DOCUMENT 10.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July 21, 1997 by
and among Intellicall, Inc., a Delaware corporation (the "Company"), with
headquarters located at Carrollton, Texas and the undersigned, (the "Initial
Purchasers" ).
RECITALS
A. In connection with the Securities Purchase Agreement dated of even date
herewith by and between the Company and the Initial Purchasers (the "Securities
Purchase Agreement"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Initial Purchasers shares
of Series A Preferred Stock of the Company (the "Preferred Stock") that is
convertible into shares (the "Conversion Shares") of the Company's common stock,
par value $.01 per share (the "Common Stock"), upon the terms and subject to the
limitations and conditions set forth in the Certificate of Designations,
Preferences and Rights with respect to such Preferred Stock (the "Certificate of
Designations").
B. To induce the Initial Purchasers to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws.
AGREEMENTS
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, and the Initial
Purchasers hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall have
the following meanings:
(a) "Purchasers" means the Initial Purchasers and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Article IX hereof.
(b) "register," "registered," and "registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act and pursuant to Rule 415 under the Securities
Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(c) "Registrable Securities" means the Conversion Shares (including any
Conversion Shares issuable with respect to conversion default payments under the
Certificate of Designation or with respect to any redemption of any Preferred
Stock) issued or issuable with respect to the Preferred Stock and any shares of
capital stock issued or issuable, from time to time (with any adjustments), on
or in exchange for or otherwise with respect to any of the foregoing.
(d) "Registration Statement" means a registration statement of the Company
under the Securities Act.
1.2 Capitalized Terms. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Securities
Purchase Agreement.
ARTICLE II
REGISTRATION
2.1 Mandatory Registration. The Company shall prepare, and, on or prior to
forty-five (45) days after the date of the Closing (the "Filing Date"), file
with the SEC a Registration Statement on Form S-3 (or, if Form S-3 is not then
available, on such form of Registration Statement as is then available to effect
a registration of all of the Registrable Securities, subject to the consent of
the Initial Purchasers (as determined pursuant to Section 11.10 hereof))
covering the resale of all of the Registrable Securities, which Registration
Statement, to the extent allowable under the Securities Act and the Rules
promulgated thereunder (including Rule 416), shall state that such Registration
Statement also covers such indeterminate number of additional shares of Common
Stock as may become issuable upon conversion of the Preferred Stock (i) to
prevent dilution resulting from stock splits, stock dividends or similar
transactions or (ii) by reason of changes in the Conversion Price of the
Preferred Stock in accordance with the terms thereof, or the number of shares of
Common Stock purchasable thereunder, in accordance with the terms thereof. The
Registrable Securities included in the Registration Statement shall be allocated
among the Purchasers as set forth in Section 11.11 hereof. The Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided to (and subject to the
approval of the Initial Purchasers, which approval shall not be unreasonably
withheld or denied) the Initial Purchasers and their counsel prior to its filing
or other submission.
2.2 Underwritten Offering. If any offering pursuant to a Registration Statement
pursuant to Section 2.1 hereof involves an underwritten offering, the Purchasers
who hold a majority in interest of the Registrable Securities subject to such
underwritten offering, with the consent of the Initial Purchasers, shall have
the right to select a total of one legal counsel to represent the
Purchasers and an investment banker or bankers and manager or managers to
administer the offering, which investment banker or bankers or manager or
managers shall be reasonably satisfactory to the Company.
2.3 Payments by the Company. The Company shall cause the registration statement
to become effective as soon as practicable, but in no event later than the
ninetieth (90th) day following the Closing Date (the "Registration Deadline").
If (i) the registration statement(s) covering the Registrable Securities
required to be filed by the Company pursuant to Section 2.1 hereof is not
declared effective by the SEC on or before the Registration Deadline, or (ii)
after the registration statement has been declared effective by the SEC, sales
of all the Registrable Securities (including any Registrable Securities required
to be registered pursuant to Section 3.2 hereof) cannot be made pursuant to the
registration statement (by reason of a stop order or the Company's failure to
update the registration statement or any other reason outside the control of the
Purchasers) (any event described in the preceding clauses (i) and (ii) being
described as a "Registration Failure Event"), then the Company will make
payments to the Purchasers in such amounts and at such times as shall be
determined pursuant to this Section 2.3 as partial relief for the damages to the
Purchasers by reason of any such delay in or reduction of their ability to sell
the Registrable Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity). Promptly upon the occurrence of such
Registration Failure Event, the Company shall pay to each Purchaser an amount
equal to (i) (A) .005 (during the first 30 days after the Registration
Deadline), .01 (during the period beginning 31 days after the Registration
Deadline and ending 60 days after the Registration Deadline) and .02
(thereafter) times (B) the aggregate purchase price of the Preferred Stock held
by such Purchaser (including, without limitation, Preferred Stock that have been
converted into Conversion Shares then held by such Purchaser) times (ii) an
amount equal to: (A) in the case of a Registration Failure Event described in
clause (i) of the second sentence of this Section 2.3, the number of months
(prorated per day for partial months) following the Registration Deadline prior
to the date the Registration Statement filed pursuant to Section 2.1 is declared
effective by the SEC, or (B) in the case of a Registration Failure Event
described in clause (ii) of the second sentence of this Section 2.3, the number
of months (prorated per day for partial months) following the Registration
Deadline but prior to the termination of the Registration Period that sales
cannot be made pursuant to the Registration Statement after the Registration
Statement has been declared effective. Such amounts shall be paid in cash or, at
each Purchaser's option, may be convertible into Common Stock at the "Conversion
Price" (as defined in the Certificate of Designation). Any shares of Common
Stock issued upon conversion of such amounts shall be Registrable Securities. If
the Purchaser desires to convert or exercise the amounts due hereunder into
Registrable Securities it shall so notify the Company in writing within two (2)
business days prior to the date on which such amounts are first payable in cash
and such amounts shall be so convertible (pursuant to the terms of the
Certificate of Designation), beginning on the last day upon which the cash
amount would otherwise be due in accordance with the following sentence.
Payments of cash pursuant hereto shall be made within five (5) days after the
end of each period
that gives rise to such obligation, provided that, if any such period extends
for more than thirty (30) days, interim payments shall be made for each such
thirty (30) day period.
2.4 Piggy-Back Registrations. If at any time prior to the expiration of the
Registration Period (as hereinafter defined) the Company shall file with the SEC
a Registration Statement relating to a firm commitment underwritten offering for
its own account or the account of others under the Securities Act of any of its
equity securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), then the Company
shall send to each Purchaser who is entitled to registration rights under this
Section 2.4 written notice of such determination and, if within fifteen (15)
days after the date of such notice, such Purchaser shall so request in writing,
the Company shall include in such Registration Statement all or any part of the
Registrable Securities such Purchaser requests to be registered, except that if,
in connection with any underwritten public offering for the account of the
Company the managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which such
Purchaser has requested inclusion hereunder as the underwriter shall permit. Any
exclusion of Registrable Securities shall be made pro rata among the Purchasers
seeking to include Registrable Securities, in proportion to the number of
Registrable Securities sought to be included by such Purchasers; provided,
however, that the Company shall not exclude any Registrable Securities unless
the Company has first excluded all outstanding securities, the holders of which
are not entitled to inclusion of such securities in such Registration Statement
or are not entitled to pro rata inclusion with the Registrable Securities; and
provided, further, however, that, after giving effect to the immediately
preceding proviso, except as disclosed on Schedule 2.4, any exclusion of
Registrable Securities shall be made pro rata with holders of other securities
having the right to include such securities in the Registration Statement other
than holders of securities entitled to inclusion of their securities in such
Registration Statement by reason of demand registration rights. No right to
registration of Registrable Securities under this Section 2.4 shall be construed
to limit any registration required under Section 2.1 or 3.2 hereof. If an
offering in connection with which a Purchaser is entitled to registration under
this Section 2.4 is an underwritten offering, then each Purchaser whose
Registrable Securities are included in such Registration Statement shall, unless
otherwise agreed by the Company, offer and sell such Registrable Securities in
an underwritten offering using the same underwriter or underwriters and, subject
to the provisions of this Agreement, on the same terms and conditions as other
shares of Common Stock included in such underwritten offering.
2.5 Eligibility for Form S-3. The Company represents and warrants that it
meets the requirements for the use of Form S-3 for registration of the sale by
the Initial Purchasers and
any other Purchaser of the Registrable Securities and the Company shall file all
reports required to be filed by the Company with the SEC in a timely manner so
as to maintain such eligibility for the use of Form S-3.
ARTICLE III
OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the Company
shall have the following obligations:
3.1 The Company shall prepare promptly and file with the SEC the Registration
Statement required by Section 2.1, and cause such Registration Statement
relating to Registrable Securities to become effective as soon as practicable
after such filing, but in no event later than the Registration Deadline, and
keep the Registration Statement effective pursuant to Rule 415 at all times
until such date as is the earlier of (i) the date on which all of the
Registrable Securities have been sold (and no further Registrable Securities may
be issued in the future) and (ii) the date on which all of the Registrable
Securities (in the reasonable opinion of counsel to the Initial Purchasers) may
be immediately sold to the public without registration, whether pursuant to Rule
144 or otherwise (the "Registration Period"). The Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein and all documents incorporated by reference therein) shall not contain
any 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.
3.2 The Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by the Registration Statement until the termination of the
Registration Period or, if earlier, such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the Registration
Statement. In the event the number of shares available under a Registration
Statement filed pursuant to this Agreement is, for any three (3) consecutive
trading days (the last of such three (3) trading days being the "Registration
Trigger Date"), insufficient to cover one hundred fifty percent (150%) of the
Registrable Securities issued or issuable upon conversion of the Preferred Stock
held by any Purchaser, the Company shall amend, if permissible, the Registration
Statement, or file a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover two hundred percent (200%) of
the Registrable Securities issued or issuable to such Purchaser, in each case,
as soon as practicable, but in any event within fifteen (15) days after the
Registration Trigger Date (based
on the market price of the Common Stock and other relevant factors on which the
Company reasonably elects to rely). The Company shall cause such amendment
and/or new Registration Statement to become effective as soon as practicable
following the filing thereof. In the event the Company fails to obtain the
effectiveness of any such Registration Statement within ninety (90) days after a
Registration Trigger Date, each Purchaser shall thereafter have the option,
exercisable in whole or in part at any time and from time to time by delivery of
a written notice to the Company (a "Redemption Notice"), to require the Company
to purchase for cash, at an amount per share equal to the Redemption Conversion
Amount (as defined in the Certificate of Designation), up to a portion of the
Purchaser's Preferred Stock such that, after giving effect to such purchase, the
total number of Registerable Securities available under a Registration Statement
filed pursuant to this Agreement is sufficient to cover two hundred percent
(200%) of the Registrable Securities issued or issuable upon conversion of the
Preferred Stock held by such Purchaser. If the Company fails to redeem any of
such shares within five (5) business days after its receipt of a Redemption
Notice, then such Purchaser shall be entitled to the remedies provided in the
Certificate of Designation (it being understood that pursuant to the Certificate
of Designation certain of these remedies are subject to the Company not being in
Monetary Default (as defined in the Certificate of Designation)).
3.3 The Company shall furnish to each Purchaser whose Registrable Securities are
included in the Registration Statement and its legal counsel (a) promptly after
the same is prepared and publicly distributed, filed with the SEC, or received
by the Company, one copy of the Registration Statement and any amendment
thereto, each preliminary prospectus and prospectus and each amendment or
supplement thereto, and, in the case of the Registration Statement referred to
in Section 2.1, each letter written by or on behalf of the Company to the SEC or
the staff of the SEC, and each item of correspondence from the SEC or the staff
of the SEC, in each case relating to such Registration Statement (other than any
portion, if any, thereof which contains information for which the Company has
sought confidential treatment), and (b) such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as such Purchaser may reasonably request in order to
facilitate the disposition of the Registrable Securities owned (or to be owned)
by such Purchaser.
3.4 The Company shall use reasonable efforts to (a) register and qualify the
Registrable Securities covered by the Registration Statement under securities
laws of such jurisdictions in the United States as each Purchaser who holds (or
has the right to hold) Registrable Securities being offered reasonably requests,
(b) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (c) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (d) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3.4, (ii)
subject itself to general taxation in any such jurisdiction, (iii) file a
general consent to service of process in any such jurisdiction, (iv) provide any
undertakings that cause the Company material expense or burden, or (v) make any
change in its charter or by-laws, which in each case the board of directors of
the Company determines to be contrary to the best interests of the Company and
its stockholders.
3.5 In the event the Purchasers who hold a majority in interest of the
Registrable Securities being offered in an offering pursuant to a Registration
Statement or any amendment or supplement thereto under Section 2.1 or 3.2 hereof
select underwriters for the offering, the Company shall enter into and perform
its obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriters of such offering.
3.6 As promptly as practicable after becoming aware of such event, the Company
shall notify each Purchaser of the happening of any event, of which the Company
has knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and deliver such number of copies of such
supplement or amendment to each Purchaser as such Purchaser may reasonably
request.
3.7 The Company shall use its best efforts to prevent the issuance of any stop
order or other suspension of effectiveness of a Registration Statement, and, if
such an order is issued, to obtain the withdrawal of such order at the earliest
practicable moment and to notify each Purchaser who holds Registrable Securities
being sold (or, in the event of an underwritten offering, the managing
underwriters) of the issuance of such order and the resolution thereof.
3.8 The Company shall permit a single firm of counsel designated by the Initial
Purchasers to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably
objects.
3.9 The Company shall make generally available to its security holders as soon
as practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the Securities Act) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next following the
effective date of the Registration Statement.
3.10 At the request of any Purchaser, the Company shall furnish, on the date of
effectiveness of the Registration Statement and thereafter from time to time on
such dates as a Purchaser may reasonably request (a) an opinion, dated as of
such applicable date, from counsel representing the Company addressed to the
Purchasers and in form, scope and substances as is customarily given in an
underwritten public offering and (b) in the case of an underwriting, a letter,
dated as of such applicable date, from the Company's independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and the Purchasers.
3.11 The Company shall make available for inspection by (i) any Purchaser, (ii)
any underwriter participating in any disposition pursuant to the Registration
Statement, (iii) one firm of attorneys and one firm of accountants or other
agents retained by the Purchasers, and (iv) one firm of attorneys retained by
all such underwriters (collectively, the "Inspectors") all pertinent financial
and other records, and pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably deemed necessary
by each Inspector to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information which any Inspector may reasonably request for purposes
of such due diligence; provided, however, that each Inspector shall hold in
confidence and shall not make any disclosure (except to a Purchaser) of any
Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (b) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be required
to disclose any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality agreements (in
form and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 3.11. Each Purchaser agrees
that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. Nothing herein shall be deemed to
limit a Purchaser's ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and regulations.
3.12 The Company shall hold in confidence and not make any disclosure of
information concerning a Purchaser provided to the Company unless (a) disclosure
of such information is necessary to comply with federal or state securities
laws, (b) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (c) the release of such
information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, (d) such information has been
made generally available to the public other than by disclosure in violation of
this or any other agreement, or (e) such Purchaser consents to the form and
content of any such disclosure. The Company agrees that it shall, upon learning
that disclosure of such information concerning a Purchaser is sought in or by a
court or governmental body of competent jurisdiction or self-regulatory
organization or through other means, give prompt notice to such Purchaser prior
to making such disclosure, and allow the Purchaser, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
3.13 The Company shall cause the listing and the continuation of listing of all
the Registrable Securities covered by the Registration Statement on the New York
Stock Exchange and cause the Registrable Securities to be quoted or listed on
each additional national securities exchange or quotation system upon which the
Common Stock is then listed or quoted.
3.14 The Company shall provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the Registration Statement. 3.15 The Company shall cooperate with the
Purchasers who hold Registrable Securities being offered and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to the Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or the Purchasers may
reasonably request and registered in such names as the managing underwriter or
underwriters, if any, or the Purchasers may request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall cause legal
counsel selected by the Company to deliver, to the transfer agent for the
Registrable Securities (with copies to the Purchasers whose Registrable
Securities are included in such Registration Statement) an opinion of such
counsel in the form attached hereto as Exhibit 1.
3.16 At the request of any Purchaser, the Company shall prepare and file with
the SEC such amendments (including post-effective amendments) and supplements to
a Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary in order to change the plan of
distribution set forth in such Registration Statement.
3.17 The Company shall comply with all applicable laws related to a Registration
Statement and offering and sale of securities and all applicable rules and
regulations of governmental authorities in connection therewith (including,
without limitation, the Securities Act and the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated by the Commission).
3.18 The Company shall take all such other actions as any Purchaser or the
underwriters, if
any, reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities.
3.19 From and after the date of this Agreement, the Company shall not, and shall
not agree to, allow the holders of any securities of the Company to include any
of their securities in any Registration Statement or any amendment or supplement
thereto under Section 2.1 or 3.2 hereof without the consent of the holders of a
majority of the Registrable Securities; provided, however, that the foregoing
restriction shall not apply to the securities subject to the agreements
disclosed in Schedule 3.19 as long as such securities do not reduce or affect
the amount of any Registrable Securities included in such Registration
Statement.
ARTICLE IV
OBLIGATIONS OF THE PURCHASERS
In connection with the registration of the Registrable Securities, the
Purchasers shall have the following obligations:
4.1 It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Purchaser that such Purchaser shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least five (5)
business days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Purchaser of the information the
Company requires from each such Purchaser.
4.2 Each Purchaser, by such Purchaser's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Purchaser has notified the Company in writing
of such Purchaser's election to exclude all of such Purchaser's Registrable
Securities from the Registration Statement.
4.3 Each Purchaser whose Registrable Securities are included in a Registration
Statement understands that the Securities Act may require delivery of a
prospectus relating thereto in connection with any sale thereof pursuant to such
Registration Statement, and each such Purchaser shall use its reasonably best
efforts to comply with the applicable prospectus delivery requirements of the
Securities Act in connection with any such sale.
4.4 Each Purchaser agrees to notify the Company promptly, but in any event
within 72 hours after the date on which all Registrable Securities owned by such
Purchaser have been sold by
such Purchaser, if such date is prior to the expiration of the Registration
Period, so that the Company may comply with its obligation to terminate the
Registration Statement in accordance with Item 512 of Regulation S-K or
Regulation S-B, as the case may be.
4.5 In the event Purchasers holding a majority in interest of the Registrable
Securities being offered determine to engage the services of an underwriter,
each Purchaser agrees to enter into and perform such Purchaser's obligations
under an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities, unless such Purchaser has notified the Company in
writing of such Purchaser's election to exclude all of such Purchaser's
Registrable Securities from the Registration Statement.
4.6 Each Purchaser agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3.6 or 3.7, such
Purchaser will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Purchaser's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3.6 or 3.7 and, if so directed by the
Company, such Purchaser shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Purchaser's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
4.7 Without limiting a Purchaser's rights under Section 2.1 or 3.2 hereof, no
Purchaser may participate in any underwritten distribution hereunder unless such
Purchaser (a) agrees to sell such Purchaser's Registrable Securities on the
basis provided in any underwriting arrangements in usual and customary form
entered into by the Company, (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and (c)
agrees to pay its pro rata share of all underwriting discounts and commissions
and any expenses in excess of those payable by the Company pursuant to Article
V.
ARTICLE V
EXPENSES OF REGISTRATION
All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Articles II and III, including, without limitation, all registration, listing
and qualification fees, printers and accounting fees, the fees and disbursements
of counsel for the Company, and the reasonable fees and disbursements of one
counsel selected by the Purchasers pursuant to Section 2.2 hereof shall be borne
by the Company; provided, however, that the reimbursable expenses of the counsel
selected by the Purchasers pursuant to Section 2.2 hereof shall not exceed
Twenty Thousand Dollars ($20,000).
ARTICLE VI
INDEMNIFICATION
In the event any Registrable Securities are included in a Registration Statement
under this Agreement:
6.1 To the extent permitted by law, the Company will indemnify, hold harmless
and defend (a) each Purchaser who holds such Registrable Securities, and (b) the
directors, officers, partners, members, employees, agents and persons who
control any Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), if any, (each, an "Indemnified Person"), against any joint or several
losses, claims, damages, liabilities or expenses (collectively, together with
actions, proceedings or inquiries by any regulatory or self-regulatory
organization, whether commenced or threatened, in respect thereof, "Claims") to
which any of them may become subject insofar as such Claims arise out of or are
based upon: (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities (the matters in the
foregoing clauses (i) through (iii) being, collectively, "Violations"). Subject
to the restrictions set forth in Section 6.3 with respect to the number of legal
counsel, the Company shall reimburse the Purchasers and each such underwriter or
controlling person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6.1: (x) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto; (y) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (z) with respect to any preliminary prospectus, shall
not inure to the benefit of any Indemnified Person if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented, if such
corrected prospectus was timely made available by the Company pursuant to
Section 3.3 hereof, and the Indemnified Person was promptly advised in writing
not to use the incorrect prospectus prior to the use giving rise to a Violation
and such Indemnified Person, notwithstanding such advice, used it. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Purchasers pursuant to Article IX.
6.2 In connection with any Registration Statement in which a Purchaser is
participating, each such Purchaser agrees to indemnify, hold harmless and
defend, to the same extent and in the same manner set forth in Section 6.1, the
Company, each of its directors, each of its officers who signs the Registration
Statement, its employees, agents and persons, if any, who control the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and any other stockholder selling securities pursuant to the
Registration Statement or any of its directors or officers or any person who
controls such stockholder or underwriter within the meaning of the Securities
Act or the Exchange Act (collectively and together with an Indemnified Person,
an "Indemnified Party"), against any Claim to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such
Purchaser expressly for use in connection with such Registration Statement; and
subject to Section 6.3 such Purchaser will reimburse any legal or other expenses
(promptly as such expenses are incurred and are due and payable) reasonably
incurred by them in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6.2
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Purchaser, which consent
shall not be unreasonably withheld; provided, further, however, that a Purchaser
shall be liable under this Agreement (including this Section 6.2 and Article
VII) for only that amount as does not exceed the net proceeds actually received
by such Purchaser as a result of the sale of Registrable Securities pursuant to
such Registration Statement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Purchasers pursuant to Article IX. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6.2 with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented, and the
Indemnified Party failed to utilize such corrected prospectus.
6.3 Promptly after receipt by an Indemnified Person or Indemnified Party under
this Article VI of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to made against any indemnifying party under this
Article VI, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that such indemnifying party shall not be entitled to assume such
defense and an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person or the Indemnified Party and the
indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are different from or in addition
to those available to such indemnifying party. The indemnifying party shall pay
for only one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable, and such legal counsel shall be selected by
Purchasers holding a majority-in-interest of the Registrable Securities included
in the Registration Statement to which the Claim relates (with the approval of
the Initial Purchasers if they hold Registrable Securities included in such
Registration Statement), if the Purchasers are entitled to indemnification
hereunder, or by the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Article VI, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Article VI shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
ARTICLE VII
CONTRIBUTION
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Article
VI to the fullest extent permitted by law; provided, however, that (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Article
VI, (ii) 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 of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (iii) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
ARTICLE VIII
REPORTS UNDER THE EXCHANGE ACT
With a view to making available to the Purchasers the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the Purchasers to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
8.1 File with the SEC in a timely manner and make and keep available all reports
and other documents required of the Company under the Securities Act and the
Exchange Act so long as the Company remains subject to such requirements (it
being understood that nothing herein shall limit the Company's obligations under
Section 4.3 of the Securities Purchase Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
8.2 Furnish to each Purchaser so long as such Purchaser holds Preferred Stock or
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested to
permit the Purchasers to sell such securities pursuant to Rule 144 without
registration.
ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of the Purchasers hereunder, including the right to have the Company
register Registrable Securities pursuant to this Agreement, shall be
automatically assignable by each Purchaser to any transferee of all or any
portion of the Preferred Stock or the Registrable Securities if: (a) the
Purchaser agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such transferee or assignee, and (ii) the securities with
respect to which such registration rights are being transferred or assigned, (c)
following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act
and applicable state securities laws, (d) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing for the benefit of the Company to be
bound by all of the provisions contained herein, and (e) such transfer shall
have been made in accordance with the applicable requirements of the Securities
Purchase Agreement.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with written consent of the Company, the Initial Purchasers
(but not an Initial Purchaser who no longer owns any Preferred Stock or
Registrable Securities) and Purchasers who hold a majority interest of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Article X shall be binding upon each Purchaser and the Company.
ARTICLE XI
MISCELLANEOUS
11.1 A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
11.2 Any notices herein required or permitted to be given shall be in writing
and may be personally served or delivered by courier or by confirmed telecopy,
and shall be deemed delivered at the time and date of receipt (which shall
include telephone line facsimile transmission). The addresses for such
communications shall be:
If to the Company:
Intellicall, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
with a copy to:
Kane, Russell, Xxxxxxx & Xxxxx, P.C.
3700 Thanksgiving Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxx
If to CC Investments, LDC:
CC Investments, LDC
Corporate Centre, West Bay Road
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
with a copy to:
Castle Creek Partners, LLC
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx
and with a copy to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx
and if to any other Purchaser, at such address as such Purchaser, shall have
provided in writing to the Company, or at such other address as each such party
furnishes by notice given in accordance with this Section 11.2.
11.3 Failure of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.
11.4 This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts made and to be performed
in the State of Delaware. The parties hereto irrevocably consent to the
jurisdiction of the courts of the State of Delaware located in the County of New
Castle in the State of Delaware 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 such courts. The Company irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit or
proceeding. The parties hereto further agree that service of process upon the
parties hereto mailed by certified mail return receipt requested shall be deemed
in every respect effective service of process upon each such party in any such
suit or proceeding. Nothing herein shall affect either party's right to serve
process in any other manner permitted by law. The parties hereto agree that a
final non-appealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in any
other lawful manner.
11.5 This Agreement, the Preferred Stock, the Certificate of Designation and the
Securities Purchase Agreement (including all schedules and exhibits thereto and
all certificates and opinions required thereby) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, the Preferred
Stock and the Securities Purchase Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
11.6 Subject to the requirements of Article IX hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
11.7 The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
11.8 This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other party hereto, by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
11.9 Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
11.10 All consents and other determinations to be made by the Purchasers or the
Initial Purchasers pursuant to this Agreement shall be made by the Purchasers or
the Initial Purchasers holding a majority of the Registrable Securities
(determined as if all Preferred Stock then outstanding had been converted into
or exercised for Registrable Securities) held by all Purchasers or Initial
Purchasers, as the case may be.
11.11 The initial number of Registrable Securities included on any Registration
Statement and each increase to the number of Registrable Securities included
thereon shall be allocated pro rata among the Purchasers based on the number of
Registrable Securities held by each Purchaser at the time of such establishment
or increase, as the case may be. In the event a Purchaser shall sell or
otherwise transfer any of such holder's Registrable Securities, each transferee
shall be allocated a pro rata portion of the number of Registrable Securities
included on a Registration Statement for such transferor. Any shares of Common
Stock included on a Registration Statement and which remain allocated to any
person or entity which does not hold any Registrable Securities shall be
allocated to the remaining Purchasers, pro rata based on the number of shares of
Registrable Securities then held by such Purchasers. Without implication that
the contrary would otherwise be true, for purposes of this paragraph, all
Preferred Stock then outstanding shall be assumed converted into or exercised
for Registrable Securities.
11.12 If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
* * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first above written.
INTELLICALL, INC.
Xxxx X. Xxxxxxxxx, Vice President of Finance
Initial Purchasers:
PURCHASER:
CANADIAN IMPERIAL HOLDINGS, INC.
By:
Its:
PURCHASER:
THE XXXXXXX FUND, N.V.
By:
Its:
PURCHASER:
CC INVESTMENTS, LDC
By:
Its:
PURCHASER:
PROPRIETARY CONVERTIBLE INVESTMENT GROUP, INC.
By:
Its:
PURCHASER:
XXXXXX INVESTMENTS, LLC
By:
Its:
EXHIBIT 1
to Registration
Rights Agreement
[Date]
[Name and address
of transfer agent]
RE: INTELLICALL, INC.
Ladies and Gentlemen:
We are counsel to INTELLICALL, INC., a Delaware corporation (the "Company"), and
we understand that [Name of Purchaser] (the "Holder") has purchased from the
Company Series A Convertible Preferred Stock of the Company (the "Preferred
Stock"), convertible into shares of the Company's common stock, par value $.10
per share (the "Common Stock"). The Preferred Stock was purchased by the Holder
pursuant to a Securities Purchase Agreement, dated as of June ___, 1997, by and
among the Company and the signatories thereto (the "Agreement"). Pursuant to a
Registration Rights Agreement, dated as of June __, 1997, by and among the
Company and the signatories thereto (the "Registration Rights Agreement"), the
Company agreed with the Holder, among other things, to register the Registrable
Securities (as that term is defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the "Securities Act"), upon the terms
provided in the Registration Rights Agreement. In connection with the Company's
obligations under the Registration Rights Agreement, on _____ __, 1997, the
Company filed a Registration Statement on Form S-_____ (File No. 333-
__________) (the "Registration Statement") with the Securities and Exchange
Commission (the "SEC") relating to the Registrable Securities, which names the
Holder as a selling stockholder thereunder and which registration statement was
declared effective by the SEC on ____________.
[Other introductory and scope of examination language to be inserted]
Based on the foregoing, we are of the opinion that the Registrable Securities
have been registered under the Securities Act.
[Other appropriate language to be included.]
Very truly yours,
cc: [Name of Purchaser]
Schedule 2.4 - Registration Rights Agreements
The Company has entered into the following agreements which contain registration
rights obligations, copies of which have been provided to the Initial Purchasers
and their counsel: Registration Rights Agreement dated Feburuary 14, 1994 with
X.X. Xxxxxxx Investments, L.P.; Conversion Agency Agreement dated December 29,
1995 with Banca del Gottardo; Conversion Agency Agreement dated November 22,
1996 with Banca del Gottardo; SF-W-1 Warrant to purchase 200,000 shares; SF-W-2
Warrant to purchase 150,000 shares.
Such agreements contain rights of the parties thereto to include Common Stock of
the Company in a registration statement filed for the Initial Purchasersall on
the terms and conditions therein specified.
