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REVISED
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT made as of the 18th day of March, 1997 by and between
MIDCOM COMMUNICATIONS INC., a Washington corporation ("MIDCOM") and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇ ("Holder").
WHEREAS, concurrent with the execution of this Agreement, MIDCOM and
Holder entered into agreements to consummate a settlement of the existing
disputes between Holder and MIDCOM ("Release"); and
WHEREAS, in connection with entering into the Release, MIDCOM has
agreed to issue to Holder up to 9,457 Common Shares (the "Release Shares") and
up to 60,000 Common Shares (the "True-Up Shares"); and
WHEREAS, MIDCOM authorized the issuance to ▇▇▇▇ of 12,236 Issued
Holdback Shares on September 20, 1996; that term is as defined in the Release;
and
WHEREAS, MIDCOM is willing to grant certain registration rights to
Holder with respect to the Issued Holdback Shares, the Release Shares and the
True-Up Shares (together called the "Additional Shares");
NOW, THEREFORE, in consideration of the Release and other valuable
consideration, receipt of which is hereby acknowledged, MIDCOM and Holder agree
as follows:
1. Definitions. The following terms shall have the following
respective meanings:
1.1 "Commission" or "SEC" means the United States
Securities and Exchange Commission.
1.2 "Common Shares" means the voting common capital
stock, $.0001 par value, of MIDCOM.
1.3 "Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
1.4 "Form S-3" means such form under the Securities Act
as is in effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the SEC that similarly permits inclusion
or incorporation of substantial information by reference to other documents
filed by MIDCOM with the SEC.
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1.5 "Holder" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ or, in the case
of John's death, his personal representative and successors in interest.
1.6 "Opening Date" means the first date on which MIDCOM
is eligible to make use of Form S-3 or any successor form to register the
Registrable Shares for resale.
1.7 "Registrable Shares" means the Additional Shares
together with any securities issued or issuable as a dividend, stock split or
other distribution directly or indirectly with respect to Additional Shares.
Any Registrable Share shall cease to be a Registrable Share when (i) it has
been disposed of pursuant to an effective Registration Statement, (ii) such
time as all of the Registrable Shares can be sold within three months without
compliance with the registration requirements of the Securities Act pursuant to
Rule 144 promulgated thereunder (or any similar provisions then in force) or
(iii) it is no longer beneficially owned by Holder.
1.8 "Registration Statement" means a registration
covering Registrable Shares.
1.9 The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a Registration
Statement in compliance with the Securities Act, and the declaration or
ordering of the effectiveness of such Registration Statement.
1.10 "Resale Shelf" means the registration statement on
SEC Form S-1, SEC file No. 333-16681, filed by MIDCOM with the SEC on November
25, 1996 to register for resale Common Shares held by a number of shareholders
of MIDCOM including any amendments thereto filed from time to time hereafter
and any registration statement on Form S-3 filed in place of such S-1
registration statement.
1.11 "Securities Act" means the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as shall be in effect at the time.
1.12 "Shelf Registration Statement" means the Registration
Statement filed pursuant to Section 2 below.
2. Shelf Registration.
2.1 Not later than April 10, 1997, MIDCOM shall file an
amendment to the Resale Shelf or shall file a separate registration statement
on the least burdensome SEC form then available to MIDCOM to register the
Registrable Shares under the Securities Act for resale, and shall use its
reasonable best efforts to secure the effectiveness of such Registration
Statement as soon as practicable thereafter (the Registration Statement filed
pursuant to this Section referred to herein as the "Shelf Registration
Statement").
2.2 Subject to the conditions and limitations set forth
in subsection 2.3 below, MIDCOM will use its reasonable best efforts to keep
the Shelf Registration Statement effective until the earlier of (A) December
31, 1997, (B) such date as all of the Registrable Shares have been resold or
(C) such time as all of the Registrable Shares can be sold within three months
without
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compliance with the registration requirements of the Securities Act pursuant to
Rule 144 promulgated thereunder.
2.3 If Holder shall propose to sell any Registrable
Shares pursuant to the Shelf Registration Statement, he shall notify MIDCOM in
writing of his intent to do so at least five (5) full business days prior to
such sale (a "Sale Notice"). A Sale Notice shall be deemed to constitute a
representation that any information previously supplied by Holder is accurate
as of the date of such notice. Following receipt of a Sale Notice, and except
as set forth in the following sentence, MIDCOM shall use its commercially
reasonable efforts to amend the Shelf Registration Statement if necessary and
to take all other actions necessary to allow such sale, and shall notify Holder
promptly after it has determined that such sale has become permissible. At any
time within the five (5) business-day period following receipt by MIDCOM of a
Sale Notice, MIDCOM may refuse to permit Holder to resell any Registrable
Shares pursuant to the Shelf Registration Statement for an initial period not
to exceed sixty (60) days; provided, however, that in order to exercise this
right, MIDCOM must give Holder written notice that a delay in such sale is
necessary because either (i) in the good faith judgment of MIDCOM, a sale
pursuant to the Shelf Registration Statement in its then-current form would not
be in the best interests of MIDCOM and its shareholders due to disclosure
obligations of MIDCOM or (ii) MIDCOM in good faith is planning an underwritten
registered public offering of Common Shares which reasonably is expected to be
offered within thirty (30) days of receipt by MIDCOM of the Sale Notice (in
either case, a "Permitted Deferral"). Notwithstanding the foregoing, MIDCOM
shall not be entitled to exercise its right to suspend sales pursuant to the
Shelf Registration Statement more than three (3) times or for more than ninety
(90) consecutive days. Holder hereby covenants and agrees that he will not
sell any Registrable Shares pursuant to the Shelf Registration Statement during
any Permitted Deferral period. Nothing in this subsection shall require Holder
to give a Sale Notice prior to selling Registrable Shares pursuant to Rule 144
promulgated under the Securities Act (or any similar provisions then in force).
3. Form S-3 Demand Rights At any time after December 31, 1997 and
continuing until the earlier of (i) such time as Holder is entitled to dispose
of all of the Registrable Shares within three months pursuant to Rule 144 or
(ii) December 31, 1998, Holder may make written demand on one occasion for
registration under the Securities Act of Holder's Registrable Shares on Form
S-3, provided that the Registrable Shares requested to be registered in such
Form S-3 Registration Statement have an aggregate expected selling price of at
least $200,000 (a "Demand Notice"). The request pursuant to this Section 3
will specify the number of Registrable Shares requested to be registered and
the anticipated per share price range for such offering. MIDCOM shall not be
obligated to effect any registration or compliance pursuant to this Section 3
for a period of up to ninety (90) days if MIDCOM shall within twenty (20) days
of its receipt of a Demand Notice give Holder written notice that a delay in
such sale is necessary because either (i) in the good faith judgment of MIDCOM
the filing and/or effectiveness of a registration at that time would not be in
the best interests of MIDCOM and its shareholders due to disclosure obligations
of MIDCOM or (ii) MIDCOM in good faith is planning an underwritten registered
public offering of Common Shares which reasonably is expected to be offered
within thirty (30) days of receipt by MIDCOM of the Demand Notice.
4. Conditions of Obligations to Register Shares. The obligations
of MIDCOM hereunder are subject to the following conditions:
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4.1 Holder shall cooperate with MIDCOM in connection with
the preparation of any Registration Statement, and for so long as MIDCOM is
obligated to file and keep effective the Registration Statement, shall provide
to MIDCOM, in writing, for use in the Registration Statement, all such
information regarding Holder as MIDCOM from time to time may reasonably request
to prepare the Registration Statement and any prospectus covering the
Registrable Shares, to maintain the currency and effectiveness thereof and
otherwise to comply with all applicable requirements of law in connection
therewith. Holder covenants that he will promptly notify MIDCOM in writing of
any changes in the information set forth in a Registration Statement regarding
Holder or his plan of distribution of Registrable Shares covered thereby.
4.2 To the extent required by the Securities Act, Holder
shall cause to be furnished to each broker through whom the Registrable Shares
may be offered, or to the offeree if an offer is not made through a broker,
such copies of the prospectus covering the Registrable Shares and any amendment
or supplement thereto and documents incorporated by reference therein as may
be required by law and he shall not bid for or purchase any securities of
MIDCOM or attempt to induce any other person to purchase any securities of
MIDCOM other than as permitted under the Exchange Act.
5. Registration Procedures. If and whenever MIDCOM is required
by the provisions of this Agreement to include any of the Registrable Shares in
a Registration Statement filed under the Securities Act, MIDCOM shall use its
reasonable commercial efforts to effect such registration, and MIDCOM shall, as
expeditiously as possible:
5.1 Prepare and file with the SEC such amendments and
supplements to any such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective for a period of 30 days from the date of its effectiveness in the
case of a registration pursuant to Section 3 hereof or (unless otherwise
required by the Securities Act) until the Registrable Shares covered thereunder
have been sold, whichever is earlier.
5.2 Furnish to Holder such number of copies of any
prospectus contained in such Registration Statement in conformity with the
requirements of the Securities Act, and such other documents as Holder may
reasonably request in order to facilitate the disposition of the Registrable
Shares, but only while MIDCOM is required under the provisions hereof to cause
a Registration Statement to remain effective.
5.3 Use its commercially reasonable efforts to register
or qualify the Registrable Shares covered by such Registration Statement under
the securities or blue sky laws of such jurisdictions as the selling Holder or
the underwriter for such offering may reasonably request; provided that MIDCOM
shall in no event be required to qualify to do business as a foreign
corporation or as a dealer in any jurisdiction where it is not so qualified, to
amend its Articles of Incorporation or to change the composition of its assets
at the time to conform with the securities or blue sky laws of such
jurisdictions, to take any action that would subject it to service of process
in suits other than those arising out of the offer and sale of the Registrable
Shares covered by the
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Registration Statement or to subject itself to taxation in any jurisdiction
where it has not theretofore done so.
5.4 Notify Holder at any time when any prospectus
relating to the Registrable Shares is required to be delivered under the
Securities Act of the happening of an event as a result of which, or upon the
discovery that, the prospectus contained in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made. Holder agrees, upon receipt of such notice, forthwith to cease
making offers and sales of the Registrable Shares pursuant to such registration
statement or deliveries of the prospectus contained therein for any purpose and
to return to MIDCOM, for modification and exchange, the copies of such
prospectus not theretofore delivered by Holder, provided, that MIDCOM shall
forthwith prepare and furnish, after securing such approvals as may be
necessary, to Holder a reasonable number of copies of any supplement to or
amendment of such prospectus that may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Shares, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made.
5.5 Promptly notify Holder of any stop order or similar
proceeding initiated by state or federal regulatory bodies and use its best
efforts to expeditiously remove such stop order or similar proceeding.
5.6 Provide a transfer agent and registrar for all such
Registrable Shares not later than the effective date of such Registration
Statement.
6. Description of Expenses. Except as set forth below, MIDCOM
shall pay all costs and expenses incurred in connection with registration of
the Registrable Shares pursuant to this Agreement including, without
limitation, all registration and filing fees, printing expenses, fees and costs
of counsel to MIDCOM, and blue sky fees and expenses. Notwithstanding the
foregoing, Holder shall pay all fees and disbursements of Holder's attorneys
and accountants, as well as all transfer taxes and brokerage and underwriters'
discounts and commissions attributable to the Registrable Shares offered and
sold by Holder.
7. Indemnification, Underwriting Agreements.
7.1 In the event that, pursuant to this Agreement, MIDCOM
registers under the Securities Act any Registrable Shares held by Holder:
7.1.1 MIDCOM agrees to indemnify, defend and hold
harmless Holder against any and all loss, claim, liability or expense (a
"Claim") arising out of or based upon any untrue statement or alleged untrue
statement of a material fact in any related Registration Statement, any
omission or alleged omission of any material fact required to be stated therein
or necessary to make the statements therein not misleading, unless such
statement, alleged statement or omission was made in reliance upon, and in
conformity with, information provided by Holder to MIDCOM expressly for use
therein.
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7.1.2 Holder hereby agrees to indemnify and hold
harmless MIDCOM, each person who controls MIDCOM within the meaning of the
Securities Act and the officers, directors, shareholders, employees and agents
of MIDCOM, against any Claim arising out of or based upon any untrue statement
or alleged untrue statement of a material fact in any Registration Statement or
alleged omission of any material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with
reference to statements or omissions made in reliance upon, and in conformity
with, information provided by Holder to MIDCOM expressly for use therein.
7.2 A party required to indemnify another party pursuant
to this Section 7 ("Indemnifying Party") shall not be liable for any settlement
of any action or claim relating to such liability or expense effected without
its consent, but if any settlement is effected with its consent or if a final
judgment for the plaintiff is entered in any such action, such Indemnifying
Party agrees to indemnify and hold harmless the indemnified party from and
against any loss or liability by reason of any such settlement or judgment.
7.3 The obligations of the parties hereto to indemnify
one another pursuant to this Section 7 are expressly conditioned upon the
Indemnifying Party being given written notice of any claim for which
indemnification will be sought within twenty (20) days after the indemnified
party learns thereof and that the Indemnifying Party is given full control over
the defense and settlement of the claim and provided, further, that the
Indemnified Party cooperates fully with the Indemnifying Party in the defense
of such claim.
8. Restrictions on Transferability of Registrable Shares;
Compliance with Securities Act.
8.1 The Registrable Shares are not transferable in the
absence of registration under the Securities Act or an exemption therefrom.
MIDCOM shall be entitled to give stop transfer instructions to its transfer
agent with respect to the Registrable Shares in order to enforce such
restrictions.
8.2 Each certificate representing the Registrable Shares
not previously issued to Holder shall bear substantially the following legends
(in addition to any legends required under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER
UNITED STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE
OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OR
ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION,
WITHOUT REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE
FEDERAL AND STATE SECURITIES
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LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM,
SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE
EVIDENCED BY AN OPINION OF SHAREHOLDER'S COUNSEL, IN FORM
ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION OF SUCH
REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED
TRANSFER OR ASSIGNMENT.
8.3 Holder hereby covenants with MIDCOM not to make any
sale of the Registrable Shares except either (i) a sale of Registrable Shares
in accordance with a Registration Statement, in which case Holder covenants to
comply with the requirement of delivering a current prospectus, (ii) a sale of
Registrable Shares in accordance with Rule 144, in which case Holder covenants
to comply with Rule 144, or (iii) subject to such conditions as MIDCOM in its
sole discretion shall impose, in accordance with another exemption from the
registration requirements of the Securities Act. Holder further acknowledges
and agrees that the Registrable Shares are not transferable on the books of
MIDCOM unless the certificate submitted to MIDCOM's transfer agent evidencing
such Registrable Shares i s accompanied by such additional certification,
documentation or information as MIDCOM shall reasonably require in order to
effect such sale in accordance with a Registration Statement, Rule 144, or such
other exemption from the registration requirements of the Securities Act.
9. Miscellaneous Provisions
9.1 Notices. All notices, demands and other
communications called for or required by this Agreement shall be in writing and
shall be addressed to the parties at their respective addresses stated below or
to such other address as a party may subsequently designate by written notice
to the other parties. Communications hereunder shall be deemed to have been
received (i) upon delivery in person, (ii) the third business day after deposit
with the United States Postal Service for delivery by certified mail, return
receipt requested and postage prepaid, (iii) the first business day after
depositing it with a commercial overnight carrier which provides written
verification of delivery or (iv) the day of transmission by telefacsimile if
sent before 2:00 p.m. recipient's time provided that a copy of such notice is
sent on the same day by U.S. certified mail, return receipt requested and
postage prepaid, with an indication that the original was sent by facsimile and
the date of its, transmittal.
To: MIDCOM Communications Inc.
Attention: President
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to:
Law Department
Attn: General Counsel
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To: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, Honeywell
Malanca, ▇▇▇▇▇▇▇▇
& Daheim, P.L.L.C.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9.2 Amendment or Waiver. No amendment of this Agreement
or waiver of any provision contained herein shall be valid unless in writing
and duly executed by MIDCOM and Holder. No evidence of any waiver or amendment
shall be offered or received in evidence in any proceedings, arbitration, or
litigation between the parties hereto arising out of or affecting this
Agreement, or the rights or obligations of the parties hereunder, unless such
waiver or amendment is in writing and duly executed. Waiver of any term or
condition of this Agreement by any party shall not be construed as a waiver of
a subsequent breach or failure of the same term or condition, or a waiver of
any other term or condition of this Agreement.
9.3 Assignment. The rights of the Holder hereunder may
not be assigned without the prior written consent of MIDCOM.
9.4 Governing Law. This Agreement, including all matters
of construction, validity and performance, shall be governed by and construed
and enforced in accordance with the laws of the State of Washington, without
regard to its conflict of law provisions which might otherwise require the
application of the law of any other jurisdiction. The parties agree that the
exclusive jurisdiction and venue of any lawsuit between them arising under this
Agreement or out of the transactions contemplated herein shall be the Superior
Court of Washington for King County, or the United States District Court for
the Western District of Washington at Seattle, and each of the parties hereby
irrevocably agrees, acknowledges and submits itself to the exclusive
jurisdiction and venue of such courts for the purposes of such lawsuit. The
terms of this Agreement are deemed to have been mutually agreed upon by all
parties hereto, and interpretation will not be for or against any party if any
ambiguity exists.
9.5 Entire Agreement. This Agreement together with the
Release and all agreements and documents referenced in Section 12.1 of the
Release, contain all of the terms and conditions agreed upon by the parties
relating to the subject matter thereof and supersedes and cancels all prior
agreements, negotiations, correspondence, undertakings, and communications of
the parties, whether oral or written, respecting that subject matter including
the Registration Rights Agreement between MIDCOM and Holder dated September 12,
1995.
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9.6 Execution in Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement, and shall become a binding agreement when one or more
counterparts have been signed by each of the parties and either original or
facsimile counterparts have been delivered to the other party.
9.7 Captions. The captions in this Agreement are
inserted solely for the purpose of facilitating easy reference and shall not be
construed in any way as part of the text, or as altering the provisions of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Amended Registration
Rights Agreement to be duly executed on the date first set forth above.
MIDCOM COMMUNICATIONS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Its: EXECUTIVE VICE PRESIDENT-CFO
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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