EXHIBIT 10.20
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WARRANT SHARES REGISTRATION RIGHTS AGREEMENT
Dated as of February 21, 1997
between
UNIFI COMMUNICATIONS, INC.
and
▇▇▇▇▇ ▇▇▇▇▇▇ INC.,
(as Initial Purchaser)
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WARRANT SHARES REGISTRATION RIGHTS AGREEMENT
WARRANT SHARES REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as
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of February 21, 1997 between UNIFI COMMUNICATIONS, INC., a Delaware corporation
(the "Company"), and ▇▇▇▇▇ ▇▇▇▇▇▇ INC. (the "Initial Purchaser").
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WHEREAS, the Company has entered into a purchase agreement (the
"Purchase Agreement") dated February 14, 1997 with the Initial Purchaser
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pursuant to which the Company has agreed to sell to the Initial Purchaser
175,000 units (the "Units") each Unit consisting of $1,000 principal amount of
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the Company's 14% Senior Notes due 2004 (the "Notes") and one warrant (the
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"Initial Warrants") entitling the holder thereof to purchase initially 27.524674
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shares of Common Stock, par value $.01 per share (the "Common Stock") of the
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Company (subject to adjustment pursuant to the terms of the Warrant Agreement
(as defined)), (the "Initial Warrant Shares"); and
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WHEREAS, in the event the Company does not complete a primary
underwritten public offering of its Common Stock on or prior to September 1,
1999, resulting in gross proceeds to the Company of at least $35.0 million, each
holder of Notes will be entitled to receive for each Note, one warrant (the
"Contingent Warrants") and, together with the Initial Warrants, the "Warrants")
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to purchase a pro rata share of an additional 8% of the fully diluted Common
Stock (the "Contingent Warrant Shares" and, together with the Initial Warrant
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Shares, the "Warrant Shares"), and
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WHEREAS, the Company has entered into a Warrant Agreement (the
"Warrant Agreement"), dated as of the date hereof, between the Company, as
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Issuer, and Fleet National Bank, a national banking association, not in its
individual capacity but solely as warrant agent (together with any successor
warrant agent, the "Warrant Agent"); and
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WHEREAS, pursuant to the Purchase Agreement the Initial Purchaser
(together with any successors, assigns and direct and indirect transferees who
become registered owners of the Warrants or Warrant Shares, the "Holders") will
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have the registration rights, co-sale rights, and co-investment rights as set
forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
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ARTICLE I
REGISTRATION
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SECTION 1.01. Shelf Registration.
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(a) The Company shall prepare and file with the United States
Securities and Exchange Commission (the "Commission") a registration statement
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or a post-effective amendment to an existing registration statement (the
"Registration Statement") on an appropriate form under the Securities Act of
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1933, as amended (the "Securities Act"), relating to the issuance by the Company
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of the Warrant Shares issuable upon exercise of all of the Warrants by the
Holders thereof from time to time in accordance with the terms and conditions
set forth in the Warrant and the Warrant Agreement.
(b) The Company shall cause such Registration Statement to become
effective under the Securities Act on or prior to the Exercise Commencement Date
(as defined in the Warrant Agreement).
SECTION 1.02. Effectiveness Period. The Company shall use its best
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efforts to keep the Registration Statement continuously effective under the
Securities Act in order to permit the prospectus included therein to be lawfully
delivered by the Company to the Holders of the Warrant Shares until March 1,
2007 (the "Expiration Date")(the "Effectiveness Period"); provided that, except
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as provided below with respect to any Blackout Period (as defined), the Company
shall be deemed not to have used its best efforts to keep the Registration
Statement effective during the requisite period if it voluntarily takes any
action that would result in it not being able to offer and sell the Warrant
Shares issuable upon exercise of the Warrants during that period, unless such
action is required by applicable law. Notwithstanding the foregoing, the
Company shall not be required to amend or supplement the Registration Statement,
any related prospectus or any document incorporated therein by reference in the
event that, and for a period (a "Blackout Period") not to exceed, for so long as
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this Agreement is in effect, an aggregate of 90 days if (x) an event occurs and
is continuing as a result of which the Registration Statement, any related
prospectus or any document incorporated therein by reference as then amended or
supplemented would, in the Company's good faith judgment, contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made,
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not misleading, and (y)(1) the Company determines in good faith that the
disclosure of such event at such time would have a material adverse effect on
the business, operations or prospects of the Company or (2) the disclosure
otherwise relates to a pending material business transaction which has not yet
been publicly disclosed.
