preferred Stock,(iii) it is not
an affiliate (as defined in Rule 405 under the 0000 Xxx) of the Company, or
if it is an affiliate it will comply with the registration and prospectus
delivery requirements of the 1933 Act to the extent applicable and (iv) it is
not acting on behalf of any Person who could not make the representations in
clauses (i) through (iii) above. The Company shall inform the Initial
Purchasers of the names and addresses of the Holders to whom the Preferred
Stock Exchange Offer is made, and the Initial Purchasers shall have the right
to contact such Holders and otherwise facilitate the tender of Registrable
Preferred Stock in the Preferred Stock 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 Preferred Stock Exchange Offer as contemplated by
section 2(a) hereof, or (ii)if for any other reason the Preferred Stock Exchange
Offer cannot be consummated within 210 days following the Original Issue Date,
or (iii) if any Holder (other than an Initial Purchaser) is not eligible to
participate in the Preferred Stock Exchange Offer or (iv) upon the request of
any Initial Purchaser (with respect to any Registrable Preferred Stock which it
acquired directly from the Company) following the consummation of the Preferred
Stock Exchange Offer, if any such Initial Purchaser shall hold Registrable
Preferred Stock which it acquired directly from the Company and if such Initial
Purchaser is not permitted, in the reasonable opinion of counsel to such Initial
Purchaser, pursuant to applicable law or applicable interpretation of the Staff
of the SEC to participate in the Preferred Stock Exchange Offer, the Company
shall, at its cost:
(A) as promptly as practicable, and in any event within 90 days after
the date on which such filing obligation arises, file with the SEC a
Preferred Stock Shelf Registration Statement relating to the offer and sale
of the then outstanding Registrable Preferred Stock by the Holders from
time to time in accordance with the methods of distribution elected by the
Majority Holders of such Registrable Preferred Stock and set forth in such
Preferred Stock Shelf Registration Statement, and use its best efforts to
cause such Preferred Stock Shelf Registration Statement to be declared
effective by the SEC on or prior to the 150th calendar day following the
Original Issue Date (or promptly in the event of a request by any Initial
Purchaser pursuant to clause (iv) above). In the event that the Company is
required to file a Preferred Stock Shelf Registration Statement upon the
request of any Holder (other than an Initial Purchaser) not eligible to
participate in the Preferred Stock 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 have declared effective by the SEC both a
Preferred Stock Exchange Offer Registration Statement pursuant to Section
2(a) with respect to all Registrable Preferred Stock and a Preferred Stock
Shelf Registration Statement (which may be a combined Registration
Statement with the Preferred Stock Exchange Offer Registration Statement)
with respect to offers and sales of Registrable Preferred Stock held by
such Holder or such Initial Purchaser after completion of the Preferred
Stock Exchange Offer; PROVIDED, that with respect to Exchange Preferred
Stock received by an Initial Purchaser in exchange for any
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portion of an unsold allotment of Preferred Stock, the Company may, if
permitted by current interpretations of the staff of the SEC, file a
post-effective amendment to the Preferred Stock 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 Section 2(b) with respect thereto, and any such
Preferred Stock Exchange Offer Registration Statement, as so amended,
shall be referred to herein as, and be governed by (for so long as such
interpretation of the SEC shall continue to be effective) the provisions
herein applicable to, a Preferred Stock Shelf Registration Statement.
(B) use its best efforts to keep the Preferred Stock Shelf
Registration Statement continuously effective in order to permit the
Prospectus forming a part thereof to be usable by Holders for a period of
two years from the date the Preferred Stock Shelf Registration Statement is
declared effective by the SEC (or one year from the date the Preferred
Stock Shelf Registration Statement is declared effective if such Preferred
Stock 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 (i) all of the Registrable Preferred Stock covered by the
Preferred Stock Shelf Registration Statement has been sold pursuant to the
Preferred Stock Shelf Registration Statement, (ii) the date on which all of
the Registrable Preferred Stock becomes eligible for resale pursuant to
Rule 144 under the 1933 Act without volume restrictions or (iii) the date
on which there ceases to be any outstanding Registrable Preferred Stock;
and
(C) notwithstanding any other provisions hereof, use its best efforts
to ensure that (i) any Preferred Stock 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 Preferred Stock 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 a part
of any Preferred Stock 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 to make the statements, in light of the
circumstances under which they were made, not misleading.
The Company further agrees, if necessary, to supplement or amend the
Preferred Stock 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 Preferred Stock copies of any such supplement or amendment promptly
after its being used or filed with the SEC.
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(c) EXPENSES. The Company shall be liable for and pay all
Registration Expenses in connection with the registration pursuant to Section
2(a) and 2(b). Each Holder shall pay all expenses of its counsel other than as
set forth in the preceding sentence, underwriting discounts and commissions
(prior to the reduction thereof with respect to selling concessions, if any) and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Preferred Stock pursuant to the Preferred Stock Shelf Registration
Statement.
(d) EFFECTIVE REGISTRATION STATEMENT.
(i) The Company will be deemed not to have used its best efforts to
cause the Preferred Stock Exchange Offer Registration Statement or the
Preferred Stock Shelf Registration Statement, as the case may be, to
become, or to remain, effective during the requisite period if the Company
voluntarily takes any action that would result in any such Registration
Statement not being declared effective or in the Holders of Registrable
Preferred Stock covered thereby not being able to exchange or offer and
sell such Registrable Preferred Stock 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) A Preferred Stock Exchange Offer Registration Statement pursuant
to Section 2(a) hereof or a Preferred Stock 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
Preferred Stock 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 Preferred Stock pursuant to such
Registration Statement may legally resume.
(e) INCREASE IN DIVIDEND RATE. In the event that (i) the Preferred
Stock Exchange Offer Registration Statement is not filed with the SEC on or
prior to the 90th day following the Original Issue Date,(ii) the Preferred Stock
Exchange Offer Registration Statement (or, if applicable, the Preferred Stock
Shelf Registration Statement) has not become effective within 120 days following
the Original Issue Date, (iii) the expiration of the Preferred Stock Exchange
Offer has not occurred within 45 days after the effective date of the Preferred
Stock Exchange Offer Registration Statement or (iv) any Registration Statement
required by this Agreement is filed and declared effective but shall thereafter
cease to be effective (except as specifically permitted herein) without being
succeeded immediately by an additional Registration Statement filed and declared
effective (any such event referred to in clauses (i) through (iv) above, a
"Registration Default;" PROVIDED that no more than one Registration Default
shall be deemed in effect at any one time), the dividend rate borne by the
Preferred Stock shall be
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increased by one-half of one percent (0.5%) per annum for the period from the
occurrence of the Registration Default until such time as no Registration
Default is in effect, PROVIDED, that if a different event specified in clause
(i), (ii), (iii) or (iv) above occurs the dividend rate will again be
increased as pursuant to the foregoing provisions. Such additional dividend
(the "Special Dividend") shall be payable in cash (or in kind to the extent
dividends are payable in kind pursuant to Section 3(a) of the Certificate of
Designation) quarterly in arrears on each February 15, May 15, August 15 and
November 15. For each 90-day period that the Registration Default continues,
the per annum rate of such Special Dividend shall increase by an additional
one-half of one percent (0.5%), PROVIDED that such rate shall in no event
exceed two percent (2.0%) per annum in the aggregate. If the Company issues
a notice that the Preferred Stock Shelf Registration Statement is unusable
pending the announcement of a material corporate transaction or otherwise
pursuant to Section 3(k) hereof, or such a notice is required under
applicable securities laws to be issued by the Company, and the aggregate
number of days in any consecutive twelve-month period for which all such
notices are issued or required to be issued exceeds 30 days in the aggregate,
then the dividend rate borne by the Preferred Stock will be increased by
one-half of one percent per annum following the date that such Preferred
Stock Shelf Registration Statement ceases to be usable beyond the 30-day
period permitted above, which rate shall be increased by an additional
one-half of one percent per annum for each additional 90-day period that such
Preferred Stock Shelf Registration Statement continues to be unusable;
PROVIDED that the aggregate increase in such annual dividend rate may in no
event exceed two percent (2.0%). Upon the Company declaring that the
Preferred Stock Shelf Registration Statement is usable after the dividend
rate has been increased pursuant to the preceding sentence, the dividend rate
borne by the Preferred Stock will be reduced to the original dividend rate if
the Company is otherwise in compliance with this paragraph; PROVIDED,
HOWEVER, that if after any such reduction in dividend rate the Preferred
Stock Shelf Registration Statement again ceases to be usable beyond the
period permitted above, the dividend rate will again be increased and
thereafter reduced pursuant to the foregoing provisions.
(f) SPECIFIC ENFORCEMENT. Without limiting the remedies available to
the Initial Purchasers and the Holders, the Company acknowledges that any
failure by the Company to comply with its respective 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) hereof.
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
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selected by the Company, (ii) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Preferred Stock 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 (i) the Preferred Stock Exchange Offer
Registration Statement as may be necessary under applicable law to keep such
Preferred Stock Exchange Offer Registration Statement effective for the
period required to comply with Section 2(a) and (ii) the Preferred Stock
Shelf Registration Statement as may be necessary under applicable law to keep
such Preferred Stock Shelf Registration Statement effective for the period
required pursuant to Section 2(b) hereof; 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;
(c) in the case of a Shelf Registration,(i) notify each Holder of
Registrable Preferred Stock, at least ten days prior to filing, that a
Preferred Stock Registration Statement (or amendment thereto) with respect to
the Registrable Preferred Stock is being filed and advising such Holders that
the distribution of Registrable Preferred Stock will be made in accordance
with the method elected by the Majority Holders; and (ii) furnish to each
Holder of Registrable Preferred Stock, to counsel for the Initial Purchasers,
to counsel for the Holders and to each underwriter of an underwritten
offering of Registrable Preferred Stock, 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,
counsel 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 Preferred Stock; and (iii) subject to the last
paragraph of 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 Preferred Stock in
connection with the offering and sale of the Registrable Preferred Stock
covered by the Prospectus, or any amendment or supplement thereto;
(d) use its best efforts to register or qualify the Registrable
Preferred Stock under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder of Registrable Preferred Stock covered by a
Registration Statement and each underwriter of an underwritten offering of
Registrable Preferred Stock shall reasonably request by the time the
applicable 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, to keep each such registration or qualification effective
during the period such Registration Statement is required to be effective
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and to do any and all other acts and things that may be reasonably necessary
or advisable to enable such Holders to consummate the disposition in each
such jurisdiction of such Registrable Preferred Stock owned by such Holders;
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 Preferred Stock and counsel for the Initial Purchasers 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, between the
effective date of a Registration Statement and the closing of any sale of
Registrable Preferred Stock 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, (v) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Registrable Preferred Stock 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
Preferred Stock Shelf Registration Statement is effective which makes any
statement made in such Preferred Stock Shelf Registration Statement or the
related Prospectus untrue in any material respect or which requires the
making of any changes in such Preferred Stock Shelf 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 Preferred Stock Exchange Offer,
(i) include in the Preferred Stock Exchange Offer Registration Statement a
"Plan of Distribution" section covering the use of the Prospectus included in
the Preferred Stock Exchange Offer Registration Statement by broker-dealers
who have exchanged their Registrable Preferred Stock for Exchange Preferred
Stock for the resale of such Exchange Preferred Stock, (ii) furnish to each
broker-dealer who desires to participate in the Preferred Stock Exchange
Offer, without charge, as many copies of each Prospectus included in the
Preferred Stock 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 Preferred Stock
Exchange Offer Registration Statement a statement that any broker-dealer who
holds Registrable Preferred Stock acquired for its own account as a result of
market-making activities or other trading activities (a "Participating
Broker-Dealer"), and who receives Exchange Preferred Stock for Registrable
Preferred Stock
12
pursuant to the Preferred Stock 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 Preferred Stock,
(iv) subject to the last paragraph of Section 3, hereby consent to the use of
the Prospectus forming part of the Preferred Stock Exchange Offer
Registration Statement or any amendment or supplement thereto, by any
broker-dealer in connection with the sale or transfer of the Exchange
Preferred Stock covered by the Prospectus or any amendment or supplement
thereto in accordance with the 1933 Act, and (v) include in the transmittal
letter or similar documentation to be executed by an exchange offeree in
order to participate in the Preferred Stock Exchange Offer (x) 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 Preferred Stock. If the
undersigned is a broker-dealer that will receive Exchange
Preferred Stock for its own account in exchange for Registrable
Preferred Stock, it represents that the Registrable Preferred
Stock to be exchanged for Exchange Preferred Stock was 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 Preferred Stock pursuant to the Preferred
Stock Exchange Offer; PROVIDED, HOWEVER, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to
admit that it is an "underwriter" within the meaning of the 1933
Act";
and (y) a statement to the effect that by making the acknowledgment described
in subclause (x) and by delivering a Prospectus in connection with the
exchange of Registrable Preferred Stock, a broker-dealer will not be deemed
to admit that it is an underwriter within the meaning of the 1933 Act; and
(B) to the extent any Participating Broker-Dealer participates
in the Preferred Stock 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
TD Securities (USA) Inc., unless it elects not to act as such
representative) only one, if any, "cold comfort" letter with respect
to the Prospectus in the form existing on the last date for which
exchanges are accepted pursuant to the Preferred Stock Exchange Offer
and with respect to each subsequent amendment or supplement, if any,
effected during the period specified in clause (C) below;
(C) to the extent any Participating Broker-Dealer participates
in the Preferred Stock Exchange Offer, the Company shall use its best
efforts to maintain the effectiveness of the Preferred Stock Exchange
Offer Registration
13
Statement for a period of 90 days following the closing of the
Preferred Stock Exchange Offer; and
(D) the Company shall not be required to amend or supplement the
Prospectus contained in the Preferred Stock Exchange Offer
Registration Statement as would otherwise be contemplated by
Section 3(b), or take any other action as a result of this
Section 3(f), for a period exceeding 120 days after the last date for
which exchanges are accepted pursuant to the Preferred Stock 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 a Preferred Stock Exchange Offer, furnish
counsel for the Initial Purchasers and (B) in the case of a Shelf
Registration, furnish counsel for the Holders of Registrable Preferred Stock
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) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement as soon as
practicable 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 Preferred Stock, 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 Preferred Stock to facilitate the timely
preparation and delivery of certificates representing Registrable Preferred
Stock to be sold and not bearing any restrictive legends; and cause such
Registrable Preferred Stock to be in such denominations (consistent with the
provisions of the Certificate of Designation) and registered in such names as
the selling Holders or the underwriters, if any, may reasonably request at
least two business days prior to the closing of any sale of Registrable
Preferred Stock;
(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 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 Preferred Stock, 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
14
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 a CUSIP number for all Exchange Preferred Stock, or
Registrable Preferred Stock, as the case may be, not later than the effective
date of a Registration Statement, and provide the Transfer Agent with printed
certificates for the Exchange Preferred Stock or the Registrable Preferred
Stock, as the case may be, in a form eligible for deposit with the Depositary;
(m) 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 Majority
Holders) in order to expedite or facilitate the disposition of such
Registrable Preferred Stock and in such connection whether or not an
underwriting 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 Preferred Stock 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 Preferred
Stock 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 use best efforts to have such letters addressed
to the selling Holders of Registrable Preferred Stock, 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;
15
(iv) enter into a securities sales agreement with all of 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 Preferred Stock, which agreement shall
be in form, substance and scope customary for similar offerings;
(v) if an underwriting agreement is entered into, 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 said Section; and
(vi) deliver such documents and certificates as may be reasonably
requested and as are customarily delivered in similar offerings.
The above actions shall be done at (i) the effectiveness of such Preferred Stock
Shelf 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 of any underwritten
offering, the Company shall provide written notice to the Holders of all
Registrable Preferred Stock 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;
(n) in the case of a Shelf Registration, make available for
inspection by representatives of the Holders of the Registrable Preferred Stock
and any underwriters participating in any disposition pursuant to a Preferred
Stock Shelf Registration Statement and any counsel or accountant retained by
such Holders or underwriters, during business hours, all financial and other
records, pertinent corporate documents and properties of the Company reasonably
requested upon reasonable notice 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 such Preferred Stock Shelf
Registration Statement; PROVIDED, HOWEVER, that such Persons shall first agree
in writing with the Company that any information that is reasonably and in good
faith designated by the Company in writing as confidential at the time of
delivery of such information shall be kept confidential by such Persons, unless
(i) disclosure of such information is required by court or administrative order
or is necessary to respond to inquiries of regulatory authorities,(ii)
disclosure of such information is required by law (including any disclosure
requirements pursuant to Federal securities laws in connection with the filing
of such Preferred Stock Shelf Registration Statement or the use of any
Prospectus),(iii) such information becomes generally available to the public
other than as a result of a disclosure or failure to safeguard such information
by such Person or (iv) such information becomes available to such Person from a
16
source other than the Company and its subsidiaries and such source is not bound
by a confidentiality agreement;
(o) (i)in the case of an Exchange Offer, a reasonable time prior to
the filing of any Preferred Stock Exchange Offer Registration Statement, any
Prospectus forming a part thereof, any amendment to a Preferred Stock 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 any of the Initial Purchasers or
their counsel may reasonably request; (ii) in the case of a Shelf Registration,
a reasonable time prior to filing any Preferred Stock Shelf Registration
Statement, any Prospectus forming a part thereof, any amendment to such
Preferred Stock Shelf Registration Statement or amendment or supplement to such
Prospectus, provide copies of such document to the Holders of Registrable
Preferred Stock, to the Initial Purchasers, to counsel on behalf of the Holders
and to the underwriter or underwriters of an underwritten offering of
Registrable Preferred Stock, if any, and make such changes in any such document
prior to the filing thereof as the Holders of Registrable Preferred Stock, the
Initial Purchasers on behalf of such Holders, their counsel and any underwriter
may reasonably request; and (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 Preferred Stock, 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 furnished a copy or to which such Holders, the Initial Purchasers on behalf
of such Holders, their counsel or any underwriter shall reasonably object, each
of which actions in this clause (iii) by the Holders shall be coordinated by one
representative for all the Holders at reasonable times and in a reasonable
manner;
(p) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Preferred Stock to be listed on any securities exchange on
which similar 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 Preferred Stock, if any;
(q) in the case of a Shelf Registration, unless the rating in effect
for the Preferred Stock applies to the Exchange Preferred Stock and the
Preferred Stock to be sold pursuant to a Shelf Registration, use its best
efforts to cause the Registrable Preferred Stock to be rated with the
appropriate rating agencies, if so requested by the Majority Holders or by the
underwriter or underwriters of an underwritten offering of Registrable Preferred
Stock, if any, unless the Registrable Preferred Stock is already so rated;
(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, 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
17
(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 Preferred Stock Shelf Registration Statement, the
Company may (as a condition to such Holder's participation in the Shelf
Registration) require each Holder of Registrable Preferred Stock to furnish to
the Company such information regarding such Holder and the proposed distribution
by such Holder of such Registrable Preferred Stock and make such
representations, in each case, as the Company may from time to time reasonably
request in writing.
In the case of a Preferred Stock 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 Preferred Stock 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 Preferred Stock current
at the time of receipt of such notice. If the Company shall give any such
notice to suspend the disposition of Registrable Preferred Stock pursuant to a
Preferred Stock 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 Preferred Stock Shelf Registration Statement effective during such
period of suspension, PROVIDED, that 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 Preferred Stock 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 or written notice from
the Company that the use of the Prospectus may be resumed.
4. UNDERWRITTEN REGISTRATIONS. If any of the Registrable Preferred
Stock covered by any Shelf Registration is 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 Preferred Stock included in such offering and shall be reasonably
acceptable to the Company.
No Holder of Registrable Preferred Stock may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Preferred Stock 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,
18
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
5. INDEMNIFICATION AND CONTRIBUTION. (a) The Company shall indemnify
and hold harmless each Holder, including the Initial Purchaser and Participating
Broker-Dealers, each underwriter who participates in an offering of Registrable
Preferred Stock, their respective affiliates, and their respective directors,
officers, employees and agents, and each Person, if any, who controls any such
parties within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act as follows:
(i) against any and all losses, liabilities, claims, damages and
expenses whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendments or supplements thereto) pursuant to which
Exchange Preferred Stock or Registrable Preferred Stock was 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 amendments
or supplements thereto) or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all losses, liabilities, claims, damages and
expenses whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; PROVIDED that (subject to Section
5(c) below) any such settlement is effected with the consent of the
Company; and
(iii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by an
indemnified party), reasonably incurred in investigating, preparing or
defending against any litigation, or 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 (i) this indemnity shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission 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 any
19
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) and (ii) the Company shall not be liable to any indemnified party
under this indemnity agreement with respect to the Registration Statement or
Prospectus to the extent that any such loss, claim, damage or liability of
such indemnified party results solely from an untrue statement of a material
fact contained in, or the omission of a material fact from, the Registration
Statement or Prospectus which untrue statement or omission was corrected in
an amended or supplemented Registration Statement or Prospectus, if the
person alleging such loss, claim, damage or liability was not sent or given,
at or prior to the written confirmation of such sale, a copy of the amended
or supplemented Registration Statement or Prospectus if the Company had
previously furnished copies thereof to such indemnified party and if delivery
of a prospectus is required by the 1933 Act and was not so made. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) In the case of a Shelf Registration, each Holder agrees,
severally and not jointly, to indemnify and hold harmless the Company, the
Initial Purchasers, each underwriter who participates in an offering of
Registrable Preferred Stock 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, each 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 losses, liabilities, claims, damages and expenses 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, as
the case may be, 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 Preferred Stock pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give notice in writing as promptly
as reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, 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 any 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 parties be liable for fees and expenses of
more than one counsel, in addition to any local 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
20
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 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, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, the Initial Purchaser and the Holders, from
the offering of the Exchange Preferred Stock or Registrable Preferred Stock
included in such offering or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, the Initial Purchasers, and the Holders, 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 the Company, the Initial
Purchasers, and the Holders 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 the Company, the Initial Purchasers or the Holders 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 Preferred Stock 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 this 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
21
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 and 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. The parties
hereto agree that any underwriting discount or commission or reimbursement of
fees paid to any Initial Purchaser pursuant to the Purchase Agreement shall
not be deemed to be a benefit received by any Initial Purchaser in connection
with the offering of the Exchange Preferred Stock or Registrable Preferred
Stock in such offering.
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 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, that if it ceases to be so required to file such
reports, it will upon the request of any Holder of Registrable Preferred Stock
(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 (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 Preferred Stock 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 request of
any Holder of Registrable Preferred Stock, 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 the Company, on or after the date of this Agreement, enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Preferred Stock 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
22
obtained the written consent of Holders of at least a majority in aggregate
principal amount of the outstanding Registrable Preferred Stock 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 Preferred Stock unless consented to in
writing by such Holder.
(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, facsimile transmission, 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 Transfer Agent,
(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 Company's 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 faxed; 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 Transfer Agent at
the address specified by the Transfer Agent from time to time in writing.
(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 Preferred
Stock in violation of the terms hereof or of the Purchase Agreement or the
Certificate of Designation. If any transferee of any Holder shall acquire
Registrable Preferred Stock, in any manner, whether by operation of law or
otherwise, such Registrable Preferred Stock shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Preferred
Stock, 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 they deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.
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(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts and in separate counterparts and, when this Agreement has been
executed by each party in multiple or separate counterparts, all such
counterparts taken together shall constitute one and the same agreement.
(h) EFFECT OF HEADINGS. The Section and other headings herein are
for convenience only and shall not affect the construction hereof.
(i) GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO ITS CONFLICTS OF LAW PROVISIONS). SPECIFIED TIMES OF DAY REFER TO NEW
YORK CITY TIME.
(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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RURAL CELLULAR CORPORATION
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
TD SECURITIES (USA) INC.
By:
------------------------------------
Authorized Signatory
NATIONSBANC XXXXXXXXXX SECURITIES LLC
By:
-------------------------------------
Authorized Signatory
BANCBOSTON SECURITIES INC.
By:
-------------------------------------
Authorized Signatory
