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EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of April 24, 1998 is
entered into between EQUALNET HOLDING CORP., a Texas corporation (the
"Company") and ▇▇▇▇▇ ▇. ▇▇▇▇▇, a natural person residing in Texas ("Crane").
Recitals
In connection with the consummation of the transactions contemplated
by the certain Stock and Warrant Purchase Agreement dated April 24, 1998 among
the Company and Crane (the "Agreement"), 3,400,000 shares (the "Shares") of the
Common Stock of the Company, $.01 par value per share (the "Common Stock"), and
a warrant (the "Warrant") for the purchase of an additional 170,000 shares of
Common Stock were issued to Crane.
Pursuant to the terms of this Agreement, the Company has agreed to
grant to Crane (and his successors and permitted assigns) certain registration
rights with respect to the Shares and the Common Stock issuable upon exercise
of the Warrant (collectively, the "Registrable Shares").
NOW, THEREFORE, in and for the mutual covenants and agreements set
forth herein, the Company and Crane agree as follows:
A. Registration Rights.
1. Demand Registration Rights. (a) The Company covenants and
agrees with Crane that within 60 days after receipt of a written request from
Crane (the "Initiating Holder"), the Company shall file a registration
statement (and use its commercially reasonable efforts to cause such
registration statement to become effective under the Securities Act of 1933, as
amended (the "Securities Act")) with respect to the offering and sale or other
disposition of any number of shares of the Registrable Securities (the "Demand
Securities"); provided that the Company may defer its obligations under this
Section 1 for a period of no more than 90 days if the Company's Board of
Directors adopts a resolution that filing such a registration statement would
require a public disclosure by the Company which disclosure would have material
adverse consequences for the Company, such as a disclosure regarding a pending
material acquisition by the Company; provided further that once such
information has been publicly disclosed, then the Company shall promptly
proceed to fulfill its obligations under this Section 1. The Company shall
continuously maintain the effectiveness of such registration statement for the
lesser of (i) 180 days after the effective date of the registration statement
or (ii) the consummation of the distribution by the holders of the Demand
Securities covered by such registration statement (the "Termination Date");
provided, however, that
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if at the Termination Date, the Demand Securities are covered by a registration
statement which also covers other securities and which is required to remain in
effect beyond the Termination Date, the Company shall maintain in effect such
registration statement as it relates to the Demand Securities for so long as
such registration statement (or any subsequent registration statement) remains
or is required to remain in effect for any of such other securities. The
Company shall not be required to comply with more than two requests for
registration pursuant to this Section 1. In addition, the Company shall be
required to effect up to three registrations of the Registerable Securities on
Form S-3 or any successor to such form promulgated under the Securities Act at
the request of Crane; provided that the requirements for use of such from set
forth in the instructions to such form are met. All expenses of such
registration shall be borne by the Company, except that underwriting
commissions and expenses attributable to the Demand Securities and fees and
disbursements of counsel and other advisors (if any) to the Initiating Holder
will be borne by such holders requesting that such securities be offered.
(b) If the Initiating Holder intends to distribute the
Demand Securities covered by their request by means of an underwriting, they
shall so advise the Company as a part of their request made pursuant to this
Section 1. The right of any other holder to registration pursuant to this
Section 1 shall be conditioned upon such holder's participation in such
underwriting and the inclusion of such holder's Demand Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holder and such holder with respect to such participation and
inclusion) to the extent provided herein. A holder may elect to include in
such underwriting all or a part of the Demand Securities it holds. If other
holders of registration rights request inclusion in any registration statement
pursuant to this Section 1(b), such holders may be included in the underwriting
conditioned on their acceptance of the further applicable provisions of this
Section 1(b). The Company shall (together with other holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with a representative of the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holder. If the representative advises the
Initiating Holder in writing that marketing factors require a limitation on the
number of shares to be underwritten, then securities held by holders other than
the Initiating Holder shall be excluded from such registration to the extent so
required by such limitation.
2. Piggy-back Registration Rights. The Company covenants and
agrees with Crane that, in the event the Company proposes to file a
registration statement under the Securities Act with respect to a firm
commitment offering of Common Stock (other than in connection with an exchange
offer or a registration statement on Form S-4 or S-8 or other similar
registration statements not available to register securities so requested to be
included), the Company shall in each case give written notice of such proposed
filing to Crane at least 30 days before the earlier of the anticipated or the
actual effective date of the registration statement and at least ten days
before the initial filing of such registration statement and such notice shall
offer to such holders the opportunity to include in such registration statement
such number of shares of the Registrable Securities (the "Piggyback
Securities") as they may request. Holders desiring inclusion of Piggy-back
Securities in such
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registration statement shall so inform the Company by written notice, given
within ten days of the giving of such notice by the Company. The Company shall
permit, or shall cause the managing underwriter of a proposed offering to
permit, the holders of Piggy-back Securities requested to be included in the
registration to include such securities in the proposed offering on the same
terms and conditions as applicable to securities of the Company, if any,
included therein for the account of any person other than the Company and the
holders. Notwithstanding the foregoing, if any such managing underwriter shall
advise the Company in writing that, in its opinion, the distribution of
securities by holders thereof, including all or a portion of the Piggy-back
Securities, requested to be included in the registration concurrently with the
securities being registered by the Company, would materially adversely affect
the distribution of such securities by the Company for its own account, then
the holders of the Registrable Securities shall delay their offering and sale
of the Registrable Securities (or the portions thereof so designated by such
managing underwriter) for such period, not to exceed 120 days, as the managing
underwriter shall request, provided that if any other securities are included
in such registration statement for the account of any person other than the
Company and the holders of Piggy-back Securities, then such securities,
including the Piggy-back Securities, so included shall be apportioned among
holders who wish to be included therein pro rata according to amounts so
requested to be included by each such person. No such delay shall in any event
impair any right granted hereunder to make subsequent requests for inclusion
pursuant to the terms of this Section 2. The Company shall continuously
maintain in effect any registration statement with respect to which the
Piggy-back Securities have been requested to be included (and so included) for
a period of not less than 180 days after the effectiveness of such registration
statement ("Piggy-back Termination Date"); provided, however, that if at the
Piggy-back Termination Date the Piggy-back Securities are covered by a
registration statement which is, or is required to remain, in effect beyond the
Piggy-back Termination Date, the Company shall maintain in effect the
registration statement as it relates to the Piggy-back Securities for so long
as such registration statement remains or is required to remain in effect for
any of such other securities. All expenses of such registration shall be borne
by the Company, except that underwriting commissions and expenses attributable
to the Piggy-back Securities and fees and distributions of counsel and other
advisors (if any) to the holders requesting that the Piggy-back Securities be
offered will be borne by such holders.
3. Other Matters. In connection with the registration of
Registrable Securities in accordance with Sections 1 or 2 above, the Company
agrees to:
(i) Use its commercially reasonable efforts to register
or qualify the Registrable Securities for offer or sale under state
securities or Blue Sky laws of such jurisdictions in which the holders
of such Registrable Securities shall designate; provided that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action
which would subject it to general service of process in any
jurisdiction where it is not now so subject, and use its commercially
reasonable efforts to do any and all other acts and things which may
be necessary or advisable to enable the holders of Registrable
Securities to consummate the sale, transfer, or other disposition of
such securities in any jurisdiction;
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(ii) Enter into indemnity and contribution agreements,
each in customary form, with each underwriter, if any, and each holder
of Registrable Securities included in such registration statement;
and, if requested, enter into an underwriting agreement containing
customary representations, warranties, covenants, allocation of
expenses, and customary closing conditions including, but not limited
to, opinions of counsel and accountants' cold comfort letters with any
underwriter who participates in the offering of Registrable
Securities;
(iii) Pay all expenses in connection with the registration
of the Registrable Securities under the Securities Act and compliance
with the provisions of clause (i) above, except to the extent
otherwise provided in Sections 1 or 2; and
(iv) List or quote the Registrable Securities on each
securities exchange or quotation system, if any, on which the Common
Stock is listed or quoted.
In connection with the registration of Registrable Securities in
accordance with Section 2, the holders agree to enter into an underwriting
agreement containing customary representations, warranties, covenants,
allocation of expenses (not otherwise inconsistent with this Agreement), and
customary closing conditions, with any underwriter who participates in the
offering of Registrable Securities.
4. Restrictions on Public Sale by the Company. The Company
agrees not to effect any public sale or distribution of any shares of Common
Stock or any securities convertible into or exchangeable or exercisable for
such shares of Common Stock (or any option or other right for such securities),
except for any securities that may be issued to the holders upon conversion of
Preferred Stock, during the 15-day period prior to, and during the 60-day
period beginning on the effective date of any registration statement under
which the Registrable Securities are registered in accordance with Sections 1
or 2 above (other than as part of such registration).
5. Rule 144. With a view to making available to Crane the
benefits of certain rules of the Securities and Exchange Commission (the
"Commission") that may permit the sale of Registrable Securities to the public
without registration, the Company hereby covenants and agrees to use its
commercially reasonable best efforts to: (i) file in a timely manner all
reports and other documents required to be filed by it under the Securities Act
and the Securities Exchange Act of 1934, as amended, and the rules and
regulations adopted by the Commission thereunder necessary to permit sales
under Rule 144 under the Securities Act, and the Company will take such further
action to the extent reasonably required from time to time to permit Crane to
sell Registrable Securities (whether or not any such securities have been the
subject of a demand or piggy-back request under Sections 1 and 2 hereof)
without registration under the Securities Act within the limitation of the
exemptions provided by (A) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (B) any similar rule or regulation hereafter
adopted by the Commission and (ii) promptly furnish to Crane a copy of all such
reports and documents upon
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request. Upon the request of Crane, the Company will deliver to Crane a
written statement as to whether it has complied with such requirements.
6. Other Registration Rights. The Company hereby agrees that it
shall not grant any additional registration rights with respect to shares of
its Common Stock, warrants to purchase its Common Stock or securities
convertible into its Common Stock, which are inconsistent with the provisions
of this Agreement. The Company hereby represents that, subject to the receipt
of the ▇▇▇▇▇▇ Group Waiver (as defined in the Agreement), this Registration
Rights Agreement does not conflict with any outstanding registration rights
granted by the Company with respect to any shares of its Common Stock, warrants
to purchase its Common Stock or securities convertible into its Common Stock.
7. Miscellaneous.
(a) This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
(b) All covenants and agreements in this Agreement
contained by or on behalf of the parties hereto shall bind and inure to the
benefit of the respective successors and permitted assigns of the parties
hereto and, to the extent provided in this Agreement, to the benefit of any
future holders of any Registrable Securities. Neither this Agreement nor any
of the rights, interest or obligations hereunder shall be assigned by either of
the parties hereto without the prior written consent of the other party hereto.
Subject to the foregoing, nothing in this Agreement shall confer upon any
person or entity not a party to this Agreement, or the legal representatives of
such person or entity, any rights or remedies of any nature or kind whatsoever
under or by reason of this Agreement.
(c) All communications provided for hereunder shall be
sent by registered or certified mail and, if to Crane, to the following: ▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇ ▇.
▇▇▇▇▇▇, at ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇; if to the Company addressed to it at EqualNet Holding Corp., ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: General Counsel, with
a copy to Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., or to such other address with respect
to any party as such party shall notify the other in writing; provided,
however, that any such communication to the Company may also, at the option of
Crane, be either delivered to the Company at the Company's address set forth
above or to any officer of the Company. Within five business days after the
date of such mailing (save for any postal interruption) such communication
shall be deemed to have been received.
(d) This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of Texas without giving effect to the choice of law or conflicts
principles thereof. Any legal action or proceeding with respect to this
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Agreement may be brought in the courts of the State of Texas or of the United
States of America for the Southern District of Texas, and, by execution and
delivery of this Agreement, the Company hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The Company irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Company at its address set forth in above, such service to become effect 30
days after such mailing. Nothing herein shall affect the right of the Crane to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in any other jurisdiction.
(e) In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by the Company
or Crane, the Company or Crane, as applicable, may proceed to protect and
enforce its or their rights either by suit in equity and/or by action at law.
(f) This Agreement contains the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
and contemporaneous arrangements or understandings with respect thereto.
(g) This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but which
together shall constitute a single agreement.
EQUALNET HOLDING CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and
Chief Executive officer
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
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