SECTION 1.03. Registration Procedures.
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(a) The Company shall cause the Registration Statement
and the related prospectus and any amendments or supplements thereto, as of the
effective date of the Registration Statement, (subject to Section 1.02), as of
any time thereafter while any of the Warrants, or, during the Effectiveness
Period, the Warrant Shares, remain outstanding (i) to comply in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations of the Commission and (ii) not to contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(b) The Company shall give prompt written notices to the Holders of
the Warrants:
(i) on the date when the Registration Statement or any post-
effective amendments thereto have become effective;
(ii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation or
threatening of any proceedings for that purpose;
(iii) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Warrant Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(iv) of the happening of any event that requires the Company to make
changes in the Registration Statement or prospectus in order to make the
statements therein not misleading;
(v) of the commencement and termination of any Blackout Period; and
(vi) 90 days prior to the Expiration Date.
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(c) The Company shall use its best efforts to prevent the issuance or
obtain the withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible time.
(d) Upon the occurrence of any event contemplated by clauses (b)(iv)
or (v) of this Section 1.03, the Company shall promptly prepare a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus or file any other required document so that, as thereafter delivered
to Holders of the Warrant Shares, the prospectus will not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading and will contain the current information required by the
Securities Act.
(e) Not later than the effective date of the Registration Statement,
the Company will provide a CUSIP number for the Warrant Shares, and provide the
registrar with printed certificates for the Warrant Shares in a form eligible
for deposit with The Depository Trust Company.
(f) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Registration
Statement and will make generally available to its securities holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act) an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act as soon as practicable, but in any event, no later than 45 days after the
end of the most recent 12-month period (or 90 days, if such period is a fiscal
year (plus any extension permitted by Rule 12b-25 under the Exchange Act))
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement, which earnings statement
shall cover such 12-month period.
(g) The Company shall register or qualify or cooperate with the
Holders in connection with the registration or qualification of the Warrant
Shares issuable upon exercise of the Warrants under the securities or blue sky
laws of such states of the United States as any Holder reasonably requests and
do any and all other acts or things necessary or advisable to enable such
exercise in such jurisdictions; provided that the Company shall not be required
to (i) qualify to do business in any jurisdiction where it is not then so
qualified or (ii) take any action which would subject it to general service of
process or to taxation in any jurisdiction where it is not then so subject.
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(h) The Company shall bear all expenses incurred by it in connection
with the performance of its obligations under this Article I.
(i) The Company shall deliver to the Holders of the Warrants or
Warrant Shares, as the case may be, who so request, without charge, at least one
copy of the applicable Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if any such Holder
requests, all exhibits (including those, if any, incorporated by reference).
(j) The Company shall cause all Warrant Shares covered by the
Registration Statement to be listed on each securities exchange on which similar
securities issued by the Company are then listed, to the extent such Warrant
Shares satisfy applicable listing requirements, if requested by the Holders of a
majority of such Warrant Shares.
SECTION 1.04. Registration Default. The Company acknowledges and
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agrees that any remedy at law for breach of any provision of this Article I
(each such default, a "Registration Default") will be inadequate and that, in
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addition to any other remedies that the Holders of Warrants may have, such
Holders shall be entitled to liquidated damages (the "Liquidated Damages") for
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each week or portion thereof during which the Registration Default continues.
The Liquidated Damages will be equal to $.001 per week per Warrant for the first
90-day period during which the Registration Default continues and will increase
by an amount equal to $.001 per week per Warrant with respect to each subsequent
90-day period during which the Registration Default continues and until the
Registration Default is cured, up to a maximum of $.005 per week per Warrant.
All Liquidated Damages will be paid to Holders of the Warrants on each March 1
and September 1.
ARTICLE II
RIGHTS OF CO-SALE
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SECTION 2.01. Sales by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. Until such time as the
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Company effects a Public Equity Offering resulting in net proceeds to the
Company of at least $35,000,000, if ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") proposes to
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transfer more than 100,000 shares of Common Stock owned by him ("Founder
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Shares"), then he shall afford the Holders the right to transfer the Warrants
and/or Warrant Shares held by them as follows:
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(a) ▇▇▇▇▇▇▇ shall give written notice to the Holders, at least thirty
(30) days prior to any proposed transfer of any such shares, specifying the
number of Founder Shares that he desires to transfer, the percentage that such
shares represent of the total number of shares held by him, on a fully-converted
and fully-exercised basis (the "Sales Percentage"), the identity of the proposed
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transferee of such shares, and the time within which and the price and all other
material terms and conditions upon which ▇▇▇▇▇▇▇ proposes to sell such shares.
(b) Concurrently with the delivery of the notice referred to in
paragraph (a) above, ▇▇▇▇▇▇▇ shall offer each of the Holders the opportunity to
sell to the proposed purchaser or purchasers of the shares that percentage of
the Warrants and/or Warrant Shares then held by the Holders that is equal to the
Sales Percentage. Any Warrants and/or Warrant Shares to be sold by each of the
Holders shall be sold on such terms as ▇▇▇▇▇▇▇ has obtained from such purchaser
or purchasers in respect of the Founder Shares proposed to be sold by him,
including the time of purchase, the purchase price and the other terms and
conditions upon which the purchase of ▇▇▇▇▇▇▇'▇ shares is to be made, provided,
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that the price per Warrant to be paid by the proposed purchaser shall be less
the exercise price of such Warrant.
SECTION 2.02. Adjustments. In the event ▇▇▇▇▇▇▇ cannot obtain
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agreements or commitments from the proposed purchaser or purchasers to purchase
that percentage of Warrants and/or Warrant Shares held by each of the Holders
which is equal to the Sales Percentage of the shares in accordance with Section
2.01, ▇▇▇▇▇▇▇ shall reduce the number of Founder Shares that ▇▇▇▇▇▇▇ proposes to
sell so that ▇▇▇▇▇▇▇ and each of the Holders shall be entitled to sell an
identical percentage (as nearly as possible, with the number of shares or
Warrants and/or Warrant Shares being sold by ▇▇▇▇▇▇▇ and each of the Holders
being rounded to the nearest whole share) of the Founder Shares or Warrants or
Warrant Shares (as applicable) then held by each of them, respectively, or such
lesser percentage as the Holders in their sole discretion may elect, which
decrease shall not require a proportionate decrease in the percentage sold by
▇▇▇▇▇▇▇.
SECTION 2.03. Notice of Sales by Holders. Each of the Holders may
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notify the Company in writing, within fifteen (15) days after receiving notice
of a proposed sale from ▇▇▇▇▇▇▇, whether such Holder desires to sell any such
Warrants and/or Warrant Shares held by such Holder concurrently with ▇▇▇▇▇▇▇ in
accordance with the terms and provisions set forth above. Failure to provide
such written notice within the fifteen-day period after receipt of notice from
▇▇▇▇▇▇▇ shall be deemed to
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constitute an irrevocable declination by such Holder to sell any of such
Holder's Warrants and/or Warrant Shares concurrently with ▇▇▇▇▇▇▇. No Holders
shall be obligated to sell any Warrants and/or Warrant Shares pursuant to any
notice furnished by ▇▇▇▇▇▇▇.
SECTION 2.04. Concurrent Sales. Any and all sales of Warrants and/or
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Warrant Shares by the Holders pursuant to the co-sale rights set forth in this
Article II shall be made either concurrently with or prior to the sale of the
Founder Shares by ▇▇▇▇▇▇▇.
SECTION 2.05. Exceptions to Co-sale Rights. Notwithstanding anything
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contained in this Articles II to the contrary, the co-sale rights shall not
apply to any proposed sale of Founder Shares by ▇▇▇▇▇▇▇ to (i) an immediate
family member of ▇▇▇▇▇▇▇; (ii) a trust for the benefit of ▇▇▇▇▇▇▇, his spouse or
his descendants; (iii) a corporation directly or indirectly wholly owned by
▇▇▇▇▇▇▇ and/or any person referred to in clause (i) or (ii); or (iv) a sale
pursuant to an effective registration statement including any of ▇▇▇▇▇▇▇'▇
shares in accordance with the exercise of registration rights pursuant to a
registration rights agreement to which the Company is a party; provided, that
any Founder Shares sold in a transaction described in clauses (i) through (iii)
shall continue to be subject to the co-sale rights set forth above in the hands
of the transferee thereof, and that such transferee shall agree to be so bound
in a separate agreement and, in the case of a transfer to a corporation, the
shares of such corporation shall also be subject to the co-sale rights set forth
above and the holders thereof shall agree to be so bound in a separate
agreement.
ARTICLE III
RIGHTS OF CO-INVESTMENT
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SECTION 3.01. Right to Purchase Shares of an Additional Series or
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Class of Stock. In the event the Company proposes to issue and sell any shares
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of Common Stock, convertible securities, warrants or options (collectively, the
"Additional Stock") to ▇▇▇▇▇▇▇, then the Company shall afford the Holders the
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right to purchase certain shares of the Additional Stock as follows:
(a) The Company shall give written notice to all Holders, at least
thirty (30) days prior to any proposed issuance and sale of Additional Stock at
a price less than the equivalent
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of the fair market value thereof, specifying the number of such shares to be
issued and sold, the time within which and the price and all other material
terms and conditions upon which the Company proposes to sell such shares.
(b) Each Holder shall notify the Company in writing, within twenty
(20) days after receiving such notice, whether such Holder desires to purchase
any such shares of Additional Stock and, if so, the number of shares he desires
to purchase. Failure to provide such written notice within such twenty-day
period after receipt of notice from the Company, for the purpose hereof, shall
be deemed to constitute a refusal by such Holder to purchase any such shares of
Additional Stock. Each Holder shall be entitled to purchase a percentage of the
Addition Stock equal to the percentage of Common Stock, on a fully-converted and
fully-exercised basis, represented by the Warrants and/or Warrant Shares owned
by such Holder.
SECTION 3.02. Exceptions to Co-investment Rights. Notwithstanding
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the foregoing, this Article III shall not apply to any issuance of Additional
Stock made upon (i) the exercise by ▇▇▇▇▇▇▇ of Convertible Preferred Stock,
Series A, B, C, D, E or F of the Company or any other series designated as
ranking on a parity with such series of conversion rights accorded such shares
pursuant to the certificate of designation of powers, rights and preferences of
such shares, (ii) the grant or exercise of an incentive or non-qualified stock
option pursuant to the Company's 1993 Stock Option Plan, as amended, or the
Company's 1994 Investor Incentive Stock Option Plan, or pursuant to any other
stock option (including, without limitation, warrants) plan ratified and adopted
by majority vote, on a fully converted basis, of the Company's stockholders and
by vote of a majority of the Company's Board of Directors who are not officers
of the Company or (iii) the exercise of any option or the conversion of any
convertible security of the Company.
ARTICLE IV
MISCELLANEOUS
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SECTION 4.01. Remedies. In the event of a breach by the Company or
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by a Holder of Warrants or Warrant Shares, as the case may be, of any of its
obligations under this Agreement, each Holder of Warrants or Warrant Shares, as
the case may be, and the Company, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.
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Notwithstanding the provisions of Section 1.04 hereof, the Company and each
Holder of Warrants or Warrant Shares, as the case may be, agree that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach of any of the provisions of this Agreement and each hereby further agrees
that, in the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be adequate.
SECTION 4.02. No Inconsistent Agreements. The Company will not enter
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into any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders of the Warrants and Warrant Shares in this
Agreement or otherwise conflicts with the provisions hereof. Without the
written consent of the Holders of a majority of the outstanding Warrants, the
Company shall not grant to any person any rights which conflict with or are
inconsistent with the provisions of this Agreement.
SECTION 4.03. No Piggyback on Registrations. The Company shall not
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grant to any of its securityholders (other than the Holders of the Warrants in
such capacity) the right to include any of their securities in any Registration
Statement other than Warrant Shares.
SECTION 4.04. Amendments and Waivers. The provisions of this
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Agreement, including the provisions of this sentence, 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 Holders of not less than a majority of the votes of the then
outstanding Warrants, each Holder having such number of votes which is equal to
the number of Warrant Shares into which such Holder's Warrants are exercisable
at such time; provided, however, that, for the purposes of this Agreement,
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Warrants that are owned, directly or indirectly, by the Company or any of its
Affiliates are not deemed outstanding; provided, further, that any modification
of Articles II or III hereunder shall require the consent of a majority of the
votes of the holders of Warrants and Warrant Shares, each Warrant holder or
Warrant Shareholder, as applicable, having that number of votes as the number of
shares into which his Warrants are exercisable at such time (including
fractional shares) plus the number of Warrant Shares held by such holder.
SECTION 4.05. Notices. All notices and other communications provided
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for herein shall be made in writing by
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hand-delivery, next-day air courier, certified first-class mail, return receipt
requested, telex or telecopier:
(a) if to the Company, as provided in the Purchase Agreement,
(b) if to the Initial Purchaser, as provided in the Purchase
Agreement, or
(c) if to any other person who is then the registered Holder of
Warrants or Warrant Shares, as the case may be, to the address of such Holder as
it appears in the register therefor of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
SECTION 4.06. Successors and Assigns. This Agreement shall inure to
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the benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall inure to the benefit of each Holder of Warrants or
Warrant Shares, as the case may be. The Company may not assign any of its
rights or obligations hereunder without the prior written consent of each Holder
of Warrants or Warrant Shares, as the case may be. Notwithstanding the
foregoing, no successor or assignee of the Company shall have any of the rights
granted under this Agreement until such person shall acknowledge its rights and
obligations hereunder by a signed written statement of such person's acceptance
of such rights and obligations.
SECTION 4.07. Counterparts. This Agreement may be executed in any
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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.
SECTION 4.08. Governing Law; Submission to Jurisdiction. THIS
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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. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK
OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE
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CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, AND EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE
AFORESAID COURTS.
SECTION 4.09. Severability. The remedies provided herein are
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cumulative and not exclusive of any remedies provided by law. 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 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.
SECTION 4.10. Headings. The headings in this Agreement are for
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convenience of reference only and shall not limit or otherwise affect the
meaning hereof. All references made in this Agreement to "Article," "Section"
and "paragraph" refer to such Article, Section or paragraph of this Agreement,
unless expressly stated otherwise.
SECTION 4.11. Entire Agreement. This Agreement is intended by the
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parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Warrant Shares. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
IN WITNESS WHEREOF, the parties have caused this Warrant Shares
Registration Rights Agreement to be duly executed as of the date first written
above.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
THE COMPANY:
UNIFI COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:
Title:
THE INITIAL PURCHASER:
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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Name:
Title: