Exhibit 7.3
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REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made as of the 26th day of November, 1997 by and
between US WATS, Inc., a New York corporation (the "Company"), and the
undersigned securityholder of the Company (the "Stockholder").
BACKGROUND
The Stockholder owns 1,590,000 shares of common stock, par value $0.001
per share ("Common Stock"), of the Company (the "Shares"). As a condition
precedent to the closing of the transactions set forth in that certain Stock
Acquisition Agreement (the "Purchase Agreement") dated as of the date hereof by
and between the Company and the Stockholder, the Company has agreed to provide
the registration rights provided for in this Agreement to the Stockholder. Any
terms used and not otherwise defined herein shall have the meanings ascribed to
such terms in the Purchase Agreement.
WITNESSETH:
The parties hereto, each intending to be legally bound and in exchange
for the mutual covenants herein, agree as follows:
1. Demand Registration.
(a) Requests for Registration. At any time after the 150th day from the
date hereof and during the term of this Agreement, the Stockholder may demand
registration (the "Demand Registration") under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (collectively, the
"1933 Act"), of all or any portion of the Shares owned by the Stockholder. In
order to accomplish such demand, the Stockholder shall send written notice of
the demand to the Company, which notice shall specify the number of Shares
sought to be registered. The Stockholder shall have the right to one Demand
Registration.
(b) Expenses. In a Demand Registration, the Company will pay the
Registration Expenses (defined below), but the Underwriting Commissions (defined
below) will be paid by the Stockholder.
(c) Cutback of Shares Included in Demand Registration. If a Demand
Registration is underwritten and the managing underwriters advise the Company in
writing that in their opinion the number of Shares requested to be included
exceeds the number that can be sold in such offering, at a price reasonably
related to fair value, the Company will include only such number in such Demand
Registration. A Demand Registration shall not be considered to be the one Demand
Registration under Section 1(a) if (i) as a result of the foregoing allocation,
the Stockholder of the Shares are not able to register and sell in the Demand
Registration at least 75% of the Shares sought to be included
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by such Stockholder in the Demand Registration, or (ii) the registration
statement does not become effective for any reason.
(d) Selection of Underwriters. If any Demand Registration is
underwritten, the selection of investment banker(s) and manager(s) and the other
decisions regarding the underwriting arrangements for the offering will be made
jointly by the Company and the Stockholder.
(e) Restrictions on Demand Registrations. Notwithstanding any provision
to the contrary in this Section 1, the Company will not be obligated to effect
any Demand Registration if, at the time of such demand, the filing of such a
registration statement would, as determined by the board of directors of the
Company, adversely affect a material Company financing project or a material
proposed or pending acquisition, merger or other similar corporate transaction
to which the Company is or reasonably expects to be a party, provided, however,
that the Company shall only be entitled to delay effecting any such Registration
pursuant to this clause on only one occasion and for a period not to exceed 90
days.
2. Piggyback Registrations.
(a) If, at any time during the term of this Agreement, the Company
proposes to register any shares of its Common Stock under the 1933 Act for sale
for cash (otherwise than in connection with the registration of securities
issuable pursuant to an employee stock option, stock purchase or similar plan or
pursuant to a merger, exchange offer or a transaction of the type specified in
Rule 145(a) under the 1933 Act), the Company shall give the Stockholder notice
of such proposed registration at least 20 days prior to the filing of a
registration statement. At the written request of the Stockholder delivered to
the Company within 10 business days after the receipt of any such notice from
the Company, stating the number of Shares that the Stockholder desires to sell
or distribute publicly under the registration statement proposed to be filed by
the Company, the Company shall use its best efforts to register under the 1933
Act the sale of such Shares (a "Piggyback Registration").
(b) Piggyback Expenses. In all Piggyback Registrations, the Company
will pay the Registration Expenses (defined below), but the Underwriting
Commissions (defined below) will be paid by the Stockholder.
(c) Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the inclusion
of the number of securities requested to be included by the Stockholder in such
registration would have an adverse effect on such offering, the Company will
allocate the securities to be included as follows: first, the securities the
Company proposes to sell on its own behalf; and second, Shares requested to be
included in such registration by the Stockholder, and third, securities
registered to be included in such registration by other stockholders of the
Company.
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(d) Priority on Secondary Registrations. If a Piggyback Registration is
initiated as an underwritten secondary registration on behalf of holders of the
Company's securities (other than a Demand Registration pursuant to Section 1),
and the managing underwriters advise the Company in writing that in their
opinion the inclusion of the number of securities requested to be included by
the Stockholder in such registration is not desirable for such offering, the
Company will allocate the securities to be included as follows: first, the
securities requested to be included by the holders initiating such registration;
and second, Shares requested to be included in such registration by the
Stockholder.
(e) Selection of Underwriters. If any Piggyback Registration is
underwritten, the selection of investment banker(s) and manager(s) and the other
decisions regarding the underwriting arrangements for the offering will be made
by the Company, if the registration is under Section 2(c), or by the Company and
the holders initiating such registration, if the registration is under Section
2(d).
3. Registration Procedures.
Whenever the Stockholder has requested that any Shares be registered
pursuant to this Agreement, the Company will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to the resale of such Shares and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish the Stockholder with copies of all
such documents proposed to be filed);
(b) prepare and file with the Securities and Exchange Commission 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 for a period of not less than 270 days;
(c) furnish to the Stockholder such number of copies of such
registration statement, each amendment and supplement thereto and the prospectus
included in such registration statement (including each preliminary prospectus),
and such other documents as the Stockholder may reasonably request in order to
facilitate the disposition of the Shares owned by the Stockholder;
(d) use its best efforts to register or qualify such Shares under such
other securities or blue sky laws of such jurisdictions as the managing holders
of the Shares included in the registration may reasonably request;
(e) notify the Stockholder at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act within the period that
the Company is required to keep the registration statement effective of the
happening of any event as a result of which the prospectus
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included in such registration statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein not
misleading, and, at the request of any such seller, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Shares, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause all such Shares to be listed or included on securities
exchanges or eligible for quotation on any trading system on which similar
securities issued by the Company are then listed or included;
(g) provide a transfer agent and registrar for all such Shares not
later than the effective date of such registration statement;
(h) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other customary actions as may be
reasonably necessary to expedite or facilitate the disposition of such Shares;
and
(i) make available for inspection by the Stockholder, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by the Stockholder or an
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by the Stockholder,
underwriter, attorney, accountant or agent in connection with such registration
statement.
4. Indemnification.
(a) The Company hereby indemnifies, to the extent permitted by law, the
Stockholder, its officers and directors, and each person who controls the
Stockholder (within the meaning of the 1933 Act), against all losses, claims,
damages, liabilities and expenses arising out of or resulting from any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by the Stockholder expressly for use therein or by the Stockholder's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished the
Stockholder with a sufficient number of copies of the same. In connection with
an underwritten offering, the Company will indemnify the underwriters, their
officers and directors, and each person who controls such underwriters (within
the meaning of the 0000 Xxx) to the same extent as provided above with respect
to the indemnification of the Stockholder.
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(b) In connection with any registration statement in which the
Stockholder is participating, the Stockholder will furnish to the Company in
writing such information as is reasonably requested by the Company for use in
any such registration statement or prospectus and will indemnify, to the extent
permitted by law, the Company, its directors and officers and each person who
controls the Company (within the meaning of the 0000 Xxx) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement or prospectus
or any amendment thereof or supplement thereto or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in information so furnished by the
Stockholder specifically for use in preparing the registration statement.
Notwithstanding the foregoing, the liability of the Stockholder under this
Section 3(b) shall be limited to an amount equal to the net proceeds actually
received by the Stockholder from the sale of Shares covered by the registration
statement.
(c) Any person entitled to indemnification hereunder will (i) give
prompt notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) 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 counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made without its consent (but
such consent will not be unreasonably withheld). An indemnifying party who is
not entitled, or elects not, to assume the defense of a claim will not be
obligated to pay the fees and 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.
5. Participation in Underwritten Registrations. The Stockholder may not
participate in any underwritten registration hereunder unless the Stockholder
(a) agrees to sell its securities on the basis provided in any underwriting
arrangements approved by the Company, and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
6. Transfer of Registration Rights. The Stockholder may transfer, from time to
time, all or any portion of its rights under this Agreement to any transferee of
an amount of Shares equal to or exceeding 1% of the outstanding Common Stock at
the time of transfer (each transferee that re ceives such minimum number of such
Shares, an "Eligible Transferee"). The Eligible Transferees, through a
stockholder representative designated by the Eligible Transferees and acting on
behalf of all Eligible Transferees as a group (the "Stockholder
Representative"), shall as a group be treated as the Stockholder for all
purposes under this Agreement. In no event, however, shall the Company be
obligated under this Agreement to effect more than one Demand Registration set
forth in Section 1 on behalf of all Eligible Transferees in the aggregate. Any
transfer of registra-
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tion rights pursuant to this Section 6 shall be effective upon receipt by the
Company of (a) written notice from the Stockholder stating the name and address
of the Eligible Transferee, identifying the amount of Shares with respect to
which the rights under this Agreement are being transferred and (b) a writing
from such Eligible Transferee agreeing to the appointment and authority of the
Stockholder Representative to act on his/her behalf and agreeing to be bound by
the terms of this Agreement. The rights hereunder and the distribution of the
number of Shares that are registered pursuant hereto shall be determined by
agreement among the Eligible Transferees, and the Company will be under no
obligation to treat any Eligible Transferee individually as the Stockholder,
other than when acting in concert through the Stockholder Representative.
7. Rule 144. So long as the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act of 1934, as amended, the Company shall
take all actions reasonably necessary to enable the Stockholder to sell the
Shares without registration under the 1933 Act within the limitation of the
exemptions provided by Rule 144 under the 1933 Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC, including filing on a timely basis all reports required to be filed by the
Securities Exchange Act of 1934, as amended. Upon the request of the
Stockholder, the Company shall deliver to the Stockholder a written statement as
to whether it has complied with such requirements.
8. Definitions.
(a) The term "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with this Agreement, including all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, expenses and
fees for listing the securities to be registered on exchanges on which similar
securities issued by the Company are then listed, and fees and disbursements of
counsel for the Company, and of all independent certified public accountants,
underwriters (other than Underwriting Commissions and the fees and disbursements
of underwriters' counsel) and other persons retained by the Company.
(b) The term "Underwriting Commissions" means all underwriting
discounts or commissions relating to the sale of securities of the Company, but
excludes any expenses reimbursed to underwriters.
9. Miscellaneous.
(a) Notices. All notices that are required or permitted hereunder shall
be in writing and shall be sufficient if personally delivered or sent by mail,
facsimile message or Federal Express or other overnight delivery service. Any
notices shall be deemed given upon the earlier of the date when received at, or
the third day after the date when sent by registered or certified mail or the
day after the date when sent by Federal Express to, the address or fax number
set forth below, unless such address or fax number is changed by notice to the
other party hereto.
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(b) Amendments and Waivers. The provisions of this Agreement may be
amended or terminated and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, if approved in
writing by the Stockholder.
(c) Binding Effect. This Agreement will bind and inure to the benefit
of the respective successors (including any successor resulting from a merger or
similar reorganization), assigns, heirs, Eligible Transferees and personal
representatives of the parties hereto. Without limiting the generality of the
foregoing, if the Stockholder transfers shares to an Eligible Transferee,
liquidates or reorganizes such that its assets are transferred to its own
stockholders or partners or to another entity, the Stockholder, partners or
entity shall succeed to all of the rights of the Stockholder hereunder.
(d) Prior Agreements. This Agreement is the only agreement between the
Company and the Stockholder with respect to the subject matter hereof, and any
prior agreements between the Company and the Stockholder relating to the subject
matter of this Agreement are terminated as of the date hereof and shall have no
further force and effect.
(e) Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the internal law, not
the law of conflicts, of the Commonwealth of Pennsylvania.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered to be an original instrument and
to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement clearly
requires otherwise, (i) references to the plural include the singular, the
singular the plural, the part the whole, (ii) references to one gender include
all genders, (iii) "or" has the inclusive meaning frequently identified with the
phrase "and/or" and (iv) "including" has the inclusive meaning frequently
identified with the phrase "but not limited to." The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
thereof in any respect.
(h) Term. Except as specifically otherwise provided herein, the
provisions of this Agreement shall terminate upon the earlier of (i) such time
as all Shares have ceased to be restricted securities, as that terms is defined
1933 Act Rule 144 and (ii) the third anniversary of the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
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GOLD & XXXXX TRANSFER, S.A.
/s/
______________________________
Name:
Title:
US WATS, INC.
/s/
______________________________
Name:
Title:
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