EXHIBIT 10.2
REGISTRATION RIGHTS AND TRANSFER RESTRICTION AGREEMENT
BY AND BETWEEN
LEVEL 3 COMMUNICATIONS, INC.
LEUCADIA NATIONAL CORPORATION
AND
XXXXXXX ENTERPRISES, INC.
____________________
Dated as of ______ __, ____
____________________
TABLE OF CONTENTS
PAGE
ARTICLE 1 EFFECTIVENESS; DEFINITIONS.................................................................1
1.1 Effectiveness..................................................................................1
1.2 Definitions....................................................................................1
ARTICLE 2 REGISTRATION...............................................................................6
2.1 Shelf Registration.............................................................................6
2.2 Certain Underwritten Offerings Pursuant to the Shelf Registration..............................7
2.3 Piggyback Underwritten Offerings..............................................................10
2.4 Registration Procedures.......................................................................12
2.5 Standstill Agreement; Restrictions on Transfer................................................15
2.6 Blackout Periods; Suspension of Dispositions..................................................16
2.7 Indemnification...............................................................................18
2.8 Assignment of Registration Rights.............................................................21
ARTICLE 3 RULE 144..................................................................................21
3.1 Current Public Information....................................................................21
ARTICLE 4 MISCELLANEOUS.............................................................................22
4.1 Notices.......................................................................................22
4.2 Governing Law.................................................................................22
4.3 Submission to Jurisdiction....................................................................23
4.4 Successors and Assigns........................................................................23
4.5 Counterparts..................................................................................23
4.6 Severability..................................................................................23
4.7 Entire Agreement..............................................................................23
4.8 No Waivers; Amendments........................................................................23
4.9 Specific Enforcement; Cumulative Remedies.....................................................24
4.10 Time of the Essence...........................................................................24
4.11 Construction..................................................................................24
4.12 Information...................................................................................24
REGISTRATION RIGHTS AND TRANSFER RESTRICTION AGREEMENT
This AGREEMENT (this "Agreement"), dated as of ______ __, ____, is
entered into by and among Level 3 Communications, Inc., a Delaware corporation
(the "Company"), Leucadia National Corporation, a New York corporation
("Leucadia"), and Xxxxxxx Enterprises, Inc. ("Xxxxxxx"), a Colorado corporation
and wholly owned subsidiary of Leucadia.
RECITALS
--------
WHEREAS, the Company, Leucadia and Xxxxxxx are parties to an
Acquisition Agreement, dated as of October 30, 2005 (the "Acquisition
Agreement"); and
WHEREAS, pursuant to the Acquisition Agreement, Xxxxxxx will receive
shares of common stock, par value $0.01 per share of the Company.
NOW, THEREFORE, in consideration of the promises, mutual covenants
and agreements hereinafter contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
EFFECTIVENESS; DEFINITIONS
--------------------------
1.1 Effectiveness. This Agreement shall be effective as of the
"Closing" as defined in the Acquisition Agreement (hereinafter, the "Closing").
1.2 Definitions.
"Acquisition Agreement" shall have the meaning set forth in the
Recitals hereto.
"Advice" shall have the meaning set forth in Section 2.6.2 hereof.
"Affiliate" means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common control
with any Person; and the term "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through ownership of voting securities, by contract or
otherwise.
"Agreement" shall have the meaning set forth in the introductory
paragraph hereof.
"Beneficially Ownership" or "Beneficially Owning" shall have the
meaning ascribed to such term under Rule 13d-3 of the Exchange Act.
"Blackout Period" shall have the meaning set forth in Section 2.6.1
hereof.
"Block" means one (1) single trade at one (1) single price with one
(1) or more counterparties of at least five million (5,000,000) shares of
Registrable Securities.
"Board" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks are authorized or required to close under the laws
of the United States or the State of New York.
"Common Stock" means the common stock, par value $0.01 per share of
the Company.
"Common Stock Equivalents" means, without duplication with any other
Common Stock or Common Stock Equivalents, any rights, warrants, options,
convertible securities or indebtedness, exchangeable securities or indebtedness,
or other rights, exercisable for or convertible or exchangeable into, directly
or indirectly, Common Stock and securities convertible or exchangeable into
Common Stock, whether at the time of issuance or upon the passage of time or the
occurrence of any future event.
"Company" shall have the meaning set forth in the introductory
paragraph hereof.
"Company Notice" shall have the meaning set forth in Section 2.3.1
hereof.
"Delay Fee" means a daily charge per share of Registrable Securities,
calculated at the rate of 6% per year (based on a 365 day year) on the aggregate
Market Value, as of the first date of any period for which the Delay Fee is
applied, multiplied by the number of Registrable Securities that each Investor
holds on the relevant date (subject to equitable adjustment in the case of
securities other than Common Stock).
"Damages" shall have the meaning set forth in Section 2.7.1 hereof.
"Effective Date" shall mean the date the Registration Statement
becomes effective under the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations promulgated by the
SEC thereunder.
"Holder" shall mean Xxxxxxx, Leucadia and any subsidiary of Leucadia.
"Investor" means the Holder and any transferee of the Registrable
Securities thereof to whom the Holder assigns its rights under this Agreement,
in whole or in part, and who agrees to become bound by the provisions of this
Agreement in accordance with Section 2.8 hereof.
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"Investor Affiliate" or "Investor Affiliates" shall have the meaning
set forth in Section 2.7.1 hereof.
"Investor Notice" shall have the meaning set forth in Section 2.1.4
hereof.
"Market Value" means, as of any date, the average per share closing
price of the Common Stock on the NASDAQ National Market over the 10-day trading
period ending on the trading day immediately prior to such date.
"Maximum Offering Size" shall have the meaning set forth in Section
2.2.1 hereof.
"NASD" means the National Association of Securities Dealers, Inc.
"Notifying Investor" shall have the meaning set forth in Section
2.2.1.
"Person" or "person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
"Piggyback Notice" shall have the meaning set forth in Section 2.2.1
hereof.
"Receiving Investor" shall have the meaning set forth in Section
2.2.1.
"register," "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" means the shares of Common Stock to be
acquired by the Holder pursuant to the transactions contemplated by the
Acquisition Agreement and any shares of capital stock or other securities issued
or issuable from time to time with respect to the Common Stock as a result of a
reclassification, share combination, share subdivision, stock split, share
dividend, merger, consolidation or similar transaction or event or otherwise as
a distribution on or in exchange for or with respect to the Common Stock until
(a) a registration statement covering all such Registrable Securities has been
declared effective by the SEC and such Registrable Securities have been disposed
of pursuant to an effective registration statement, or (b) such Registrable
Securities are sold pursuant to Rule 144 (or any similar provision then in
force).
"Registration Expenses" means any and all expenses incident to the
performance of or compliance with any registration or marketing of securities,
including all (i) registration and filing fees, and all other fees and expenses
payable in connection with the listing of securities on any securities exchange
or automated interdealer quotation system, (ii) fees and expenses of compliance
with any securities or "blue sky" laws (including reasonable fees and
disbursements of counsel in connection with "blue sky" qualifications of the
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securities registered), (iii) expenses in connection with the preparation,
printing, mailing and delivery of any registration statements, prospectuses and
other documents in connection therewith and any amendments or supplements
thereto, (iv) security engraving and printing expenses, (v) internal expenses of
the Company (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), (vi) fees and
disbursements of counsel for the Company and customary fees and expenses for
independent certified public accountants retained by the Company (including the
expenses relating to any comfort letters or costs associated with the delivery
by independent certified public accountants of any comfort letters), (vii) fees
and expenses of any special experts retained by the Company in connection with
such registration, (viii) reasonable fees and out-of-pocket expenses of one
counsel to the Investors in an aggregate amount not to exceed $35,000 in an
underwritten offering pursuant to Section 2.2, (ix) filing fees and reasonable
and customary attorneys' fees in connection with filings with the NASD in
connection with any review by the NASD of the underwriting arrangements for any
underwritten offering pursuant to Section 2.2, (x) costs of printing and
producing any agreements among underwriters, underwriting agreements, any "blue
sky" or legal investment memoranda and any selling agreements and other
documents in connection with the offering, sale or delivery of the Registrable
Securities, (xi) transfer agents' and registrars' fees and expenses and the fees
and expense of any other agent or trustee appointed in connection with such
offering, (xii) expenses of the Company relating to any analyst or investor
presentations or any "road shows" undertaken in connection with an underwritten
offering of the Registrable Securities pursuant to Section 2.2 and (xiii) any
other fees and disbursements of underwriters customarily paid by issuers or
sellers of securities by excluding any underwriters discounts and commissions
attributable to the sale of Registrable Securities (other than fees and expenses
of any "qualified independent underwriter", including fees and expenses of
counsel thereto, and fees and expenses payable in connection with any ratings of
the Registrable Securities, including expenses relating to any presentations to
rating agencies).
"Resale Prospectus" shall have the meaning set forth in Section 2.1.4
hereof.
"Rule 144" means Rule 144 under the Securities Act as in effect on
the date hereof and such rule as from time to time amended and any successor
rule or regulation under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act as in effect on
the date hereof and such rule as from time to time amended and any successor
rule or regulation under the Securities Act.
"Rule 145" means Rule 145 under the Securities Act as in effect on
the date hereof and such rule as from time to time amended and any successor
rule or regulation under the Securities Act.
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"Rule 415" means Rule 415 under the Securities Act as in effect on
the date hereof and such rule as from time to time amended and nay successor
rule or regulation under the Securities Act.
"SEC" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations promulgated by the SEC
thereunder.
"Shelf Registration Statement" shall have the meaning provided in
Section 2.1.1 hereof.
"Substitution Rights" shall have the meaning provided in the
Acquisition Agreement.
"Suspension Notice" shall have the meaning set forth in Section 2.6.2
hereof.
"Suspension Period" shall have the meaning set forth in Section 2.6.2
hereof.
"Takeover Proposal" means any bona fide offer or proposal by a third
party to acquire, directly or indirectly, more than 50% of assets of the Company
and its Subsidiaries, taken as a whole, or more than 50% of the Common Stock
then outstanding pursuant to a merger, consolidation or other business
combination, sale of shares of capital stock or other equity interests, sale of
assets, tender offer, exchange offer or similar transaction.
"Transferee" shall have the meaning set forth in Section 2.8 hereof.
"Transfer" shall mean to sell, contract to sell, pledge, grant any
option to purchase, acquire any option to sell, hypothecate, loan, make a short
sale or otherwise transfer or dispose of to any Person, other than to a
subsidiary of the Investor which subsidiary agrees in writing to be bound by the
terms of the Agreement.
"Transfer Date" shall have the meaning set forth in Section 2.5.2
hereof.
"Transfer Period" shall have the meaning set forth in Section 2.5.2
hereof.
"Underwriting Notice" shall have the meaning set forth in Section
2.2.1 hereof.
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ARTICLE 2
REGISTRATION
------------
2.1 Shelf Registration.
2.1.1 Shelf Registration Statement. The Company shall promptly
upon the consummation of the Closing file with the SEC a shelf registration
statement relating to the offer and sale by the Holder at any time and from time
to time on a delayed or continuous basis in accordance with Rule 415, through
such method or methods of distribution as the Holder shall select, and in
accordance with this Agreement, of all the Registrable Securities (the "Shelf
Registration Statement"); provided that the Shelf Registration Statement shall
be filed no later than the second Business Days after the Closing or the date on
which the Holder provides all information requested by the Company with respect
to the Shelf Registration Statement, so long as the Company has requested such
information from the Holder in a timely manner. The Company shall use its best
efforts to have the Shelf Registration Statement declared effective as
expeditiously as possible, but no later than thirty (30) days from the date of
filing. The Company shall use its reasonable best efforts to keep the Shelf
Registration Statement effective under the Securities Act until the second
anniversary of the Closing (or for such longer period if extended pursuant to
Section 2.6.3 hereof). In the event the Shelf Registration Statement cannot be
kept effective for such period, the Company shall, subject to Section 2.6
hereof, use its reasonable best efforts to prepare and file with the SEC and
have declared effective as promptly as practicable another registration
statement on the same terms and conditions as the initial Shelf Registration
Statement and such registration statement shall be considered the Shelf
Registration Statement for purposes hereof. The Company shall supplement and
amend the Shelf Registration Statement to reflect changes in the manner of
distribution reasonably requested by the Investors.
2.1.2 Adjustment. If at any time the outstanding shares of
Registrable Securities as a class shall have been increased, decreased, changed
into or exchanged for a different number or class of shares or securities as a
result of a reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, combination or exchange of shares or other
similar change in capitalization, then an appropriate and proportionate
adjustment shall be made to the number of shares of such stock for all purposes
under this Agreement.
2.1.3 Expenses. The Company shall be liable for and pay all
Registration Expenses in connection with any registration pursuant Section 2.1.1
hereof.
2.1.4 Notice of Intended Use of Prospectus. If, at any time
after the Closing, any Investor intends to use or deliver the prospectus forming
a part of the Shelf Registration Statement (or any prospectus supplement or
amendment thereto) in connection with any offer or sale of Registrable
Securities covered thereby ("Resale Prospectus"), such Investor shall first give
written notice thereof to the Company at least two (2) Business Days prior to
the first date such prospectus or prospectus supplement will be used or
delivered by such Investor in connection with such offer or sale (the "Investor
6
Notice"). Notwithstanding anything to the contrary contained in this Agreement,
in the event that an Investor provides the Company with the Investor Notice that
specifies that the Investor intends to use or deliver the Resale Prospectus on a
continuous basis for a period of time specified in such Investor Notice, then
the Investor Notice shall be deemed to have been provided each day during the
continuous period of time specified in the Investor Notice.
2.1.5 Eligibility on 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 Investors of the Registrable Securities and covenants that on
and after the filing of the Registration Statement pursuant to Section 2.1.1
hereof it will meet the requirements for the use of Form S-3, and the Company
has filed all reports required to be filed by the Company with the SEC in a
timely manner and covenants that it will continue to do so to obtain and
maintain such eligibility for the use of Form S-3. In the event that Form S-3 is
not available for sale by the Investors of the Registrable Securities, then (i)
the Company shall register the sale of the Registrable Securities on another
appropriate form as soon as practicable and (ii) the Company shall undertake to
register the Registrable Securities on Form S-3 as soon as such form is
available, provided that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.
2.1.6 Most Favored Nation Clause. Notwithstanding anything to
the contrary in this Agreement until the earlier to occur of (A) the second
anniversary of the date hereof and (B) the date on which no Investor holds
Registrable Securities, the Company hereby covenants that the terms and
conditions applicable to the length and frequency of Blackout Periods shall be
at least as favorable as those offered by the Company to any other Person, and
this Agreement shall be automatically amended, without any affirmative action
taken by the parties hereto, as may be necessary to effect such covenant.
2.2 Certain Underwritten Offerings Pursuant to the Shelf
Registration.
2.2.1 Underwriting Notice. In the event that any Investor
holding thirty percent (30%) or more of the Registrable Securities then
outstanding (and with respect to the Holder, as otherwise permitted by the last
sentence of this Section 2.2.1) shall seek to undertake an underwritten offering
of any Registrable Securities (including, without limitation, in connection with
any security issued by the Holder that is convertible into or exchangeable for
any Registrable Security) pursuant to the Shelf Registration Statement, such
Investors shall first give written notice thereof to the Company (the
"Underwriting Notice" and each such party giving notice, a "Notifying Investor")
to the other Investors (the "Receiving Investors") at least ten (10) Business
Days prior to the anticipated initiation of such underwritten offering,
specifying the number of Registrable Securities sought to be offered. The
Company shall advise the Notifying Investor and the Receiving Investors and each
Receiving Investor shall advise the Notifying Investor and the Company in
writing within five (5) Business Days after receipt of such Underwriting Notice
(or if the Notifying Investors intend to execute the underwriting agreement with
respect to such underwritten offering prior to such date, the Notifying
Investors shall so notify the Company and the Receiving Investors in the
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Underwriting Notice, and each Receiving Investor shall advise the Notifying
Investor and the Company in writing on or before the date on which the
underwriting agreement is executed but no less than five (5) Business Days after
receipt of such Underwriting Notice), specifying the number, if any, of shares
of Registrable Securities that such Receiving Investors, as applicable, seek to
include in such underwritten offering (each a "Piggyback Notice"), and subject
to the next sentence, such shares of Registrable Securities shall be included in
such underwritten offering. If the managing underwriter of the underwritten
offering pursuant to which Registrable Securities are included pursuant to this
Section 2.2 shall advise the Company and the Investors in writing that, in its
view, the number of securities requested to be included in such underwritten
offering exceeds the largest number of securities which can be sold in such
offering without adversely affecting the offering, including with respect to the
price at which such shares can be sold (the "Maximum Offering Size"), the
Company and the Investors will include in such underwritten offering, to the
extent of the number which the Investors are so advised can be sold in such
offering, a pro rata amount, based upon the number of Registrable Securities
sought to be offered by each Investor as set forth in the Underwriting Notice
and the Piggyback Notice. Notwithstanding anything contained herein to the
contrary, and whether or not the Holder owns 30% (thirty percent) or more of the
Registrable Securities outstanding at such time, the Holder shall be entitled to
be the sole Notifying Investor for at least one of three underwritten offerings
permitted herein, so long as the Underwriting Notice given by the Holder covers
not less than the minimum amount specified in Section 2.2.4(C) hereof.
2.2.2 Expenses. The Company shall be liable for and pay all
Registration Expenses in connection with any underwritten offering pursuant to
Section 2.2.1 hereof; provided, however, that in any underwritten offering
pursuant to this Section 2.2 the Investors shall pay any underwriting
commissions and discounts incurred pursuant to and in connection with any
underwritten offering by the Investors and the other fees and expenses in excess
of the thresholds set forth in the definition of "Registration Expenses."
2.2.3 No Piggyback Rights. For the avoidance of doubt, only an
Investor is permitted to provide a Piggyback Notice and seek to include shares
of Common Stock or Registrable Securities of the Company in an underwritten
offering made pursuant to this Section 2.2.
2.2.4 Procedures. Subject to Section 2.6 hereof, the Company
shall (i) make reasonably available for inspection by the Investors, any
underwriter participating in any disposition pursuant to the Shelf Registration
Statement and any attorney, accountant or other agent retained by the Investors
or any such underwriter, all relevant financial and other records, pertinent
corporate documents and properties of the Company, (ii) cause the Company's
officers, directors, employees, and use its reasonable best efforts to cause the
Company's accountants and auditors, to supply all relevant information
reasonably requested by the Investors or any such underwriter, attorney,
accountant or agent in connection with the underwritten offering, (iii) as may
be reasonably requested, cause the Company's officers and employees to
participate in investor presentations to prospective investors and analysts,
8
including via "road shows," and (iv) generally accommodate any participating
underwriter's reasonable requests relating to its due diligence efforts;
provided, however, that the Investors shall only be entitled to effect up to a
total of three (3) underwritten offerings of Registrable Securities pursuant to
the Shelf Registration Statement; provided, further, however, that no such
offering pursuant to Section 2.2.1 hereof shall be made by the Holder:
(A) on more than one occasion during any period of sixty (60)
consecutive days after any other such offering of Registrable Securities in
accordance with this Section 2.2 was consummated;
(B) within sixty (60) days of the consummation of an offering of
Registrable Securities in which the Investors were offered the opportunity to
participate pursuant to Section 2.3 hereof, provided that all the Registrable
Securities requested by the Investors to be so registered were registered for
sale in such offering; and
(C) unless the Investors will offer for sale at least thirty
million (30,000,000) shares of Common Stock or the equivalent number of shares
of Registrable Securities or, with respect to the third underwritten offering,
at least forty million (40,000,000) shares of Common Stock or the equivalent
number of shares of Registrable Securities. (1)
2.2.5 Effective Registration Statement. For purposes of
determining an Investor's right to sell Registrable Securities pursuant to the
Shelf Registration Statement in an underwritten offering referred to in Section
2.2.1 hereof, an offering of such nature shall not be deemed to have been
effected unless (A) a registration statement with respect thereto has become
effective and remained in effect for the relevant period set forth in Section
2.4.1(b) hereof (provided, however, that a registration which does not become
effective solely by reason of the refusal of all of the Investors to proceed
with the offering or the refusal by the Company to proceed based upon the
written opinion of outside counsel to the lead underwriter delivered to and
reasonably acceptable to the Company to the effect that proceeding is
inappropriate as a legal matter for a reason relating to circumstances of all of
the Investors shall be deemed to have been effected), (B) after it has become
effective, such registration has not become subject to any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court for any reason, other than solely by reason of some act or omission by
the Investors with respect thereto, or such stop order, injunction or other
order has been lifted so as to permit such offering and sale of Registrable
Securities, and (C) the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are satisfied or any failure to satisfy such conditions was solely
by reason of some act or omission by the Investors.
2.2.6 Underwriting Agreements. If requested by the underwriters
for any underwritten offering by the Investors to be conducted pursuant to
Section 2.2.1 hereof, the Company will enter into an underwriting agreement with
such underwriters for such offering, such agreement to be in customary form for
offerings of this type and acceptable to the Investors (it being agreed that the
--------------------
(1) To the extent the Company exercises its Substitution Rights, these
thresholds will be reduced proportionately.
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Company's prior underwriting agreements to the extent applicable for offerings
of this type will be considered in determining what is customary), whose
acceptance shall not be unreasonably withheld, to contain such representations
and warranties by the Company and such other terms as are generally prevailing
in agreements of this type, including, without limitation, representations and
indemnities by the Company and other customary indemnifications. The Investors
will cooperate with the Company in the negotiation of the underwriting agreement
and will give consideration to the reasonable suggestions of the Company
regarding the form thereof.
2.2.7 Holdback Agreement. Unless the managing underwriter
otherwise agrees, each of the Company and the Investors agree (and the Company
agrees, in connection with any underwritten registration, to use its
commercially reasonable efforts to cause its Affiliates to agree) not to effect
any public sale or private offer or distribution of any Common Stock or Common
Stock Equivalents during such time period after the pricing of any underwritten
offering pursuant to this Section 2.2 as may reasonably be requested by the
managing underwriter (such period of time not to exceed ninety (90) days);
provided, however, that the foregoing restriction shall not apply to (i) if
applicable, any offering made as part of such underwritten registration, (ii) up
to $100 million of 3(a)(9) offerings and (iii) other exceptions customary for
offerings of this type (it being agreed that the Company's prior underwriting
agreements to the extent applicable for offerings of this type will be
considered in determining what is customary).
2.2.8 Selection of Underwriters. In an underwritten offering of
Registrable Securities effected pursuant to this Section 2.2, the Notifying
Investors shall select the investment banking firm or firms to manage the
underwritten offering; provided, however, that such selection shall be subject
to the consent of the Company; provided, further, that the Company agrees that
any selection of Xxxxxxxxx & Company, Inc. shall be acceptable.
2.2.9 Participation in Underwritten Offerings. Neither an
Investor nor any other Person may participate in any underwritten offering in
which Registrable Securities are to be offered pursuant to this Section 2.2
unless such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved, subject to the terms and
conditions hereof, by the Company and the Investors to be included in such
underwritten offering and (ii) completes and executes all questionnaires,
indemnities, underwriting agreements and other documents (other than powers of
attorney) reasonably required under the terms of such underwriting arrangements.
2.3 Piggyback Underwritten Offerings.
2.3.1 Right to Piggyback. In the event that the Company shall
seek to undertake an underwritten public offering of registered shares of Common
Stock for cash (whether for the account of the Company or the account of any
securityholder of the Company), except in the case of an offering registered on
Form S-4 or S-8 (or any successor form) for the registration of securities to be
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offered in a transaction of the type referred to in Rule 145 or to be offered to
employees of and/or consultants to the Company or subsidiaries thereof, the
Company shall first give written notice thereof (the "Company Notice") to each
Investor, which Company Notice shall be given not less than ten (10) Business
Days prior to the anticipated initiation of such underwritten offering and shall
offer the Investors the opportunity to include any or all of its Registrable
Securities in such underwritten offering, subject to the limitations contained
in Section 2.3.3 hereof, unless the managing underwriter for such underwritten
public offering has advised the Company that the shares to be offered by the
Company in such offering constitute the Maximum Offering Size, in which case,
the Company shall give the Investors written notice to this effect prior to the
initiation of such offering in lieu of the Company Notice and each Investor
shall not have the right to include its Registrable Securities in such offering.
2.3.2 Notice of Participation in Piggyback Offerings. Each
Investor shall advise the Company in writing within five (5) Business Days after
the date of receipt of the Company Notice, specifying the number of Registrable
Securities, if any, the Investor seeks to include in such underwritten offering.
The Company shall thereupon include in such underwritten offering the number of
Registrable Securities so requested by such Investor to be included, subject to
Section 2.3.3 hereof, and shall use reasonable best efforts to effect
registration of such Registrable Securities under the Securities Act; provided,
however, that the Company may at any time withdraw or cease proceeding with any
such underwritten offering of such Investor's Registrable Securities if it shall
at the same time withdraw or cease proceeding with the underwritten offering of
all other shares of Common Stock originally proposed to be registered.
2.3.3 Priority on Piggyback Offerings. If the managing
underwriter of the underwritten offering pursuant to which Registrable
Securities are included pursuant to this Section 2.3 shall advise the Company
and the Investors in writing that, in its view, the number of securities
requested to be included in such underwritten offering (including securities to
be sold by the Company or by other Persons not holding Registrable Securities)
exceeds the Maximum Offering Size, the Company will include in such underwritten
offering, to the extent of the number which the Company is so advised can be
sold in such underwritten offering, (i) first, securities of the Company that
the Company proposes to sell, (ii) second, Registrable Securities held by the
Investors, and (iii) third, securities of the Company held by other Persons
having registration rights proposed to be included in such registration
statement, allocated, if necessary, on a pro rata basis in accordance with the
number of shares proposed to be included in such registration by such Investors
and/or such other Persons, as applicable.
2.3.4 Expenses. The Company shall be liable for and pay all of
Registration Expenses in connection with any underwritten offering in which the
Investors have the opportunity to participate pursuant to this Section 2.3;
provided, however, that in any underwritten offering pursuant to this Section
2.3 the Investors shall pay any underwriting commissions and discounts incurred
pursuant to and in connection with any underwritten offering by such Investor
and the other fees and expenses in excess of the thresholds set forth in the
definition of "Registration Expenses."
11
2.3.5 Limitation on Subsequent Registration Rights. The Company
acknowledges and agrees that the Company will not grant to any other Person or
allow the exercise by any other Person rights to piggyback or participate in
registered underwritten offerings of shares of Common Stock for cash in priority
to the rights granted to the Investors in this Section 2.3 or that would impair
the rights of the Investors under this Agreement (including with respect to the
timing of any underwritten offering initiated by the Investors pursuant hereto).
2.4 Registration Procedures.
2.4.1 Actions to be taken by the Company. If and when the
Company is required to use its reasonable best efforts to effect the
registration of any Registrable Securities under the Securities Act as provided
herein, the Company shall, as expeditiously as possible, but subject to the
provisions of Section 2.6 hereof:
(a) prepare and file with the SEC a registration statement on any
appropriate form under the Securities Act with respect to such
Registrable Securities and thereafter use its reasonable best efforts
to cause such registration statement to become effective as promptly
as practicable under the circumstances and to remain effective for the
period set forth in subparagraph (b) below;
(b) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement until the earlier of such time as all of such
securities have been disposed of in accordance with the intended
methods of distribution thereof or, in the case of the Shelf
Registration Statement, the expiration of the period set forth in
Section 2.1 hereof;
(c) furnish to each seller of Registrable Securities and the
underwriters of the securities being registered such number of copies
of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus), any documents incorporated by reference
therein and such other documents as such seller or underwriters may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller or the sale of such
securities by such underwriters (it being understood that, subject to
Section 2.6 hereof and the requirements of the Securities Act and
applicable state securities laws, the Company consents to the use of
the prospectus and any amendment or supplement thereto by each seller
and the underwriters in connection with the offering and sale of the
Registrable Securities covered by the registration statement of which
such prospectus, amendment or supplement is a part);
12
(d) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of
such jurisdictions as the managing underwriter reasonably requests
(or, in the event the registration statement does not relate to an
underwritten offering, as the holders of a majority of such
Registrable Securities may reasonably request); use its reasonable
best efforts to keep each such registration or qualification (or
exemption therefrom) effective during the period in which such
registration statement is required to be kept effective and take any
other action which may be reasonably necessary or advisable to enable
the Investor and such underwriter to consummate the disposition in
such jurisdictions of the securities owned by the Investor; and do any
and all other acts and things which may be reasonably necessary or
advisable to enable the Investor to consummate the disposition of the
Registrable Securities owned by the Investor in such jurisdictions
(provided, however, that the Company will not be required to (A)
qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this subparagraph or (B)
consent to general service of process in any such jurisdiction);
(e) promptly notify each seller and each underwriter and (if
requested by any such Person) confirm such notice in writing (i) when
the registration statement, a prospectus or any prospectus supplement
or post-effective amendment has been filed and, with respect to a
registration statement or any post-effective amendment, when the same
has become effective, (ii) of the issuance by any state securities or
other regulatory authority of any order suspending the qualification
or exemption from qualification of any of the Registrable Securities
under state securities or "blue sky" laws or the initiation of any
proceedings for that purpose and (iii) of the happening of any event
which makes any statement made in a registration statement or related
prospectus untrue or which requires the making of any changes in such
registration statement, prospectus or documents so that in either
event they will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and, as
promptly as practicable thereafter, prepare and file with the SEC and
furnish a supplement or amendment to such prospectus so that, as
thereafter deliverable to the purchasers of such Registrable
Securities, such prospectus will not contain any untrue statement of a
material fact or omit a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(f) if requested by the managing underwriter or any seller
promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or any seller
reasonably requests to be included therein, including, without
limitation, with respect to the Registrable Securities being sold by
13
such seller, the purchase price being paid therefor by the
underwriters and with respect to any other terms of the underwritten
offering of the Registrable Securities to be sold in such offering,
and promptly make all required filings of such prospectus supplement
or post-effective amendment;
(g) as promptly as practicable after filing with the SEC of any
document which is incorporated by reference into a registration
statement (in the form in which it was incorporated), make a copy of
each such document available to each seller or, at such seller's
request, deliver a copy of each such document to such seller;
(h) cooperate with the sellers and the managing underwriter to
facilitate the timely preparation and delivery of certificates (which
shall not bear any restrictive legends unless required under
applicable law) representing securities sold under any registration
statement, and enable such securities to be in such denominations and
registered in such names as the managing underwriter or such sellers
may request and keep available and make available to the Company's
transfer agent prior to the effectiveness of such registration
statement a supply of such certificates;
(i) furnish to each seller and underwriter a signed counterpart
of (A) an opinion or opinions of counsel to the Company, and (B) a
comfort letter or comfort letters from the Company's independent
public accountants, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letters, as the
case may be, as the sellers or managing underwriter reasonably
requests;
(j) cause the Registrable Securities included in any registration
statement to be listed on each securities exchange, if any, on which
similar securities issued by the Company are then listed;
(k) provide a transfer agent and registrar for all Registrable
Securities registered hereunder and provide a CUSIP number for the
Registrable Securities included in any registration statement not
later than the effective date of such registration statement;
(l) cooperate with each seller and each underwriter participating
in the disposition of such Registrable Securities and their respective
counsel in connection with any filings required to be made with the
NASD;
(m) during the period, if any, when the prospectus is required to
be delivered under the Securities Act, promptly file all documents
required to be filed with the SEC pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act;
14
(n) notify each of the sellers promptly of any request by the SEC
for the amending or supplementing of such registration statement or
prospectus or for additional information;
(o) prepare and file with the SEC promptly any amendments or
supplements to such registration statement or prospectus which, in the
opinion of counsel for the Company or the managing underwriter, is
required in connection with the distribution of the Registrable
Securities;
(p) enter into such agreements (including underwriting agreements
in the managing underwriter's customary form) as are customary in
connection with an underwritten registration; and
(q) advise each seller, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for such purpose and
promptly use its reasonable best efforts to prevent the issuance of
any stop order or to obtain its withdrawal at the earliest possible
moment if such stop order should be issued.
2.4.2 Information to be Provided by the Investors. The Investors
shall furnish the Company such information regarding such Investor and the
distribution of such securities as the Company may from time to time reasonably
request in writing and as shall be required in connection with the Company's
performance of its obligations hereunder.
2.5 Standstill Agreement; Restrictions on Transfer.
2.5.1 Standstill. Notwithstanding anything to the contrary
contained in this Agreement, neither the Holder nor any of its Affiliates shall
(i) until June 22, 2006, increase its Beneficial Ownership of the Common Stock
and (ii) thereafter until the third anniversary of the date hereof, increase its
Beneficial Ownership above 15% (fifteen percent) of the Company's total
outstanding Common Stock without the prior written consent of the Board,
provided, however, that the foregoing limitation set forth in clause (ii) shall
terminate and be of no further force and effect from and after the time, if
ever, that, the Holder's and any of its Affiliates Beneficial Ownership of the
Common Stock falls below 5% (five percent) of the Company's total outstanding
Common Stock.
2.5.2 Prohibitions during Transfer Period. Prior to the
Effective Date, neither the Holder nor its Affiliates shall Transfer any shares
of Common Stock. Other than as set forth below, until the first to occur of (A)
150 days following the Effective Date and (B) June 22, 2006 (the "Transfer
Period"), the Holder and its Affiliates shall not Transfer in the aggregate on
any given day (a "Transfer Date") such number of shares of Common Stock that
exceeds (i) the product of (x) three million (3,000,000) shares of Common Stock
and (y) the number of trading days in the period from and including the Closing
Date to and including the Transfer Date less (ii) the aggregate number of shares
15
of Common Stock Transferred by the Holder and its Affiliates in accordance with
this Section 2.5.2 during the period from and including the Closing Date to, but
excluding, the Transfer Date; provided, however, that in no event shall the
Holder and its Affiliates be permitted to Transfer, whether directly or
indirectly, more than six million (6,000,000) shares of Common Stock on such
Transfer Date, and provided, further, that in determining the maximum number of
shares of Common Stock that may be sold in any one day as provided above, any
Transfers permitted by the succeeding sentence shall not be included in such
calculation. Notwithstanding anything herein to the contrary, the transfer
restriction set forth in this Section 2.5.2 shall not apply to: (1) any Transfer
of shares of Common Stock by the Holder or its Affiliate to any of the Persons
listed on Annex A hereto; (2) any Transfer of shares of Common Stock after a
Takeover Proposal has been made, provided that such Takeover Proposal is
approved by (A) a majority of the members of the Board or (B) the holders of
more than majority of the shares of Common Stock issued and outstanding as of
the date such Takeover Proposal is made; (3) underwritten offerings permitted by
Section 2.2 or Section 2.3 hereof; (4) sales negotiated between the Holder and a
buyer in which such buyer represents to the Holder that either (A) the buyer's
acquisition of Common Stock will not result in the buyer Beneficially Owning
(based upon the number of shares of Common Stock reported as being outstanding
in the Company's most recently filed report with the SEC) 5% or more of Common
Stock outstanding after giving effect to the consummation of such sale or (B)
such buyer already Beneficially Owns 5% or more of the Common Stock and, upon
consummation of the proposed sale, will continue to Beneficially Own more than
5% of the Common Stock (in each case based upon the number of shares of Common
Stock reported as being outstanding in the Company's most recently filed report
with the SEC); (5) any Block transaction; and (6) any dividend or other pro rata
distribution of the Common Stock made to record shareholders of Leucadia.
The Holder (and any subsequent transferee who agrees to be bound by
the terms of this Section 2.5.2) agrees that within 15 Business Days after the
consummation of any Transfer referred to in (1) or (4) above, the Holder (or any
subsequent transferee who agrees to be bound by this Section 2.5.2) shall
deliver documentation to the Company that identifies the buyer, the number of
shares of Common Stock transferred and the date of such Transfer.
2.6 Blackout Periods; Suspension of Dispositions.
2.6.1 Blackout Periods. Notwithstanding anything to the contrary
contained herein (other than as set forth in Section 2.1 hereof), for a period
not to exceed twenty (20) consecutive calendar days and not to exceed sixty (60)
calendar days in any twelve-month period (each a "Black Out Period"), provided
that there must be an interim period of at least sixty (60) consecutive days
between the end of one Black Out Period and the beginning of another Black Out
Period, the Company will not be required to file any registration statement
pursuant to this Agreement, file any amendment thereto, furnish any supplement
to a prospectus included in a registration statement pursuant to Section
2.4.1(e)(iii) hereof, make any other filing with the SEC required pursuant to
this Agreement, cause any registration statement or other filing with the SEC to
become effective, or take any similar action, and any and all sales of
Registrable Securities by the Investors pursuant to an effective registration
16
statement shall be suspended: (i) if an event has occurred and is continuing as
a result of which any such registration statement or prospectus would, in the
Company's reasonable judgment based on advice of outside counsel to the Company,
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, (ii) if the Company notifies the Investors that such actions would,
in the good faith judgment of outside counsel to the Company, require the
disclosure of material non-public information which the Company has a bona fide
business purpose for preserving as confidential and which the Company would not
otherwise be required to disclose or (iii) if the Company notifies the Investors
that, in the Company's good faith judgment (after consultation with the
Company's proposed managing underwriter, initial purchaser or outside financial
advisor), it is necessary to suspend sales of Registrable Securities by the
Investors, to facilitate a pending or proposed public or Rule 144A offering by
the Company or Common Stock or Common Stock Equivalents, provided, however, that
the Company (X) shall not be able to exercise any rights under this clause (iii)
during the first three (3) months following the date hereof, and (Y) shall only
be able to use its blocking rights under this clause (iii) for a period not to
exceed 15 consecutive days and not more than two times in any twelve month
period. Upon the termination of the condition described in clauses (i), (ii) or
(iii) of above, the Company shall promptly give written notice to the Investors
and shall promptly file any registration statement or amendment thereto required
to be filed by it pursuant to this Agreement, furnish any prospectus supplement
or amendment required to be furnished pursuant to Section 2.4.1(e)(iii) hereof,
make any other filing with the SEC required of it or terminate any suspension of
sales it has put into effect and shall take such other actions to permit
registered sales of Registrable Securities as contemplated by this Agreement. If
the Company does not take the foregoing action as required to permit the
Investors to sell the Registrable Securities upon the end of the permitted
relevant Black Out Period, the Company shall pay to the Investors the Delay Fee
for the number of days that the Investors are unable to sell Registrable
Securities.
2.6.2 Suspension of Dispositions. Each Investor agrees by
acquisition of any Registrable Securities that, upon receipt of any notice (a
"Suspension Notice") from the Company of the happening of any event of the kind
described in Section 2.4.1(e)(iii) hereof such Investor will forthwith
discontinue disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities (the "Suspension Period")
until such Investor's receipt of the copies of the supplemented or amended
prospectus, or until it is advised in writing (the "Advice") by the Company that
the use of the prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus, and, if so directed by the Company, such Investor will deliver to
the Company all copies, other than permanent file copies then in such Investor's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. The Company shall use its reasonable best
efforts and take such actions as are reasonably necessary to render the Advice
as promptly as practicable.
2.6.3 Extensions. For the purposes of Sections 2.1.1, 2.1.6,
2.3.1 and 4.1 hereof, the occurrence of any Blackout Period or Suspension Period
pursuant to this Section 2.6 shall cause the second anniversary of the date
hereof to be deemed extended by the number of days equivalent to the duration of
any periods during which the Holder may not sell Registrable Securities pursuant
to a registration statement required hereunder.
17
2.7 Indemnification.
2.7.1 Indemnification by the Company. The Company agrees to
indemnify and reimburse, to the fullest extent permitted by law, each
underwriter of Registrable Securities, each Investor and each of such Investor's
directors, officers, employees and agents and each other Person who controls the
Investor Holder (within the meaning of the Securities Act or the Exchange Act)
(each an "Investor Affiliate" and collectively, the "Investor Affiliates") (i)
against any and all losses, claims, damages, liabilities, and expenses, joint or
several (including, without limitation, reasonable attorneys' fees and
disbursements except as limited by Section 2.7.3 hereof) ("Damages") based upon,
arising out of, related to or resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus, or preliminary prospectus relating to the Registrable Securities any
amendment thereof or supplement thereto, or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, (ii) against any and all loss, liability, claim, damage, and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon,
arising out of, related to or resulting from any such untrue statement or
omission or alleged untrue statement or omission and (iii) against any and all
costs and expenses (including reasonable fees and disbursements of counsel) as
may be reasonably incurred in investigating, preparing, or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon, arising out of,
related to or resulting from any such untrue statement or omission or alleged
untrue statement or omission, or such violation of the Securities Act or
Exchange Act, to the extent that any such expense or cost is not paid under
subparagraph (i) or (ii) above; provided, however, that the Company shall not be
liable in any such case to the extent that such statements are made in reliance
upon and in strict conformity with information furnished in writing to the
Company by an Investor or any Investor Affiliate for use therein or arise from
an Investor's or any Investor Affiliate's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Company has furnished an Investor or any Investor Affiliate with a
sufficient number of copies of the same. The reimbursements required by this
Section 2.7.1 will be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred.
2.7.2 Indemnification by the Investor. In connection with any
registration statement in which an Investor is participating, each such Investor
will, to the fullest extent permitted by law will indemnify the Company and its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act or the Exchange Act) against any and all Damages
resulting from any untrue statement or alleged untrue statement of a material
18
fact contained in the registration statement, prospectus, or any preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein in light of the circumstances under which they
were made not misleading, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission is contained in any
information or affidavit so furnished in writing by such Investor or any
Investor Affiliate specifically for inclusion in the registration statement;
provided, however, that the obligation to indemnify will be several, not joint
and several, among such Investors of Registrable Securities, and the liability
of each such Investor of Registrable Securities will be in proportion to, and
provided, further, that such liability will be limited to, the net amount
received by such seller from the sale of Registrable Securities pursuant to such
registration statement; provided, that such Investor shall not be liable in any
such case to the extent that prior to the filing of any such registration
statement or prospectus or amendment thereof or supplement thereto, such
Investor has furnished in writing to the Company information expressly for use
in such registration statement or prospectus or any amendment thereof or
supplement thereto which corrected or made not misleading information previously
furnished to the Company.
2.7.3 Notice of Claims, etc. Any Person entitled to
indemnification hereunder will (A) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(provided that the failure to give such notice shall not limit the rights of
such Person except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice) and (B) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with a single counsel
reasonably satisfactory to the indemnified party; provided, however, that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless (X)
the indemnifying party has agreed to pay such fees or expenses, or (Y) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person. In the event the
indemnified party reasonably believes such a conflict of interest exists, the
indemnifying party shall indemnify the indemnified party for all reasonable
costs and expenses of one separate counsel for the indemnified party in
accordance with Sections 2.7.1 or 2.7.2 hereof) above, as applicable. If such
defense is not assumed by the indemnifying party as permitted hereunder, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). If such defense is assumed by the indemnifying party
pursuant to the provisions hereof, such indemnifying party shall not settle or
otherwise compromise the applicable claim unless (1) such settlement or
compromise contains a full and unconditional release of the indemnified party
and the settlement or compromise does not require any admission of wrongdoing on
the part of the indemnified party or (2) the indemnified party otherwise
consents in writing. An indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim will not be obligated to pay the fees and
19
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the
reasonable fees and disbursements of such additional counsel or counsels.
2.7.4 Contribution. Each party hereto agrees that, if for any
reason the indemnification provisions contemplated by Section 2.7.1 or 2.7.2
hereof are unavailable to or insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages, liabilities, or expenses (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, liabilities, or expenses (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, claims, damages, liabilities or expenses as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; provided that in no event shall
the obligation of any indemnifying party to contribute under this Section 2.7.4
exceed the amount that such indemnifying party would have been obligated to pay
by way of indemnification if the indemnification provided for under Sections
2.7.1 or 2.7.2 hereof had been available under the circumstances. The parties
hereto agree that it would not be just and equitable if contribution pursuant to
this Section 2.7.4 were determined by pro rata allocation (even if the Investors
or any underwriters or all of them were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 2.7.4. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities, or expenses (or actions in respect thereof) referred to above shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such indemnified party in connection with investigating or, except as provided
in Section 2.7.3 hereof, defending any such action or claim. Notwithstanding the
provisions of this Section 2.7.4, the Investors shall not be required to
contribute an amount greater than the dollar amount by which the net proceeds
received by the Investors with respect to the sale of any Registrable Securities
exceeds the amount of damages which such Investor has otherwise been required to
pay by reason of any and all untrue or alleged untrue statements of material
fact or omissions or alleged omissions of material fact made in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto related to such sale of Registrable Securities. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Investors' obligations in
this Section 2.7.4 to contribute shall be several in proportion to the amount of
Registrable Securities registered by them and not joint.
20
If indemnification is available under this Section 2.7, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Sections 2.7.1 and 2.7.2 hereof without regard to the relative fault
of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 2.7.4 subject, in the case of the
Investors, to the limited dollar amounts set forth in Section 2.7.2 hereof.
2.7.5 Effectiveness of Indemnification. The indemnification and
contribution provided for under this Agreement will remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified
party or any officer, director, or controlling Person of such indemnified party
and will survive the transfer of securities.
2.8 Assignment of Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be assignable
by the Holder and any subsequent Investor, in whole or in part, including the
Holder's rights pursuant to Section 2.2 hereof to an Investor (a "Transferee"),
provided that: (i) the Holder agrees in writing with the Transferee to transfer
or assign such rights, and a copy of such agreement is promptly furnished to the
Company after such transfer or assignment; (ii) the Company is, promptly after
such transfer or assignment, furnished with written notice of (a) the name and
address of such Transferee, and (b) the securities with respect to which such
registration rights are being transferred or assigned and the amount being
transferred or assigned; (iii) at or before the time the Company receives the
written notice contemplated by clause (ii) of this sentence the Transferee
agrees in writing with the Company to be bound by all of the provisions
contained herein (including with respect to Section 2.5.2); (iv) such Transferee
shall be an "accredited investor" as that term is defined in Rule 501 of
Regulation D promulgated under the 1933 Act; (v) in the event the assignment
occurs subsequent to the date of effectiveness of the Registration Statement
required to be filed pursuant to Section 2.1 hereof, the Transferee agrees to
pay all reasonable expenses of amending or supplementing such Registration
Statement to reflect such assignment; provided, however, that any assignment by
the Holder of its rights hereunder to any of its subsidiaries shall not be
subject to this clause v; and (vi) after giving effect to the Transfer, the
Transferee will beneficially own not less than 30% of the Common Stock issued
under the Acquisition Agreement (or such comparable amount of Registrable
Securities).
ARTICLE 3
RULE 144
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3.1 Current Public Information. With a view to making available to
the Investors the benefits of certain rules and regulations of the SEC that may
at any time permit the sale of securities to the public without registration,
the Company agrees to use its reasonable best efforts to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times after the date
hereof;
21
(ii) file with the SEC in a timely manner all reports and other
documents required to be filed by the Company under the Securities Act
and the Exchange Act; and
(iii) furnish to any Investor, so long as such Investor owns any
Registrable Securities, upon request by such Investor, (a) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange
Act, (b) a copy of the most recent annual or quarterly report of the
Company and (c) such other reports and documents of the Company and
other information in the possession of or reasonably obtainable by the
Company as the Investors may reasonably request in availing itself of
any rule or regulation of the SEC allowing the Investors to sell any
such securities without registration.
ARTICLE 4
MISCELLANEOUS
-------------
4.1 Notices. All notices, requests and other communications that are
required or may be given under this Agreement shall, unless otherwise provided
for elsewhere in this Agreement, be in writing and shall be deemed to have been
duly given if and when delivered by commercial courier or other hand delivery,
as follows:
For the Company: For the Holder:
Xxxxx 0 Communications, Inc. Leucadia National Corporation
0000 Xxxxxxxx Xxxx. 000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx 0000 Xxx Xxxx, XX 00000
Xxxxxxxxxx, XX 00000 Attention: Xxxxxx X. Xxxxxxxxx, President
Attention: General Counsel
with a copy (which shall not with a copy (which shall not
constitute notice) to: constitute notice) to:
Xxxxxxx Xxxx & Xxxxxxxxx LLP Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxx Xxxxxx 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Boston, Esq. Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Any notice or communication hereunder shall be deemed to have been
given or made as of the date so delivered if personally delivered and five (5)
calendar days after mailing if sent by registered or certified mail (except that
a notice of change of address shall not be deemed to have been given until
actually received by the addressee).
If a notice or communication is mailed in the manner provided above,
it is duly given, whether or not the addressee receives it.
22
4.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
4.3 Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY AND THE HOLDER EACH
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND APPELLATE COURTS
FROM ANY THEREOF. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY CONSENT
TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF TO THE COMPANY OR THE HOLDER, AS
THE CASE MAY BE, BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, TO SUCH PARTY AT ITS ADDRESS SPECIFIED IN SECTION 4.1. THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
4.4 Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall be binding upon and benefit the Company, the
Holder, and their respective successors and permitted assigns.
4.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which when
taken together shall constitute one and the same original document.
4.6 Severability. In the event any provision in this Agreement shall
be held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and the remaining provisions shall not in any way be affected or
impaired thereby.
4.7 Entire Agreement. This Agreement and any exhibits and other
documents referred to herein constitute the entire agreement and understanding
among the parties hereto in respect of the subject matter hereof and thereof and
supersede all prior and contemporaneous agreements and understandings, both oral
and written, among the parties hereto, or between any of them, with respect to
the subject matter hereof and thereof.
4.8 No Waivers; Amendments. No failure or delay on the part of the
Company or any Investor in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
23
herein are cumulative and are not exclusive of any remedies that may be
available to the Company or any Investor at law or in equity or otherwise. Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Company and the
Investors.
4.9 Specific Enforcement; Cumulative Remedies. The parties hereto
acknowledge that money damages may not be an adequate remedy for violations of
this Agreement and that any party, in addition to any other rights and remedies
which the parties may have hereunder or at law or in equity, may, in his or its
sole discretion, apply to a court of competent jurisdiction for specific
performance or injunction or such other relief as such court may deem just and
proper in order to enforce this Agreement or prevent any violation hereof and,
to the extent permitted by applicable law, each party waives any objection to
the imposition of such relief. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such rights, powers or remedies by such party.
4.10 Time of the Essence. Time shall be of the essence in this
Agreement.
4.11 Construction. In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the articles, sections, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in construction; (ii) no consideration shall be given to the fact or presumption
that any of the parties had a greater or lesser hand in drafting this Agreement;
(iii) examples shall not be construed to limit, expressly or by implication, the
matter they illustrate; (iv) the word "includes" and its syntactic variants mean
"includes, but is not limited to" and corresponding syntactic variant
expressions; (v) the plural shall be deemed to include the singular, and vice
versa; (vi) each gender shall be deemed to include the other genders; and (vii)
any exhibit, appendix, attachment and schedule to this Agreement is a part of
this Agreement.
4.12 Information. The parties acknowledge and agree that in the
course of discussions relating to this Agreement and the transaction
contemplated hereby, neither the Company nor the Holder believes that the
Company has conveyed to the Holder any material non-public information in
respect of the Company and/or its business, operations, pending transactions,
financial condition, results of operations, or prospects.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
LEVEL 3 COMMUNICATIONS, INC.,
a Delaware corporation
By:
-----------------------------------
Name:
Title:
LEUCADIA NATIONAL CORPORATION,
a New York corporation
By:
------------------------------------
Name:
Title:
XXXXXXX ENTERPRISES, INC., a Colorado
corporation
By:
-----------------------------------
Name:
Title:
