Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
Dated as of _________, 2002
MPOWER HOLDING CORPORATION
COMMON STOCK
Table of Contents
Page
1. Definitions.........................................................1
2. Demand Registration.................................................3
3. Piggy-Back Registration.............................................5
4. Reduction of Offering...............................................6
5. Registration Procedures.............................................7
6. Registration Expenses..............................................12
7. Indemnification....................................................12
8. Underwritten Registrations.........................................15
9. Miscellaneous......................................................16
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REGISTRATION RIGHTS AGREEMENT
Mpower Holding Corporation, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated in the Debtors' Joint Plan
of Reorganization Under Chapter 11 of the Bankruptcy Code (the "Plan") and the
order, dated __________, 2002 (and entered by the Clerk of the Bankruptcy Court
on ____________, 2002), of the Bankruptcy Court confirming the Plan, to issue to
each of the holders of the Company's 13% Senior Notes due 2010 (the
"Noteholders") and the holders of the Company's Series C and Series D Preferred
Stock (collectively, the "Preferred Stockholders"; and together with the
Noteholders, the "Holders"), including certain Eligible Holders (as defined
below) which are signatories hereto; certain shares of Mpower Holding Common
Stock (the "Common Stock"), as defined in the Plan. The Company hereby agrees as
follows:
1. Definitions
As used in this Registration Rights Agreement (the "Agreement"), the
following terms shall have the following meanings:
Advice: See the last paragraph of Section 5.
Agreement: See the introductory sentence to this Section 1.
Business Day: A day that is not a Saturday, a Sunday, or a day on
which banking institutions in New York, New York are required to be closed.
Commission: The Securities and Exchange Commission.
Common Stock: See the introductory paragraph to this Agreement.
Company: See the introductory paragraph to this Agreement.
Demand Registration: See Section 2(a).
Dividend Shares: means Shares issued as dividends on outstanding
Shares or Dividend Shares, as the case may be.
Eligible Holders: means Holders who individually receive in excess of
ten percent (10%) of the Common Stock under the Plan.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.
Holder: See the introductory paragraph to this Agreement.
Included Shares: means any Registrable Shares included in a
Registration Statement pursuant to this Agreement.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Inspectors: See Section 5(o).
NASD: National Association of Securities Dealers, Inc.
Noteholder: See the introductory paragraph to this Agreement.
Participant: See Section 7(a).
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
Piggy-Back Registration: See Section 3.
Plan: See the introductory paragraph to this Agreement.
Preferred Stockholder: See the introductory paragraph to this
Agreement.
Prospectus: 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, with respect to the terms of the offering of any portion
of the Registrable Shares covered by such Registration Statement, 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.
Records: See Section 5(o).
Registrable Shares: (i) any Shares issued or issuable to the Eligible
Holders pursuant to the Plan and (ii) any Shares issued or issuable with respect
to the Shares referred to in clause (i) above by way of a stock dividend or
stock split or in connection with a combination of Shares, recapitalization,
merger, consolidation or other reorganization. As to any particular Registrable
Shares, such Shares shall cease to be Registrable Shares upon the earliest to
occur of (i) a Registration Statement covering such Shares has been declared
effective by the Commission and such Shares have been disposed of in accordance
with such effective Registration Statement, (ii) such Shares are eligible for
sale to the public pursuant to Rule 144 (or any similar provision then in force)
under the Securities Act, (iii) such Shares shall have been otherwise
transferred by such Eligible Holder, or (iv) such Shares cease to be outstanding
for purposes of the Company's Certificate of Incorporation and By-laws then in
effect.
Registration Statement: Any registration statement of the Company that
covers any of the Registrable Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
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Rule 144: Rule 144 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 Commission 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.
Rule 144A: Rule 144A 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 Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
Shares: means shares of the Common Stock. Unless the context otherwise
necessitates, when used in this Agreement the term "Shares" shall be deemed to
include any and all Dividend Shares that may be outstanding at the time of the
application of any of the applicable provision of this Agreement.
Withdrawal Election: See Section 4(b).
Underwritten registration or underwritten offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Demand Registration
(a) Request for Registration. Eligible Holders, individually or
jointly, may make a written request for registration under the Securities Act of
their Registrable Shares (a "Demand Registration"). Any such request will
specify the number of Registrable Shares, which may not be less than 50% in
aggregate number of outstanding Registrable Shares, proposed to be sold and will
also specify the intended method of disposition thereof. Subject to Section
2(b), in no event shall the Company be required to register Registrable Shares
pursuant to this Section 2(a) more than two times. Notwithstanding the
foregoing, in the event of a request for a Demand Registration made by the
Eligible Holders, the Company may either (A) proceed with such Demand
Registration pursuant to the provisions of this Section 2 or (B) proceed with a
registered primary offering of its securities, in which case the Eligible
Holders will have the rights set forth in Section 3 and such offering will not
constitute a Demand Registration requested by the Eligible Holders pursuant to
this Section 2.
Upon a demand, the Company will prepare, file and use its reasonable
best efforts to file with the Commission within 180 days and cause to be
effective within 220 days of such demand a Registration Statement in respect of
all the Registrable Shares. The Eligible Holders will pay all registration
expenses in accordance with Section 6(b) hereof in connection with each
registration of Registrable Shares requested pursuant to this Section 2, and
each Eligible Holder shall pay all underwriting, discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Eligible
Holder's Registrable Shares pursuant to a Demand Registration effected pursuant
to this Section 2.
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Notwithstanding anything to the contrary contained in this
Section 2(a), the Company shall not be required to effect a Demand Registration
if the Company delivers to the Eligible Holders requesting such Demand
Registration an opinion of counsel (such counsel to be reasonably satisfactory
to such Eligible Holders) to the effect that the Registrable Shares proposed to
be included in such Demand Registration are otherwise freely transferable under
the federal securities laws of the United States.
(b) Effective Registration. A registration will not be deemed to have
been effected as a Demand Registration unless it has been declared effective by
the Commission and the Company has complied in all material respects with its
obligations under this Agreement with respect thereto; provided that if, after
it has become effective, the offering of Registrable Shares pursuant to such
registration is or becomes the subject of any stop order, injunction or other
order or requirement of the Commission or any other governmental or
administrative agency, or if any court prevents or otherwise limits the sale of
Registrable Shares pursuant to the registration (for any reason other than the
act or omissions of the selling Eligible Holders), such registration will be
deemed not to have been effected. If (i) a registration requested pursuant to
this Section 2 is deemed not to have been effected or (ii) the registration
requested pursuant to this Section 2 does not remain effective for a period of
the earlier of (x) an aggregate of 90 days during which such registration is
effective (whether or not consecutive) beyond the initial effective date thereof
or (y) until the consummation of the distribution by the selling Eligible
Holders of the Included Shares, then the Company shall continue to be obligated
to effect an additional registration pursuant to this Section 2. The selling
Eligible Holders of Registrable Shares shall be permitted to withdraw all or any
part of the Included Shares from a Demand Registration at any time prior to the
effective date of such Demand Registration. If at any time a Registration
Statement is filed pursuant to a Demand Registration, and subsequently a
sufficient number of Included Shares are withdrawn from the Demand Registration
so that such Registration Statement does not cover at least 25% of the
outstanding Registrable Shares, the selling Eligible Holders who have not
withdrawn their Included Shares shall have the opportunity to include an
additional number of Registrable Shares in the Demand Registration so that such
Registration Statement covers at least such percentage. If additional
Registrable Shares are not so included so that such Registration Statement does
not cover at least 25% of the outstanding Registrable Shares, the Company may
withdraw the Registration Statement. In the event that a Registration Statement
has been filed and the Company withdraws the Registration Statement due to the
occurrence of the events specified in the prior two sentences, such withdrawn
Registration Statement will count as a Demand Registration unless such
revocation occurs following a material adverse change in the Company's business,
operations, assets or condition (financial or otherwise), in which case it shall
not be considered a Demand Registration for any purpose hereunder.
(c) Priority in Demand Registrations. If a Demand Registration
pursuant to this Section 2 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
Registrable Shares requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in such
registration only the number of Registrable Shares that in the opinion of the
managing underwriter(s) can be sold in such registration. In the event that the
number of Registrable Shares requested to be included in such registration
exceeds the number which, in the opinion of such managing underwriter, can be
sold, the number of such Registrable
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Shares to be included in such registration shall be allocated pro rata among all
requesting Eligible Holders on the basis of the relative number of Registrable
Shares then held by each such Eligible Holder; provided that, any Registrable
Shares thereby allocated to any such Eligible Holder that exceed such Eligible
Holder's request shall be reallocated among the remaining requesting Eligible
Holders in like manner. In the event that the number of Registrable Shares
requested to be included in such registration is less than the number which, in
the opinion of the managing underwriter, can be sold, the Company may include in
such registration any securities the Company proposes to sell up to the number
of securities that, in the opinion of the managing underwriter, can be sold.
(d) Selection of Underwriter. If the selling Eligible Holders so
elect, the offering of such Registrable Shares pursuant to such Demand
Registration shall be in the form of an underwritten offering. The Company shall
select one or more nationally recognized firms of investment banks, who shall be
reasonably acceptable to the selling Eligible Holders owning a majority of the
Registrable Shares being sold pursuant to such Demand Registration, to act as
the managing underwriter or underwriters in connection with such offering and
shall select any additional investment bank(s) and manager(s) to be used in
connection with the offering.
(e) Restrictions on Demand Registration. The Company shall be entitled
to (upon written notice to all selling Eligible Holders) for up to one hundred
eighty (180) days (i) postpone the filing or the effectiveness or (ii) suspend
the effectiveness, of a Registration Statement in respect of a Demand
Registration (but no more than once in any period of twelve (12) consecutive
months) if the board of directors of the Company, or similar governing body or
any duly authorized committee thereof, determines in good faith and in its
reasonable judgment that effecting the Demand Registration would have a material
adverse effect on any (i) proposal or plan by the Company to engage in any debt
or equity offering, other financings, material acquisition or disposition of
assets (other than in the ordinary course of business), (ii) merger,
consolidation, recapitalization, reorganization, tender offer or other similar
transaction, or (iii) other material corporate events. In the event of a
postponement by the Company of the filing or effectiveness of a registration
statement in respect of a Demand Registration pursuant to this Section 2(e), the
selling Eligible Holders shall have the right to withdraw such Demand
Registration and such Demand Registration shall be deemed to not have been
effected as provided in Section 2(b).
In the event of a suspension by the Company of the effectiveness of a
Registration Statement in respect of a Demand Registration, the selling Eligible
Holders may not use the Prospectus included therein for offers and sales of
Registrable Shares until they either receive a supplemental or amended
prospectus pursuant to Section 5(j) hereof or are advised in writing by the
Company that use of the prospectus may be resumed.
3. Piggy-Back Registration
If at any time the Company proposes to file a registration statement under
the Securities Act with respect to an underwritten offering by the Company for
its own account or for the account of any of its respective securityholders any
Common Stock (other than (i) a registration statement on Form S-4 or S-8 (or any
substitute form that may be adopted by the Commission) or (ii) a registration
statement filed in connection with an offer or offering of
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Common Stock solely to the Company's existing securityholders, then the Company
shall give written notice of such proposed filing to the Eligible Holders as
soon as practicable (but in no event less than 10 Business Days before the
anticipated filing date), and such notice shall offer such Eligible Holders the
opportunity to register such number of Registrable Shares as each such Eligible
Holder may request (which request shall be provided within five Business Days
after receipt of such notice and shall specify the Registrable Shares intended
to be disposed of by such selling Eligible Holder) (a "Piggy-Back
Registration"). The Company shall use its reasonable best efforts to cause the
managing underwriter or underwriters of such proposed underwritten offering to
permit the Registrable Shares requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any Common Stock
of the Company or any Shares of any other securityholder, in each case, included
therein and to permit the sale or other disposition of such Registrable Shares
in accordance with the intended method of distribution thereof, except as
otherwise provided in Section 4. Any selling Eligible Holder shall have the
right to withdraw its request for inclusion of its Registrable Shares in any
Registration Statement pursuant to this Section 3 by giving written notice to
the Company of its request to withdraw no later than 15 Business Days before
such Registration Statement becomes effective. The Company may withdraw a
Piggy-Back Registration at any time prior to the time it becomes effective;
provided that, the Company shall give prompt notice thereof to participating
selling Eligible Holders. The Company will pay all registration expenses in
accordance with Section 6(a) hereof in connection with each registration of
Registrable Shares requested pursuant to this Section 3, and each Eligible
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Eligible Holder's
Registrable Shares pursuant to a Piggy-Back Registration effected pursuant to
this Section 3.
No registration effected under this Section 3, and no failure to effect a
registration under this Section 3, shall relieve the Company of its obligation
to effect a registration upon the request of Eligible Holders pursuant to
Section 2.
4. Reduction of Offering
(a) Piggy-Back Registration. If the managing underwriter(s) of any
underwritten offering described in Section 3 have informed, in writing, the
selling Eligible Holders of the Registrable Shares requesting inclusion in such
offering that it is their opinion that the total amount of Common Stock which
the Company, the selling Eligible 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 amount to be offered for the account of
the selling Eligible Holders and all such other Persons (other than the Company)
participating in such registration shall be reduced or limited pro rata in
proportion to the respective amount of Shares requested to be registered to the
extent necessary to reduce the total amount of Shares requested to be included
in such offering to the amount of Shares, if any, recommended by such managing
underwriters; provided, however, that if such offering is effected for the
account of any securityholder of the Company other than the selling Eligible
Holders, pursuant to the demand registration rights of any such securityholder,
then the amount of Shares to be offered for the account of the selling Eligible
Holders and all other Persons (other than the Company and such securityholders
who have exercised their demand registration rights) participating in such
registration shall be reduced or limited pro rata in proportion to the
respective amount of shares requested to be
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registered to the extent necessary to reduce the total amount of Shares
requested to be included in such offering to the amount of Shares, if any,
recommended by such managing underwriters. If a reduction in the Registrable
Shares pursuant to this Section 4(a) above would, in the judgment of the
managing underwriter(s) or underwriters, be insufficient to substantially
eliminate the adverse effect that inclusion of the Registrable Shares of the
Eligible Holders requested to be included would have on any underwritten
offering, such Registrable Shares will be excluded from such offering.
(b) If, as a result of the proration provisions of this Section 4, any
selling Eligible Holder shall not be entitled to include all Registrable Shares
in a Piggy-Back Registration that such selling Eligible Holder has requested to
be included, such selling Eligible Holder may elect to withdraw his request to
include Registrable Shares in such registration (a "Withdrawal Election") within
three Business Days of such proration determination; provided, however, that a
Withdrawal Election shall be irrevocable and, after making a Withdrawal
Election, a selling Eligible Holder shall no longer have any right to include
Registrable Shares in the Registration Statement as to which such Withdrawal
Election was made.
5. Registration Procedures
Whenever the Eligible Holders have requested that any Registrable Shares be
registered pursuant to Section 2 or 3 hereof, the Company will use all
reasonable efforts to effect the registration of such Registrable Shares in
accordance with the intended method of disposition thereof as quickly as
practicable, and in connection with any such registration, the Company will as
expeditiously as possible:
(a) Prepare and file with the Commission a Registration Statement and
use its reasonable best efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided that, before
filing any Registration Statement or any amendments or supplements thereto, the
Company shall, if requested, furnish to and afford the Eligible Holders of the
Registrable Shares to be registered pursuant to such Registration Statement and
their counsel and the managing underwriters, if any, a reasonable opportunity to
review copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to be filed
(in each case at least five Business Days prior to such filing). The Company
shall not file any such Registration Statement or any amendments or supplements
thereto if the Eligible Holders of a majority in aggregate number of the
Registrable Shares covered by such Registration Statement or their counsel shall
reasonably object.
(b) Prepare and file with the Commission such amendments and
post-effective amendments to each Registration Statement, as may be necessary to
keep such Registration Statement continuously effective for the applicable
period provided herein; cause the related Prospectus to be supplemented by any
Prospectus supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act and the
Exchange Act 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.
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(c) Notify the selling Eligible Holders of Registrable Shares or their
counsel and the managing underwriters, if any, promptly (but in any event within
two Business Days), and confirm such notice in writing (which notice pursuant to
clauses (ii) - (vi) hereof shall be accompanied by an instruction to suspend the
use of the prospectus until the requisite changes have been made), (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 Eligible Holder may, upon request, obtain, without
charge, one conformed copy of such Registration Statement or post-effective
amendment including financial statements and schedules, documents incorporated
or deemed to be incorporated by reference and exhibits), (ii) of any request by
the Commission for amendments or supplements to the a Registration Statement or
the prospectus included therein or for any additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose,
(iv) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Shares the representations
and warranties of the Company contained in any agreement (including any
underwriting agreement contemplated by Section 5(n) hereof) cease to be true and
correct in any material respect, (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the Registrable Shares
for sale in any jurisdiction, or the initiation or threatening of any proceeding
for such purpose, (vi) of the happening of any event, the existence of any
condition or any information becoming known, in each case known by the Company,
that makes any statement made in such Registration Statement or related
Prospectus any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in, or amendments or supplements to, such Registration Statement,
Prospectus or documents so that, in the case of the Registration Statement, 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 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
(vii) of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.
(d) Use its reasonable best efforts to prevent the issuance of any
order suspending the effectiveness of a 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 Shares for sale in
any jurisdiction, and, if any such order is issued, to use its reasonable best
efforts to obtain the withdrawal of any such order at the earliest possible
date.
(e) If reasonably requested by the managing underwriters, if any, or
the Eligible Holders of a majority in aggregate number of the Registrable Shares
being sold in connection with an underwritten offering, (i) as promptly as
practicable incorporate in a prospectus supplement or post-effective amendment
such information or revisions to information therein relating to such
underwriters or selling Eligible Holders as the managing underwriters, if
8
any, or such Eligible Holders or their counsel reasonably request to be included
or made therein, (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 selling Eligible Holder of Registrable Shares who
so requests and to each managing underwriter, if any, who so requests without
charge, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits not otherwise
publicly available.
(g) Deliver to each selling Eligible Holder of Registrable Shares and
the underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of preliminary prospectus) and each amendment
or supplement thereto and any documents incorporated by reference therein not
otherwise publicly available as such Persons may reasonably request; and,
subject to the last paragraph of this Section 5, the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by each of
the selling Eligible Holders of Registrable Shares, and the underwriters or
agents, if any, and dealers (if any), in connection with the offering and sale
of the Registrable Shares covered by such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Shares, use its
reasonable best efforts to register or qualify, and cooperate with the selling
Eligible Holders of Registrable Shares, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable Shares,
for offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any selling Eligible Holder, or the managing
underwriter or underwriters, if any, reasonably request in writing; keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Shares covered by the
applicable Registration Statement; provided that, the Company shall 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) subject itself to taxation in any such jurisdiction where it is not then so
subject.
(i) Facilitate the timely preparation and delivery of certificates
representing Registrable Shares to be sold, which certificates shall not bear
any restrictive legends and shall be in a form eligible for deposit with The
Depository Trust Company; and enable such Registrable Shares to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or Eligible Holders may reasonably request.
(j) Upon the occurrence of any event contemplated by paragraph
5(c)(vi) or 5(c)(vii) hereof, as promptly as practicable prepare and (subject to
Section 5(a) hereof) file with the Commission, a supplement or post-effective
amendment to the Registration Statement or a
9
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Shares being
sold thereunder, any 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.
(k) Prior to the effective date of the first Registration Statement
relating to the Registrable Shares, (i) provide the transfer agent with printed
certificates for the Registrable Shares in a form eligible for deposit with The
Depository Trust Company and (ii) provide a CUSIP number for the Registrable
Shares.
(l) Enter into an underwriting agreement as is customary in
underwritten offerings of equity securities similar to the Shares 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 the
disposition of such Registrable Shares and, in such connection, (i) make such
representations and warranties to the underwriters, with respect to the business
of the Company and its subsidiaries and the Registration Statement, Prospectus
and documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings of equity securities similar to the Shares, and confirm
the same in writing if and when reasonably requested; (ii) if reasonably
requested by the managing underwriter or underwriters, obtain the opinion of
counsel to the Company and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
underwriters covering the matters customarily covered in opinions requested in
underwritten offerings of equity securities similar to the Shares; and (iii) if
reasonably requested by the managing underwriter or underwriters, obtain "cold
comfort" letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters from the independent
certified public accountants 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 of equity securities
similar to the Shares. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(m) Make reasonably available for inspection by the selling Eligible
Holders, any managing underwriter participating in any disposition of
Registrable Shares and one of each of an attorney, accountant and agent retained
by the selling Eligible Holders and any such managing underwriter (provided that
the managing underwriters may be represented by only one of each of the
foregoing persons), if any (collectively, the "Inspectors") at the offices where
normally kept, during reasonable business hours, all material financial and
other records, pertinent corporate documents and properties of the Company and
its subsidiaries (collectively, the "Records") as shall be reasonably necessary
to enable them to exercise any applicable due diligence responsibilities, and
cause the officers, directors and employees of the Company and its subsidiaries
to supply all material information reasonably requested by any such Inspector in
connection with such Registration Statement. Each selling Eligible Holder of
such Registrable
10
Shares and any managing underwriter, if any, will be required to agree that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company unless and until such is made
generally available to the public.
(n) Comply with all applicable rules and regulations of the Commission
and make generally available to its securityholders 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 45 days after the end of any 12-month period (or 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 Shares are sold to underwriters in a
firm commitment or reasonable best efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(o) Cooperate with each selling Eligible Holder of Registrable Shares
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Shares and their respective
counsel in connection with any filings required to be made with the NASD.
(p) Use its best efforts to take all other steps reasonably necessary
to effect the registration of the Registrable Shares covered by a Registration
Statement contemplated hereby.
The Company may, as a condition to such Eligible Holder's participation in
any Registration Statement, require each Eligible Holder of Registrable Shares
to (i) furnish to the Company such information regarding the Eligible Holder and
the proposed distribution by such Eligible Holder of such Registrable Shares as
the Company may from time to time reasonably request in writing, (ii) agree in
writing to be bound by this Agreement and (iii) enter into a standard form
underwriting agreement. The Company may exclude from such registration the
Registrable Shares of any Eligible Holder who fails to furnish such information
described in clause (i) of the immediately preceding sentence or enter into the
agreements contemplated by clauses (ii) and (iii) of the immediately preceding
sentence within a reasonable time after being so requested.
Each Eligible Holder of Registrable Shares agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5(c)(ii)-(vii), such Eligible Holder will forthwith discontinue
disposition of such Registrable Shares covered by such Registration Statement or
Prospectus and, in each case, dissemination of such Prospectus until such
Eligible Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(j), 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.
11
6. Registration Expenses
(a) Piggy-Back Registration:
All fees and expenses incident to the performance of or compliance
with Section 3 of this Agreement by the Company shall be borne by the Company
whether or not a Registration Statement in respect of a Piggy-Back Registration
is filed or becomes effective, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Shares and determination of the eligibility of the Registrable
Shares for investment under the laws of such jurisdictions where the holders of
Registrable Shares are located)), (ii) printing expenses, including, without
limitation, expenses of printing certificates for Registrable Shares in a form
eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriter or underwriters, if any, or by the Eligible Holders of a majority in
aggregate number of the Registrable Shares included in any Registration
Statement, (iii) fees and disbursements of counsel for the Company, (iv) fees
and disbursements of all independent certified public accountants referred to in
Section 5(l)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(v) fees and expenses of all other Persons retained by the Company, (vi)
internal expenses of the Company (including, without limitation, all salaries
and expenses of officers and employees of the Company performing legal or
accounting duties), (vii) the expense of any annual or special audit, (viii) the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange, (ix) the fees and disbursements of
underwriters, if any, 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 the Registrable Shares which discounts,
commissions or taxes shall be paid by Eligible Holders of such Registrable
Shares) and (x) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements and any other documents necessary in order to comply with
Section 3 hereof.
(b) Demand Registration:
All fees and expenses incident to the performance of or compliance
with Section 2 of this Agreement by the Company shall be borne by the selling
Eligible Holders whether or not a Registration Statement in respect of a Demand
Registration is filed or becomes effective, including, without limitation, all
registration expense items listed in Section 6(a) hereof.
7. Indemnification
(a) The Company agrees to indemnify and hold harmless each Eligible
Holder of Registrable Shares, the officers, directors, employees and agents of
each such Person, and each Person, if any, who controls any such Person within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act (each, a "Participant"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, the reasonable
legal
12
fees and other reasonable expenses actually incurred 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 Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or caused by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Participant furnished to the Company in writing
by or on behalf of such Participant expressly for use therein; provided,
however, that the Company shall not be liable 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 the Participants
resulted from any action, claim or suit by any Person who purchased Registrable
Shares which are the subject thereof from such Participant and it is established
in the related proceeding that such Participant 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 Shares 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 5 of this Agreement. The Company shall also indemnify
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution (in each case as described in
the Registration Statement covered by this Agreement), their officers and
directors and each person who controls such persons within the meaning of the
Securities Act or the Exchange Act to the same extent as provided above with
respect to the indemnification of the Participants if reasonably requested by
such Participants.
(b) Each Participant will be required to agree, jointly and severally,
to indemnify and hold harmless the Company, its directors and officers and each
Person who controls the Company within the meaning of 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 each Participant, but only with
reference to information relating to such Participant furnished to the Company
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person may, at its option, participate
in and assume the defense thereof and retain counsel reasonably satisfactory to
the Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that
13
the failure to so notify the Indemnifying Person shall not relieve it of any
obligation or liability which it may have hereunder or otherwise except to the
extent that the Indemnifying Person is materially prejudiced by such failure to
notify. In any such proceeding, any Indemnified Person 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 Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed in writing to the contrary,
(ii) the Indemnifying Person has failed within a reasonable time to retain
counsel reasonably satisfactory to the Indemnified Person or (iii) the named
parties in any such proceeding (including any impleaded parties) include both
the Indemnifying Person and the Indemnified Person, or affiliates of such
Persons, and there may be one or more defenses available to such Indemnified
Person or Persons that are different from or additional to those available to
the Indemnifying Persons, in which case, if such Indemnified Person or Persons
notifies the Indemnifying Persons in writing that it elects to employ separate
counsel of its choice at the expense of the Indemnifying Persons (in the case of
clause (iii) above, the expenses of separate counsel shall be limited to those
matters to which there exists a conflict as provided in clause (iii)), the
Indemnifying Persons shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Persons. The
Indemnifying Person shall not, in any event, unless there exists a conflict
among Indemnified Persons, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are
incurred. Any such separate firm for the Participants and such control Persons
of Participants shall be designated in writing by Participants who sold a
majority in interest of Registrable Shares sold by all such Participants and any
such separate firm for the Company, its directors, officers and such control
Persons of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there is a final nonappealable judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for reasonable fees and
expenses actually incurred by counsel as contemplated by the third sentence of
this paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its consent if (i) such settlement
is entered into more than 30 days after receipt by such Indemnifying Person of
the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement; provided, however, that the Indemnifying Person shall
not be liable for any settlement effected without its consent pursuant to this
sentence if the Indemnifying Person is contesting, in good faith, the request
for reimbursement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (A) includes an unconditional release
of such Indemnified Person, in form and substance satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of an Indemnified Person.
14
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other 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 fault of the parties 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 on the one hand
or by the Participants or such other Indemnified Person, as the case may be, on
the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission and any other
equitable considerations appropriate under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Shares
exceeds the amount of any damages that such Participant has otherwise been
required to pay 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.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
(g) The agreements contained in this Section 7 shall survive the sale
of the Shares pursuant to the Registration Statement covered in this Agreement
and shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
Indemnified Party.
8. Underwritten Registrations
If any of the Registrable Shares covered by the registration pursuant
to either Section 2 or 3 hereof is to be sold in an underwritten offering, the
investment banker or
15
investment bankers and manager or managers that will manage the offering will be
selected by the Company and reasonably acceptable to the Eligible Holders of a
majority in aggregate number of such Registrable Shares included in such
offering.
No Eligible Holder of Registrable Shares may participate in any
underwritten registration hereunder unless such Eligible Holder (a) agrees to
sell such Eligible Holders Registrable Shares on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
9. Miscellaneous
(a) No Inconsistent Agreements. The Company has not entered, as of the
date hereof, and the Company shall not enter, after the date of this Agreement,
into any agreement with respect to any of its securities that is inconsistent
with the rights granted to the Eligible Holders of Registrable Shares in this
Agreement or otherwise conflicts with the provisions hereof.
(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, otherwise than with the prior written
consent of the Eligible Holders of not less than a majority in aggregate number
of the then outstanding Registrable Shares. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Eligible Holders of Registrable Shares
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 Eligible Holders of Registrable Shares may be given by Eligible Holders
of at least a majority in aggregate number of the Registrable Shares being
tendered or being sold by such Eligible Holders pursuant to such Registration
Statement and provided, further, that no such modification, amendment or waiver
may treat any Eligible Holder more adversely than any other Eligible Holder
without such Eligible Holder's written consent.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
1. if to an Eligible Holder, at the most current address given by
such Eligible Holder to the Company in accordance with the provisions
of this Section 10(c), which address initially is, with respect to
each Eligible Holder, the address of such Eligible Holder to which
confirmation of the issuance of Registrable Shares to such Eligible
Holder was first sent by the Company with copies in like manner as
follows:
16
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
2. if to the Company, as follows:
Mpower Holding Corporation
▇▇▇ ▇▇▇▇▇'▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Senior Vice President,
General Counsel and Secretary
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; one Business Day after
being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto
and the Eligible Holders; provided, however, that this Agreement shall not inure
to the benefit of or be binding upon a successor or assign of a Eligible Holder
unless and to the extent such successor or assign holds Registrable Shares.
(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. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH
17
OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
(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 reasonable 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 is intended by the parties as a
final and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein and any and
all prior oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda among the Eligible
Holders of Registrable Shares on the one hand and the Company on the other, or
between or among any agents, representatives, parents, subsidiaries, affiliates,
predecessors in interest or successors in interest with respect to the subject
matter hereof and thereof are merged herein and replaced hereby.
18
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to Mpower Holding Corporation a counterpart
hereof, whereupon this Agreement will become a binding agreement among the
Company and the Eligible Holders in accordance with its terms.
Very truly yours,
MPOWER HOLDING CORPORATION
By:
----------------------------------
Name:
Title:
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above
written.
Eligible Holders
[ ]
By:
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Name:
Title:
[ ]
By:
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Name:
Title: