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EXHIBIT 10.3
WARRANT REGISTRATION RIGHTS AGREEMENT
Dated as of July 30, 1998
between
TELEHUB COMMUNICATIONS CORPORATION
and
BANCBOSTON SECURITIES INC.
THIS WARRANT REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
and entered into as of July 30, 1998, between TELEHUB COMMUNICATIONS
CORPORATION, a Nevada corporation (the "Company"), and BANCBOSTON SECURITIES
INC. (the "Initial Purchaser"). This Agreement is made pursuant to the Purchase
Agreement dated July 27, 1998, between the Company and the Initial Purchaser
(the "Purchase Agreement"), relating to, among other things, the sale by the
Company to the Initial Purchaser of an aggregate of 125,000 units (the "Units"),
each consisting of $1,000 principal amount at maturity of 13 7/8% Senior
Discount Notes due 2005 (the "Notes")of the Company and 125,000 warrants (each,
a "Warrant"), each Warrant initially entitling the holder thereof to purchase an
aggregate of 16.661856 shares of common stock, par value $0.001 per share (the
"Common Stock"), of the Company. The Warrants have been issued pursuant to the
Warrant Agreement dated as of the date hereof between the Company and State
Street Bank and Trust Company as warrant agent (the "Warrant Agreement"). In
order to induce the Initial Purchaser to enter into the Purchase Agreement, the
Company has agreed to provide to the Initial Purchaser and the Holders (as
defined herein), among other things, registration rights for the Warrant Shares
(as defined herein) as set forth in this Agreement. The execution and delivery
of this Agreement is a condition to the obligations of the Initial Purchaser
under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
Section 1. Definitions.
As used in this agreement, the following defined terms shall have the
following meanings:
"Advice" has the meaning ascribed to such term in the last paragraph of
Section 4 hereof.
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"Business Day" shall mean a day that is not a Legal Holiday.
"Common Shelf Registration Statement" has the meaning ascribed to such
term in Section 2.1 hereof.
"Common Stock" has the meaning ascribed to such term in the preamble
hereof.
"Company" shall have the meaning ascribed to that term in the preamble
hereof and shall also include the Company's permitted successors and assigns.
"Demand Registration" has the meaning ascribed to such term in Section
2.2(a) hereof.
"DTC" has the meaning ascribed to such term in Section 4(i) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Expiration Date" has the meaning ascribed to such term in the Warrant
Agreement.
"Holder" shall mean the Initial Purchaser, for so long as it owns any
Warrants or Warrant Shares, and each of its successors, assigns and direct and
indirect transferees who become registered owners of such Warrants or Warrant
Shares.
"Included Securities" has the meaning ascribed to such term in Section
2.2(a) hereof.
"Indemnified party" has the meaning ascribed to such term in Section
5(c) hereof.
"Indenture" means the Indenture, of even date herewith, between the
Company and State Street Bank and Trust Company, as Trustee, pursuant to which
the Notes are issued.
"Initial Purchaser" has the meaning ascribed to such term in the
preamble hereof.
"Inspectors" has the meaning ascribed to such term in Section 4(n)
hereof.
"Issue Date" means the date of this Agreement, which is also the date
of the issuance of the Warrants under the Warrant Agreement.
"Legal Holiday" shall mean a Saturday, a Sunday or a day on which
banking institutions in New York, New York are required by law, regulation or
executive order to remain closed.
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"Notes" has the meaning ascribed to such term in the preamble hereof.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Piggy-Back Registration" has the meaning ascribed to such term in
Section 2.3 hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Public Offering" means an underwritten primary public offering of
common stock of the Company registered under the Securities Act (other than a
public offering registered on Form S-8 under the Securities Act).
"Purchase Agreement" has the meaning ascribed to such term in the
preamble hereof.
"Registrable Securities" means any of (i) the Warrant Shares and (ii)
any other securities issued or issuable with respect to any Warrant Shares by
way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise, unless, in each case, such Warrant Shares and securities, if any,
have been offered and sold to the Holder pursuant to an effective Registration
Statement under the Securities Act declared effective prior to the
exercisability of the Warrants or such Warrant Shares and securities, if any,
may be sold to the public pursuant to Rule 144 without any restriction on the
amount of securities which may be sold by such Holder or the satisfaction of any
condition. As to any particular Registrable Securities held by a Holder, such
securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the exercise or offering of such securities by the
Holder thereof shall have been declared effective under the Securities Act and
such securities shall have been exercised and/or disposed of by such Holder
pursuant to such Registration Statement, (ii) such securities may at the time of
determination be sold to the public pursuant to Rule 144 without any restriction
on the amount of securities which may be sold by such Holder (or any similar
provision then in force, but not Rule 144A) promulgated under the Securities Act
without the lapse of any further time or the satisfaction of any condition,
(iii) such securities shall have been otherwise transferred by such Holder and
new certificates for such securities not bearing a legend restricting further
transfer shall have been delivered by
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the Company or its transfer agent and subsequent disposition of such securities
shall not require registration or qualification under the Securities Act or any
similar state law then in force or (iv) such securities shall have ceased to be
outstanding.
"Registration Expenses" shall mean all expenses incident to the
Company's performance of or compliance with this Agreement, including, without
limitation, all SEC, exchange or National Association of Securities Dealers,
Inc. registration and filing fees and expenses, fees and expenses of compliance
with securities or blue sky laws (including, without limitation, reasonable fees
and disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Securities), printing expenses, messenger,
telephone and delivery expenses, fees and disbursements of counsel for the
Company and all independent certified public accountants, the fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities (but not including any underwriting discounts or commissions or
transfer taxes, if any, attributable to the sale of Registrable Securities by
Holders of such Registrable Securities) and other reasonable out-of-pocket
expenses of Holders (including the fees and expenses of one counsel for the
Holders to be selected by a majority of such Holders).
"Registration Statement" shall mean any appropriate registration
statement of the Company filed with the SEC pursuant to the Securities Act which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Requisite Securities" shall mean a number of Registrable Securities
equal to not less than 25% of the Registrable Securities held in the aggregate
by all Holders; provided, however, that with respect to any action to be taken
at the request of the Holders of the Registrable Securities prior to such time
as the Warrants have expired pursuant to the terms thereof and of the Warrant
Agreement, each Warrant outstanding shall be deemed to represent that number of
Registrable Securities for which such Warrant would be then exercisable (without
giving effect to the cashless (net) exercise feature referred to in the Warrant
Agreement).
"Rule 144" shall mean Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
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"Rule 144A" shall mean Rule 144A promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Selling Holder" shall mean a Holder who is selling Registrable
Securities in accordance with the provisions of Section 2 hereof.
"Shelf Registration Statement" has the meaning ascribed to such term in
Section 2.1 hereof.
"Warrants" has the meaning ascribed to such term in the preamble
hereof.
"Warrant Agent" means State Street Bank and Trust Company and any
successor Warrant Agent for the Warrants pursuant to the Warrant Agreement.
"Warrant Agreement" has the meaning ascribed to such term in the
preamble hereof.
"Warrant Shares" means the shares of Common Stock delivered or
deliverable upon exercise of the Warrants.
"Warrant Shelf Registration Statement" has the meaning ascribed to such
term in Section 2.1 hereof.
Section 2. Registration Rights.
Section 2.1. Shelf Registrations.
(a) General. If at any time the Company proposes to file pursuant to
Rule 415 (or any successor provision) of the Securities Act (i) a shelf
registration statement relating to the offer and sale of the Warrants Shares by
the Holders from time to time in accordance with the methods of distribution
elected by such holders and set forth in such registration statement (the
"Warrant Shelf Registration Statement") or (ii) a shelf registration statement
(separately from the Warrant Shelf Registration Statement or included as part
thereof) covering the issuance of Warrant Shares to the Holders upon exercise of
the Warrants by the Holders thereof (the "Common Shelf Registration Statement",
and together with the Warrant Shelf Registration Statement, the "Shelf
Registration Statements"), then the Company shall give
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written notice of such proposed filing to the Holders as soon as practicable
(but in no event fewer than 15 days before the anticipated filing date).
(b) Effectiveness of Shelf Registration Statements. If the Company
files and causes to become effective a Shelf Registration Statement, the Company
shall cause such Shelf Registration Statement to remain effective until (A) in
the case of the Common Shelf Registration Statement, the earliest of (i) such
time as all Warrants have been exercised and (ii) 30 days after the Expiration
Date, and (B) in the case of the Warrant Shelf Registration Statement, the
earliest of (i) such time as all the Warrants have been sold thereunder, (ii) 30
days after the Expiration Date, (iii) two years after its effective date and
(iv) the date that Warrants held by non-affiliates of the Company are tradeable
without restriction under Rule 144(k) under the Securities Act.
Section 2.2. Demand Registrations.
(a) General. If the Shelf Registration Statements are not filed and
declared effective or cease to be effective, then, at any time and from time to
time after the earlier of (i) 365 days after the Issue Date and (ii) 180 days
after a Public Offering, Holders owning, individually or in the aggregate, not
less than the Requisite Securities may make a written request, on no more than
two occasions (each, a "Demand Registration"), that the Company register the
resale of the Warrant Shares, under the Securities Act. The Company shall file
with the SEC and use its best efforts to cause to become effective under the
Securities Act a Registration Statement with respect to such Registrable
Securities within (i) 60 days of receipt of such written request for a Demand
Registration if the Company is then eligible to register an offering pursuant to
Form S-3 under the Securities Act; or (ii) 120 days of receipt of such written
request for a Demand Registration if the Company is not then eligible to
register an offering pursuant to Form S-3 under the Securities Act but is then
qualified as a reporting company under the Exchange Act; provided that the
Company may delay its obligations to file with the SEC such Registration
Statement for up to 90 days provided that if on the date a Demand Registration
is made the Company is a reporting company under the Exchange Act the Company
will not be able to delay a filing hereunder beyond the next required filing of
the Company's Form 10-K if such filing is required to be made at least 60 days
from the date of the Demand Registration is made. Any such request will specify
the number of Registrable Securities proposed to be sold and will also specify
the intended method of disposition thereof. The Company shall give written
notice of such registration request to all other Holders of Registrable
Securities within 15 business days after the receipt thereof. Within 10 days
after receipt by any Holder of Registrable Securities of such notice from the
Company, such Holder may request in writing that such Holder's Registrable
Securities be included in such Registration Statement and the Company shall
include in such Registration Statement the Registrable Securities of any such
Holder requested to be so included (the "Included Securities"). Each such
request by such other Holders shall specify
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the number of Included Securities proposed to be sold and the intended method of
disposition thereof. Subject to Sections 2.2(b) and 2.2(e) hereof, the Company
shall be required to register Registrable Securities pursuant to this Section
2.2(a) on a maximum of two occasions.
Subject to Section 2.2(e) hereof, no other securities of the Company
except (i) Registrable Securities held by any Holder, (ii) equity securities to
be offered and sold for the account of the Company and (iii) any equity
securities of the Company held by any Person having "piggy-back" registration
rights pursuant to any contractual obligation of the Company shall be included
in a Demand Registration. The inclusion of any such securities for the account
of the Company or any other Person shall be on the same terms as that of the
Registrable Securities.
(b) Effective Registration. A Registration Statement will not be deemed
to have been effected as a Demand Registration unless it has been declared
effective by the SEC and the Company has complied in all material respects with
all of its obligations under this Agreement with respect thereto; provided,
however, that if, after such Registration Statement has become effective, the
offering of Registrable Securities pursuant to such Registration Statement is or
becomes the subject of any stop order, injunction or other order or requirement
of the SEC or any other governmental or administrative agency or court that
prevents, restrains or otherwise limits the sale of Registrable Securities
pursuant to such Registration Statement for any reason not attributable to any
Holder participating in such registration and such restraint is not lifted
within 60 days after being imposed, such Registration Statement will be deemed
not to have been effected. If (i) a registration requested pursuant to this
Section 2.2 is deemed not to have been effected or (ii) a Demand Registration
does not remain effective under the Securities Act until at least the earlier of
(A) an aggregate of six months after the effective date thereof or (B) the
consummation of the distribution by the Holders of all of the Registrable
Securities covered thereby, then such registration shall not count towards
determining if the Company has satisfied its obligation to effect the Demand
Registration pursuant to this Section 2.2. For purposes of calculating the six
month period referred to in the preceding sentence, any period of time during
which such Registration Statement was not in effect shall be excluded. The
Holders of Registrable Securities shall be permitted to withdraw all or any part
of the Registrable Securities from a Demand Registration at any time prior to
the effective date of such Demand Registration; provided, however, that should
the Holders of Registrable Securities remaining after such withdrawal own,
individually or in the aggregate, less than the Requisite Securities, the
Company shall have the right to terminate or withdraw any registration initiated
by it under Section 2.2 prior to the effectiveness of such registration.
(c) Restrictions on Sale by Holders. Each Holder of Registrable
Securities whose Registrable Securities are covered by a Registration Statement
filed pursuant to Section 2.2
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and are to be sold by the Holder thereunder agrees, if and to the extent
reasonably requested by the managing underwriter or underwriters in an
underwritten offering of common stock or common equivalents the gross proceeds
of which equal at least $10.0 million, not to effect any public sale or
distribution of Registrable Securities of the Company of the same class as any
securities included in such Registration Statement, including a sale pursuant to
Rule 144 (except as part of such underwritten offering), during the 10-day
period prior to, and during the 180- day period beginning on, the closing date
of each underwritten offering made pursuant to such Registration Statement, to
the extent timely notified in writing by the Company or such managing
underwriter or underwriters.
The foregoing provisions of Section 2.2(c) shall not apply to any
Holder of Registrable Securities if such Holder is prevented by applicable
statute or regulation from entering into any such agreement; provided, however,
that any such Holder shall undertake, in its request to participate in any such
underwritten offering, not to effect any public sale or distribution of any
Registrable Securities commencing on the date of sale of such Registrable
Securities unless it has provided 45 days' prior written notice of such sale or
distribution to the underwriter or underwriters.
(d) Underwritten Registrations. If any of the Registrable Securities
covered by a Demand Registration are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will manage
the offering will be selected by the Company and will be reasonably acceptable
to the Holders of not less than a majority of the Registrable Securities to be
sold thereunder. The Company shall obtain the consent of a majority of the
Holders of Registrable Securities in order for the third registration pursuant
to Section 2.2(a) to be an underwritten offering.
No Holder of Registrable Securities may participate in any underwritten
registration pursuant to a Registration Statement filed under this Agreement
unless such Holder (a) agrees to (i) sell such Holder's Registrable Securities
on the basis provided in and in compliance with customary underwriting
arrangements and (ii) comply with Rules 101, 102 and 104 of Regulation M
promulgated under the Exchange Act and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably and customarily required under the terms of such
underwriting arrangements.
(e) Priority in Demand Registration. In a registration pursuant to
Section 2.2 hereof involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders who have requested such Demand
Registration or who have sought inclusion therein that in such underwriter's or
underwriters' opinion the total number of securities which the Selling Holders
and any other Person entitled to participate in such registration pursuant to
Section 2.2(a)
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hereof intend to include in such offering is such as to adversely affect the
success of such offering, including the price at which such securities can be
sold, then the Company will be required to include in such registration only the
amount of securities which it is so advised should be included in such
registration. In such event, securities shall be registered in such registration
in the following order of priority: (i) first, the securities which have been
requested to be included in such registration by the Holders of Registrable
Securities and the securities of other Persons entitled to exercise "piggy-back"
registration rights pursuant to contractual commitments of the Company (pro rata
based on the amount of securities held by the Holders of Registrable Securities
and such Persons), and (ii) second, provided that no securities sought to be
included by the Holders or any other Person sought to be included therein have
been excluded from such registration, securities to be offered and sold for the
account of the Company.
If 25% or more of the Registrable Securities which the Holders have
requested to be included in a registration statement pursuant to Section 2.2
hereof have been excluded from such registration statement pursuant to the
provisions of the foregoing paragraph, then such registration shall not count
towards determining whether the Company has satisfied its obligation to effect a
Demand Registration pursuant to Section 2.2 hereof.
Section 2.3. Piggy-Back Registration.
(a) General. If at any time after the earlier of (i) 365 days after the
Issue Date and (ii) 90 days after a Public Offering, the Company proposes to
file a Registration Statement under the Securities Act with respect to an
offering by the Company for its own account or for the account of any of its
security holders of any class of its common equity securities (other than (i) a
Registration Statement on Form S-4 or S-8 (or any substitute form that may be
adopted by the SEC or other form of limited purpose), (ii) a Registration
Statement filed in connection with an exchange offer or offering of securities
solely to the Company's existing security holders, or (iii) a Registration
Statement filed pursuant to the exercise of "demand" registration rights of
existing security holders pursuant to a contractual commitment of the Company)
then the Company shall give written notice of such proposed filing to the
Holders of Registrable Securities as soon as practicable (but in no event fewer
than 15 days before the anticipated filing date or 10 days if the Company is
subject to filing reports under the Exchange Act and able to use Form S-3 under
the Securities Act), and such notice shall offer such Holders the opportunity to
register such number of shares of Registrable Securities as each such Holder may
request in writing not later than 5 days prior to the anticipated filing date of
the Registration Statement after receipt of such written notice from the Company
(which request shall specify the Registrable Securities intended to be disposed
of by such Selling Holder and the intended method of distribution thereof) (a
"Piggy-Back Registration"). The Company shall use its best efforts to keep such
Piggy-Back Registration continuously effective under the Securities Act until at
least the earlier of (A) 90 days after
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the effective date thereof or (B) the consummation of the distribution by the
Holders of all of the Registrable Securities covered thereby. The Company shall
use its commercially reasonable efforts to cause the managing underwriter or
underwriters, if any, of such proposed offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company or any
other security holder included therein, subject to the restrictions set forth in
Section 2.3(b), and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method of distribution thereof. Any
Selling Holder shall have the right to withdraw its request for inclusion of its
Registrable Securities in any Registration Statement pursuant to this Section
2.3 by giving timely written notice to the Company of its request to withdraw.
The Company may withdraw a Piggy-Back Registration at any time prior to the time
it becomes effective or the Company may elect to delay the registration;
provided, however, that the Company shall give prompt written notice thereof to
participating Selling Holders. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 2.3, and each Holder of Registrable Securities shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to a
Registration Statement effected pursuant to this Section 2.3.
No registration effected under this Section 2.3, and no failure to
effect a registration under this Section 2.3, shall relieve the Company of its
obligation to effect a registration pursuant to Section 2.2 hereof, and no
failure to effect a registration under this Section 2.3 and to complete the sale
of securities registered thereunder in connection therewith shall relieve the
Company of any other obligation under this Agreement.
(b) Priority in Piggy-Back Registration. In a registration pursuant to
Section 2.3 hereof involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders requesting inclusion in such
offering that in such underwriter's or underwriters' opinion the
total number of securities which the Company, the Selling Holders and any other
Persons desiring to participate in such registration intend to include in such
offering is such as to adversely affect the success of such offering, including
the price at which such securities can be sold, then the Company will be
required to include in such registration only the amount of securities which it
is so advised should be included in such registration. In such event, securities
shall be registered in such offering in the following order of priority: (i)
first, the securities which the Company proposes to register, and (ii) second,
provided that no securities sought to be included by the Company have been
excluded from such registration, the securities which have been requested to be
included in such registration by the Holders of Registrable Securities and other
Persons entitled to exercise "piggy-back" registration rights pursuant to
contractual commitments of the Company (pro rata based on the amount
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of securities held by the Holders of Registrable Securities requesting such
inclusion and such Persons).
If, as a result of the provisions of this Section 2.3(b), any Selling
Holder shall not be entitled to include all Registrable Securities in a Piggy-
Back Registration that such Selling Holder has requested to be included, such
Selling Holder may elect to withdraw his request to include Registrable
Securities in such registration.
Section 2.4. Limitations, Conditions and Qualifications to Obligations
Under Registration Covenants.
The obligations of the Company set forth in Section 2 hereof are
subject to each of the following limitations, conditions and qualifications:
(a) Subject to the next sentence of this paragraph, the Company shall
be entitled to postpone, for a reasonable period of time, the filing or
effectiveness of, or suspend the rights of any Holders to make sales pursuant
to, any Registration Statement otherwise required to be prepared, filed and made
and kept effective by it pursuant to Section 2 thereunder; provided, however,
that the duration of such postponement or suspension may not exceed the earlier
to occur of (A) 15 days after the cessation of the circumstances described in
the next sentence of this paragraph on which such postponement or suspension is
based or (B) 90 days after the date of the determination of the Board of
Directors referred to in the next sentence, and the duration of such
postponement or suspension shall be excluded from the calculation of the six
month period described in Section 2.2(b). Such postponement or suspension may be
effected only if the Board of Directors of the Company determines reasonably and
in good faith that the filing or effectiveness of, or sales pursuant to, such
Registration Statement would materially impede, delay or interfere with any
material financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving the Company or any of
its Subsidiaries which material financing, offer or sale of securities,
acquisition, corporate reorganization or other significant transaction is under
active consideration at the time of such postponement or suspension; provided,
however, that the Company shall not be entitled to such postponement or
suspension more than twice in any twelve-month period. If the Company shall so
postpone the filing of a Registration Statement it shall, as promptly as
possible, deliver a certificate signed by the Chief Executive Officer or
President of the Company to the Selling Holders as to such determination, and
the Selling Holders shall (y) have the right, in the case of a postponement of
the filing or effectiveness of a Registration Statement, upon the affirmative
vote of the Holders of not less than a majority of the Registrable Securities to
be included in such Registration Statement, to withdraw the request for
registration by giving written notice to the Company within 10 days after
receipt of such notice or (z) in the case of a suspension of the right to make
sales, receive an extension of the registration period equal to the number of
days of the suspension.
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Any Demand Registration as to which the withdrawal election referred to in the
preceding sentence has been effected shall not be counted for purposes of the
two Demand Registrations the Company is required to effect pursuant to Section
2.2 hereof.
(b) The Company's obligations shall be subject to the obligations of
the Selling Holders, which the Selling Holders acknowledge, to furnish all
information and materials required of such Selling Holders and to take any and
all actions required of such Selling Holders as may be required under applicable
federal and state securities laws and regulations to permit the Company to
comply with all applicable requirements of the SEC and to obtain any
acceleration of the effective date of such Registration Statement; and
(c) The Company shall not be obligated to cause any special audit to be
undertaken in connection with any registration pursuant to this Agreement unless
such audit is required by the SEC or requested by the underwriters with respect
to such registration.
Section 2.5. Restrictions on Sale by the Company and Others.
Company covenants and agrees that (i) it shall not, and that it shall
not cause or permit any of its subsidiaries to, effect any public sale or
distribution of any securities of the same class as any of the Registrable
Securities or any securities convertible into or exchangeable or exercisable for
such securities (or any option or other right for such securities), other than
any Common Stock and/or options, warrants or other Common Stock purchase rights,
and the Common Stock issued pursuant to such option, warrants or other rights,
to employees, officers or directors of, or consultants or advisors to the
Company or any subsidiary pursuant to stock purchase or stock option plans or
other arrangements that are approved by the Board of Directors of the Company,
during the 10-day period prior to, and during the 180-day period beginning on,
the commencement of any underwritten offering of Registrable Securities pursuant
to a Demand Registration which has been requested pursuant to this Agreement,
prior to the Company or any of its subsidiaries publicly announcing its
intention to effect any such public sale or distribution; and (ii) the Company
will not, and the Company will not cause or permit any subsidiary of the Company
to, after the date hereof, enter into any agreement or contract that conflicts
with or limits or prohibits the full and timely exercise by the Holders of
Registrable Securities of the rights herein to request a Demand Registration or
to join in any Piggy-Back Registration subject to the other terms and provisions
hereof.
Section 2.6. Rule 144 and Rule 144A.
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any time
the Company is not required to file such reports, it will, upon the request of
any Holder or beneficial owner of Registrable Securities,
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make available such information necessary to permit sales pursuant to Rule 144A
under the Securities Act. The Company further covenants that it will take such
further action as any Holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such Holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144(k) and Rule 144A under the
Securities Act, as such Rules may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC (it being expressly
understood that the foregoing shall not create any obligation on the part of the
Company to file periodic reports or other reports under the Exchange Act at any
time that it is not then required to file such reports pursuant to the Exchange
Act). Upon the request of any Holder of Registrable Securities, the Company will
in a timely manner deliver to such Holder a written statement as to whether it
has complied with such information requirements.
Section 3. "Market Stand-Off" Agreement.
(a) Each Holder hereby agrees that it shall not, to the extent
requested by a managing underwriter of common stock or common equivalents of the
Company, sell or otherwise transfer or dispose of any Registrable Securities of
the Company then owned by such Holder (other than to donees or partners of the
Holder who agree to be similarly bound) for up to 180 days following the date of
the final Prospectus in connection with each Registration Statement of the
Company filed under the Securities Act; provided, however, that such agreement
(i) shall not be applicable to Registrable Securities sold pursuant to such
registration, and (ii) shall only be applicable if the managing underwriters
request such agreement from each Holder.
(b) In order to enforce the foregoing covenant, the Company shall have
the right to impose stop transfer instructions with respect to the Registrable
Securities (and the Registrable Securities of every other person subject to the
foregoing restriction) until the end of such period. The provisions of this
Section 3 shall be binding upon any transferee of any Registrable Securities.
Section 4. Registration Procedures.
In connection with the obligations of the Company with respect to any
Registration Statement pursuant to Sections 2.1, 2.2, 2.3 and 2.5 hereof, the
Company shall, except as otherwise provided:
(a) Prepare and file with the SEC as soon as practicable each such
Registration Statement (but in any event on or prior to the date of filing
thereof required under this Agreement) and cause such Registration Statement to
become effective and remain effective as provided herein; provided, however,
that before filing any such Registration Statement or
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any Prospectus (for registrations pursuant to Sections 2.1, 2.2 and 2.3 hereof)
or any amendments or supplements thereto (only for registrations pursuant to
Sections 2.1 and 2.2 hereof), the Company shall make available to the Warrant
Agent, the Holders of the Registrable Securities covered by such Registration
Statement, and the managing underwriter or underwriters, if any, copies of all
such documents proposed to be filed, which documents will be subject to the
review and comment of such Holders and underwriters in connection with such
sale, if any, for a period of at least five Business Days, and the Company will
not file any such Registration Statement or any amendment or supplement to any
such Registration Statement (including all such documents incorporated by
reference) to which the Holders of the Registrable Securities covered by such
Registration Statement or the underwriters in connection with such sale, if any,
shall reasonably object within five Business Days after the receipt thereof. A
participating Holder or underwriter, if any, shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment or supplement,
as applicable, as proposed to be filed, contains a material misstatement or
omission or fails to comply with the applicable requirements of the Act;
(b) Prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the time periods prescribed
hereby; cause the related Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
and comply with the provisions of the Securities Act, the Exchange Act and the
rules and regulations of the SEC promulgated thereunder applicable to it with
respect to the disposition of all securities covered by such Registration
Statement as so amended or in such prospectus as so supplemented.
(c) Notify the Warrant Agent, the Holders of Registrable Securities,
their counsel and the managing underwriter or underwriters, if any, promptly
(but in any event within two (2) Business Days), and confirm such notice in
writing, (i) when 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 (including in such
notice a written statement that any Holder may, upon request, obtain, without
charge, one conformed copy of such Registration Statement or post-effective
amendment including financial statements and schedules and exhibits), (ii) of
the issuance by the SEC of any stop order suspending the effectiveness of such
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation or threatening of any proceedings for
that purpose, (iii) of the receipt by the Company of any notification with
respect to (A) the suspension of the qualification or exemption from
qualification of the Registration Statement or any of the Registrable Securities
covered thereby for offer or sale in any jurisdiction, or (B) the initiation of
any proceeding for such purpose, (iv) of the happening of any event, the
existence of any condition or information becoming known that
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requires the making of any changes in such Registration Statement, Prospectus or
documents so that, in the case of such Registration Statement, it will conform
in all material respects with the requirements of the Securities Act and it 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 that in the case of the Prospectus, it will conform
in all material respects with the requirements of the Securities Act and it 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, in light of the circumstances under which they were made, not
misleading, and (v) of the Company's reasonable determination that a
post-effective amendment to such Registration Statement would be appropriate.
(d) Use commercially reasonable efforts to prevent the issuance of any
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities covered
thereby for sale in any jurisdiction, and, if any such order is issued, to
obtain the withdrawal of any such order at the earliest practicable moment.
(e) If requested by the managing underwriter or underwriters, if any,
or the Holders of a majority of the Registrable Securities being sold in
connection with an underwritten offering (only for registrations pursuant to
Sections 2.1 and 2.2 hereof), (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriter or underwriters, if any, or such Holders reasonably request to be
included therein to comply with applicable law, (ii) make all required filings
of such prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be
incorporated in such prospectus supplement or post effective amendment, and
(iii) supplement or make amendments to such Registration Statement.
(f) Furnish to each Holder of Registrable Securities who so requests
and to counsel for the Holders of Registrable Securities and each managing
underwriter, if any, without charge, upon request, one conformed copy of the
Registration Statement and each post effective amendment thereto, including
financial statements and schedules, and of all documents incorporated or deemed
to be incorporated therein by reference and all exhibits (including exhibits
incorporated by reference).
(g) Deliver to each Holder of Registrable Securities, their counsel and
each underwriter, if any, without charge, as many copies of each Prospectus
(including each form of prospectus) and each amendment or supplement thereto as
such Persons may reasonably request; and, subject to the last paragraph of this
Section 4, the Company hereby consents to
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the use of such Prospectus and each amendment or supplement thereto by each of
the Holders of Registrable Securities and the underwriter or underwriters or
agents, if any, in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities, to register or
qualify, and cooperate with the Holders of Registrable Securities, the
underwriter or underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of, such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
the managing underwriter or underwriters reasonably request in writing, or, in
the event of a non-underwritten offering, as the Holders of a majority of the
Registrable Securities may request; provided, however, that where Registrable
Securities are offered other than through an underwritten offering, the Company
agrees to cause its counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this Section
4(h); keep each such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the securities covered thereby; provided, however, that the Company will not be
required to (A) qualify generally to do business in any jurisdiction where it is
not then so qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
(C) become subject to taxation in any jurisdiction where it is not then so
subject.
(i) Cooperate with the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends whatsoever
and shall be in a form eligible for deposit with The Depository Trust Company
("DTC"); and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
Holders may reasonably request at least two business days prior to any sale of
Registrable Securities in a firm commitment underwritten public offering.
(j) Pay all Registration Expenses in connection with the registrations
requested pursuant to Sections 2.1, 2.2 and 2.3 hereof. Each Holder of
Registrable Securities shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to a Registration Statement requested pursuant
to Section 2.2.
(k) Upon the occurrence of any event contemplated by Section 4(c)(iv)
or 4(c)(v) above, as promptly as practicable prepare a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document
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incorporated or deemed to be incorporated therein by reference, and, subject to
Section 4(a) hereof, file such with the SEC so that, as thereafter delivered to
the purchasers of Registrable Securities being sold thereunder, such Prospectus
will not 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, in light of the circumstances under which they were made, not
misleading.
(l) Prior to the effective date of a Registration Statement, (i)
provide the registrar for the Registrable Securities with certificates for such
securities in a form eligible for deposit with DTC and (ii) provide a CUSIP
number for such securities.
(m) If the Company determines to conduct any offering provided for
herein by meaning of an underwriting, enter into an underwriting agreement in
form, scope and substance as is customary in underwritten offerings and take all
such other actions as are reasonably requested by the managing underwriter or
underwriters in order to expedite or facilitate the registration or disposition
of such Registrable Securities in any underwritten offering to be made of the
Registrable Securities in accordance with this Agreement, and in such
connection, (i) make such representations and warranties to the underwriter or
underwriters, with respect to the business of the Company and the subsidiaries
of the Company, and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in each
case, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings, and confirm the same if and when
requested; (ii) use reasonable efforts to obtain an opinion of counsel to the
Company, addressed to the underwriter or underwriters covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by underwriters; (iii) use
reasonable efforts to obtain "cold comfort" letters from the independent
certified public accountants of the Company (and, if applicable, the
subsidiaries of the Company) and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement, addressed to each of the
underwriters, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested by the
managing underwriter or underwriters and as permitted by the Statement of
Auditing Standards No. 72; and (iv) if an underwriting agreement is entered
into, the same shall contain customary indemnification provisions and procedures
with respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or as and
to the extent required thereunder.
(n) Make available for inspection by a representative of the Holders of
Registrable Securities being sold, any underwriter participating in any such
disposition of Registrable
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Securities, if any, and any attorney or accountant retained by such
representative of the Holders or underwriter (collectively, the "Inspectors"),
at the offices where normally kept, during reasonable business hours, at the
Inspector's expense, all financial and other records, pertinent corporate
documents and properties of the Company and the subsidiaries of the Company as
reasonably requested by the Inspector, and cause the officers, directors and
employees of the Company and the subsidiaries of the Company to supply all
information in each case reasonably requested by any such Inspector in
connection with such Registration Statement; provided, however, that all such
information shall be kept confidential by such Inspector and shall not be used
for any purpose other than as contemplated hereby, except to the extent that (i)
the disclosure of such information is necessary or advisable to avoid or correct
a misstatement or omission in the Registration Statement or in any Prospectus;
provided however, that prior notice is given to the Company, and the Company's
legal counsel and such Holder's legal counsel concur that disclosure is
required, (ii) the release of such information is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction, (iii) disclosure of such
information is necessary or advisable in connection with any action, claim, suit
or proceeding, directly or indirectly, involving or potentially involving such
Inspector and arising out of, based upon, relating to or involving this
Agreement or any of the transactions contemplated hereby or arising thereunder;
provided, however, that prior notice shall be provided as soon as practicable to
the Company of the potential disclosure of any information by such Inspector
pursuant to clauses (ii) or (iii) of this sentence to permit the Company to
obtain a protective order (or waive the provisions of this paragraph (n)) and
that such Inspector shall take all actions as are reasonably necessary to
protect the confidentiality of such information (if practicable) to the extent
such action is otherwise not inconsistent with, an impairment of or in
derogation of the rights and interests of the Holder or any Inspector, or (iv)
such information has been made generally available to the public.
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than
forty-five (45) days after the end of any 12-month period (or ninety (90) days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to an underwriter or to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to an underwriter or to underwriters
in such an offering, commencing on the first day of the first fiscal quarter of
the Company after the effective date of the relevant Registration Statement,
which statements shall cover said 12-month periods.
(p) Use its best efforts to cause all Registrable Securities relating
to such Registration Statement to be listed on each securities exchange, if any,
on which similar securities issued by the Company are then listed.
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(q) Cooperate with the Selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends and
registered in such names as the Selling Holders may reasonably request at least
two business days prior to the closing of any sale of Registrable Securities.
Each seller of Registrable Securities as to which any registration is
being effected agrees, as a condition to the registration obligations with
respect to such seller provided herein, to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request in writing
to comply with the Securities Act and other applicable law. The Company may
exclude from such registration the Registrable Securities of any seller for so
long as such seller fails to furnish such information within a reasonable time
after receiving such request. If the identity of a seller of Registrable
Securities is to be disclosed in the Registration Statement, such seller shall
be permitted to include all information regarding such seller as it shall
reasonably request.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any written notice from the Company
of the happening of any event of the kind described in Section 4(c)(ii),
4(c)(iii), 4(c)(iv), or 4(c)(v) hereof, such Holder will forthwith discontinue
disposition of such Registrable Securities covered by the Registration Statement
or Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(k) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
prospectus may be resumed, and has received copies of any amendments or
supplements thereto, and, if so directed by the Company, such Holder will, at
the Company's expense, deliver to the Company all copies, other than permanent
file copies, then in such Holder's actual possession of the Prospectus covering
such Registrable Securities current at the time of receipt of such notice;
provided, however, that nothing herein shall create any obligation on the part
of any Holder to undertake unreasonable efforts to retrieve or return any such
Prospectus not within the actual possession or control of such Holder. In the
event the Company shall give any such notice, the period of time for which a
Registration Statement is required thereunder to be effective shall be extended
by the number of days during such periods from and including the date of the
giving of such notice to and including the date when each seller of Registrable
Securities covered by such Registration Statement shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 4(k)
hereof or (y) the Advice.
Section 5. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Holder and
each Person, if any, who controls such Holder within the meaning of either
Section 15 of the
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Securities Act or Section 20 of the Exchange Act, or is under common control
with, or is controlled by, such Holder, from and against all losses, claims,
damages and liabilities (including, without limitation, and subject to clause
(c) of this Section 5 below, the reasonable legal fees and other reasonable
out-of-pocket expenses actually incurred by any Holder or any such controlling
or affiliated Person in connection with any suit, action or proceeding or any
claim asserted), caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Registrable Securities
were registered under the Securities Act, or caused by any omission or alleged
omission to state in any such Registration Statement a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state in any such
preliminary prospectus or Prospectus a material fact required to be stated in
any such preliminary prospectus or Prospectus or necessary to make the
statements in any such preliminary prospectus or Prospectus in light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Holder furnished to the Company in
writing by such Holder expressly for use in any such Registration Statement or
Prospectus; provided, however, that the Company shall not be required to
indemnify any such Person if such untrue statement or omission or alleged untrue
statement or omission was contained or made in any preliminary prospectus and
corrected in the Prospectus, or any amendment or supplement thereto and the
Prospectus does not contain any other untrue statement or omission or alleged
untrue statement or omission of a material fact that was the subject matter of
the related proceeding and any such loss, liability, claim, damage or expense
suffered or incurred by such indemnified Person resulted from any action, claim
or suit by any Person who purchased Registrable Securities which are the subject
thereof from such indemnified Person and it is established in the related
proceeding that such indemnified Person failed to deliver or provide a copy of
the Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registrable Securities sold to such Person if
required by applicable law, unless such failure to deliver or provide a copy of
the Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 4 hereof or as a result of the failure of the Company to
provide such Prospectus.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign any Registration
Statement, and each Person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such Holder, but
only with reference to information relating to such Holder
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furnished to the Company in writing by such Holder expressly for use in any
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto). The liability of any Holder under this
paragraph shall in no event exceed the proceeds received by such Holder from
sales of Registrable Securities giving rise to such obligations.
(c) In case any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to either paragraph
(a) or (b) above, such Person (the "indemnified party") shall promptly notify
the Person against which such indemnity may be sought (the "indemnifying party")
in writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
reasonably designate in such proceeding and shall pay the reasonable fees and
expenses actually incurred of such counsel relating to such proceeding;
provided, however, that the failure to so notify the indemnifying party shall
not relieve it of any obligation or liability which it may have thereunder or
otherwise unless the indemnifying party has been materially prejudiced by such
failure. In any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the contrary, (ii) the
indemnifying party shall have failed to retain within a reasonable period of
time counsel reasonably satisfactory to such indemnified party or parties or
(iii) the named parties to any such proceeding (including any impleaded parties)
include both such indemnified party or parties and the indemnifying parties or
any affiliate of the indemnifying parties or such indemnified parties and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between the indemnifying party or
parties and the indemnified party or parties. It is understood that the
indemnifying parties shall not, in connection with any one such proceeding or
separate but substantially similar or related proceedings in the same
jurisdiction, arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified party
or parties and that all such fees and expenses shall be reimbursed within
reasonable time of the request after the incurrence thereof. Any such separate
firm for the Holders and such control Persons of the Holders shall be designated
in writing by Holders who sold a majority in interest of Registrable Securities
sold by all such Holders and any such separate firm for the Company, its
directors, its officers and such control Persons of the Company shall be
designated in writing by the Company. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its prior written consent
(which consent shall not be unreasonably withheld or delayed) but if settled
with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify and hold harmless the indemnified party
from and against any loss or liability by reason of such settlement or
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judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement or compliance of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party, or indemnity could
have been sought thereunder by such indemnified party, unless such settlement or
compliance involves only the payment of money damages that are actually paid by
the indemnifying party or includes an unconditional written release of such
indemnified party in form and substance reasonably satisfactory to such
indemnified party of such indemnified party from all liability or claims that
are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 5 is unavailable to, or insufficient to hold harmless, an
indemnified party in respect of any losses, claims, damages or liabilities, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder and in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect (i) the relative benefits received by
the Company on the one hand and the Holders on the other hand from the offering
of such Registrable Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, not only such relative benefits but
also the relative fault of the Company on the one hand and the Holders on the
other hand in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Holders on the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of discounts and commissions but before
deducting expenses) of the Warrants sold pursuant to the Purchase Agreement
received by the Company bears to the total proceeds received by such Holder from
the sale of Registrable Securities, as the case may be. The relative fault of
the Company on the one hand and the Holders on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 5(d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in Section 5(d) above shall be deemed to include,
subject to the limitations set forth above, any reasonable legal or other
expenses
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actually incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 5, in no event shall a Holder be required to contribute any amount in
excess of the amount by which proceeds received by such Holder from sales of
Registrable Securities exceeds the amount of any damages that such Holder has
otherwise been required to pay or has paid by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 5 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 5 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 5 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Holder or any person who controls a
Holder, the Company, their respective directors or officers or any person
controlling the Company and (ii) any termination of this Agreement.
Section 6. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents and warrants to
the Holders that it has not entered into nor will the Company on or after the
date of this Agreement enter into, or cause or permit any of its subsidiaries to
enter into, any agreement which is inconsistent with the rights granted to the
Holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof. The rights granted to the Holders thereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's other issued and outstanding securities, if any, under
any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company consents and the
Company has obtained the prior written consent of Holders of not less than a
majority in number of the then outstanding Warrants and Registrable Securities
not resold to the public for the purpose of adding any provision to or changing
in any manner or eliminating any of the provisions of this Agreement or
modifying in any manner the rights of the Holders of the outstanding Warrants;
provided, however, that Section 5 hereof and this Section 6(b) may not be
amended, modified
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or supplemented without the prior written consent of each Holder (including any
Person who was a Holder of Registrable Securities disposed of pursuant to any
Registration Statement) affected by such amendment, modification or supplement.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders of
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect, impair,
limit or compromise the rights of other Holders of Registrable Securities may be
given the Company and by the Holders of not less than a majority of the
Registrable Securities proposed to be sold by such Holders pursuant to such
Registration Statement.
(c) Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and shall be mailed,
delivered, telecopied and confirmed in writing or sent by a nationally
recognized overnight courier service guaranteeing delivery on the next business
day to: (i) if sent to a Holder, at the most current address of Holder as set
forth in the register for the Warrants or the Warrant Shares; (ii) if sent to
the Initial Purchaser, to BancBoston Securities Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Investment Banking, telecopy number:
(▇▇▇) ▇▇▇-▇▇▇▇, with a copy to Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, telecopy number:
(▇▇▇) ▇▇▇-▇▇▇▇; and (iii) if sent to the Company, to TeleHub Communications
Corporation, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Financial Officer, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy
to Haligman ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, telecopy number: (303)
292-1300.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders. If any transferee of any Holder shall acquire
Warrants and/or Registrable Securities, in any manner, whether by operation of
law or otherwise, such Warrants and/or Registrable Securities shall be held
subject to all of the terms of this Agreement, and by taking and holding such
Warrants and/or Registrable Securities such Person shall be conclusively deemed
to have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such Person shall be entitled to receive the benefits hereof.
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(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY: (A)
SUBMITS ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS WARRANT REGISTRATION RIGHTS AGREEMENT OR FOR RECOGNITION AND ENFORCEMENT OF
ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND CONSENTS AND
AGREES TO SUCH ACTION OR PROCEEDING BEING BROUGHT IN SUCH COURTS; AND (B) WAIVES
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN
ANY INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME.
(h) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(i) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Warrant Agreement is intended by the parties as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of
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the parties hereto in respect of the subject matter contained herein and
therein. This Agreement, the Purchase Agreement and the Warrant Agreement
supersede all prior agreements and understandings between the parties with
respect to such subject matter.
(j) Attorneys' Fees. As between the parties to this Agreement, in any
action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in addition to its
costs and expenses and any other available remedy.
(k) Securities Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities or Warrants is required thereunder, Registrable Securities or
Warrants held by the Company or by any of its affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not be counted (in either
the numerator or the denominator) in determining whether such consent or
approval was given by the Holders of such required percentage.
(l) Remedies. In the event of a breach by the Company of any of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights provided herein, in the Purchase Agreement or granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
TELEHUB COMMUNICATIONS CORPORATION
By:
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive
Officer
BANCBOSTON SECURITIES INC.
By:
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
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