EXHIBIT 4.7
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of December 29, 1997, by and among Tuesday Morning Corporation,
a Delaware corporation (the "Company"), TMI Holdings, Inc. ("TMI"), Tuesday
Morning, Inc. ("Tuesday Morning"), Friday Morning, Inc. ("Friday Morning") and
TMIL Corporation ("TMIL"), as guarantors and Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated (the "Initial Purchaser").
This Agreement is made pursuant to the Purchase Agreement dated
December 15, 1997 among the Company, the Subsidiary Debenture Guarantors (as
defined herein), and the Initial Purchaser (the "Purchase Agreement"), which
provides for the sale by the Company to the Initial Purchaser of an aggregate of
250,000 units consisting of 250,000 shares of the Company's 13 1/4% Senior
Exchangeable Preferred Stock, par value $0.01 per share (the "Preferred Stock"),
which will be mandatorily redeemable in 2009 (the "Shares"), as set forth in the
Certificate of Designation of the Company (the "Certificate of Designation"),
and will be exchangeable, at the option of the Company, in whole but not in
part, into 13 1/4% Subordinated Exchange Debentures due 2009 (the "Exchange
Debentures") to be issued, if applicable, pursuant to an Indenture dated as of
December 29, 1997 (the "Exchange Debenture Indenture") among the Company, the
Subsidiary Debenture Guarantors (as defined below) and the Trustee, and 250,000
shares of common stock, par value $0.01 per share, of the Company (the "Common
Stock").
The obligations of the Company under the Exchange Debentures, when
issued, and the Exchange Debenture Indenture will be guaranteed by (i) TMI,
Tuesday Morning, Friday Morning, TMIL and (ii) any future domestic subsidiaries
of the Company which are Restricted Subsidiaries (as defined in the Exchange
Debenture) (collectively, the "Subsidiary Debenture Guarantors"), on an
unsecured subordinated basis pursuant to the terms of the Exchange Debenture
Indenture (the "Debenture Guarantees"). In order to induce the Initial
Purchaser to enter into the Purchase Agreement, the Company and the Subsidiary
Debenture Guarantors have agreed to provide to the Initial Purchaser and its
direct and indirect transferees and assigns the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following capitalized
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defined terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
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to time, and the rules and regulations of the SEC promulgated thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
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from time to time, and the rules and regulations of the SEC promulgated
thereunder.
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"Certificate of Designation" shall mean the certificate of
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designations, preferences and rights of the Shares filed with the Secretary
of State of the State of Delaware.
"Closing Time" shall mean the Closing Time as defined in the Purchase
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Agreement.
"Company" shall have the meaning set forth in the preamble of this
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Agreement and also includes the Company's successors.
"Debenture Guarantees" shall have the meaning set forth in the
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preamble of this Agreement.
"Depositary" shall mean The Depositary Trust Company, or any other
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depositary appointed by the Company, provided, however, that any such
depositary must have an address in the Borough of Manhattan, in the City of
New York.
"Dividend Payment Date" shall mean March 15, June 15, September 15
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and December 15 of each year.
"Exchange Debentures" shall have the meaning set forth in the preamble
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of this Agreement.
"Exchange Debenture Indenture" shall have the meaning set forth in the
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preamble of this Agreement.
"Exchange Offer" shall mean the exchange offer by the Company of
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Exchange Shares for Registrable Shares pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
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Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
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registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Exchange Shares" shall mean the securities issued by the Company
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containing terms identical to the Shares and the PIK Shares (except that
(i) dividends thereon will accumulate from the last date on which dividends
were paid on the Shares and the PIK Shares or, if no such dividends has
been paid, from December 29, 1997, (ii) the transfer restrictions thereon
shall be eliminated and (iii) certain provisions relating to the payment
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of liquidated damages thereon shall be eliminated), to be offered to
Holders of Shares and PIK Shares in exchange for Shares and PIK Shares
pursuant to the Exchange Offer.
"Holders" shall mean the Initial Purchaser, for so long as it owns any
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Registrable Shares, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Shares.
"Initial Purchaser" shall have the meaning set forth in the preamble
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of this Agreement.
"Majority Holders" shall mean the Holders of, in the case of the
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Shares, a majority of the aggregate liquidation preference of outstanding
Registrable Shares; provided that whenever the consent or approval of
Holders of a specified percentage of Registrable Shares is required
hereunder, Registrable Shares held by the Company or any of its affiliates
(as such term is defined in Rule 405 under the 0000 Xxx) (other than the
Initial Purchaser or subsequent holders of Registrable Shares if such
subsequent holders are deemed to be such affiliates solely by reason of
their holding of such Registrable Shares) shall be disregarded in
determining whether such consent or approval was given by the Holders of
such required percentage or amount.
"Person" shall mean an individual, partnership, limited liability
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company, corporation, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
"PIK Shares" shall mean any shares of Preferred Stock issued as
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payment in kind dividends to any holder of shares of Preferred Stock.
"Prospectus" shall mean the prospectus included in a Registration
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Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Shares covered by a Shelf Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
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of this Agreement.
"Registrable Shares" shall mean the Shares and the PIK Shares;
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provided, however, that the Shares and the PIK Shares shall cease to be
Registrable Shares when (i) a Registration Statement with respect to such
Shares and such PIK Shares shall have been declared effective under the
1933 Act and such Shares and such PIK Shares shall have been
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disposed of pursuant to such Registration Statement, (ii) such Shares and
such PIK Shares shall have been sold to the public pursuant to Rule 144 (or
any similar provision then in force, but not Rule 144A) under the 1933 Act,
(iii) such Shares and such PIK Shares shall have ceased to be outstanding
or (iv) such Shares and such PIK Shares have been exchanged for Exchange
Shares upon consummation of the Exchange Offer.
"Registration Expenses" shall mean any and all expenses incident to
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performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. ("NASD") registration and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state or
other securities or blue sky laws and compliance with the rules of the NASD
(including reasonable fees and disbursements of one counsel for any
underwriters and Holders in connection with state or other securities or
blue sky qualification of any of the Exchange Shares or Registrable
Shares), (iii) all expenses of any Persons in preparing, or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements, certificates
representing the Exchange Shares and other documents relating to the
performance of and compliance with this Agreement, (iv) all rating agency
fees, if any, (v) all fees and expenses incurred in connection with the
listing, if any, of any of the Registrable Shares on any securities
exchange or exchanges, (vi) all fees and disbursements relating to the
qualification of the Exchange Debenture Indenture under applicable
securities laws, (vii) the fees and disbursements of counsel for the
Company and, in the case of a Shelf Registration Statement, the reasonable
fees and disbursements (including the expenses of preparing and
distributing any underwriting or securities sales agreement) of one counsel
(in addition to appropriate local counsel) for the Holders (which counsel
shall be selected in writing by the Majority Holders), (viii) the fees and
expenses of the independent public accountants of the Company, including
the expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance, (ix) the fees and expenses of
a "qualified independent underwriter" as defined by Conduct Rule 2720 of
the NASD, if required by the NASD rules, in connection with the offering of
the Registrable Securities, (x) the fees and expenses of Transfer Agent and
its counsel, (xi) the fees and expenses of the Trustee, including its
counsel, and any escrow agent or custodian, and (xii) any fees and
disbursements of the underwriters customarily required to be paid by
issuers or sellers of securities and the reasonable fees and expenses of
any special experts retained by the Company in connection with any
Registration Statement, but excluding underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition
of Registrable Shares by a Holder.
"Registration Statement" shall mean any registration statement of the
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Company which covers any of the Exchange Shares or Registrable Shares
pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration
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Statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
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"Shelf Registration" shall mean a registration effected pursuant to
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Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
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statement of the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the then Registrable Shares on an appropriate
form under Rule 415 under the 1933 Act, or any similar rule that may be
adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Subsidiary Debenture Guarantors" shall have the meaning set forth in
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the preamble of this Agreement and shall also include the Subsidiary Debenture
Guarantors' successors.
"Transfer Agent" shall mean United States Trust Company of New York or
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its successors provided that any such successor is a participant in the
Depositary's full-FAST system.
"Trustee" shall mean the trustee with respect to the Exchange
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Debentures under the Exchange Debenture Indenture.
2. Registration Under the 0000 Xxx. (a) Exchange Offer
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Registration. To the extent not prohibited by any applicable law or applicable
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interpretation of the staff of the SEC, the Company shall (i) file within 45
days after the Closing Time an Exchange Offer Registration Statement covering
the offer by the Company to the Holders to exchange all of the Registrable
Shares for Exchange Shares, (ii) use its best efforts to cause such Exchange
Offer Registration Statement to be declared effective by the SEC within 120 days
after the date hereof, (iii) use its best efforts to cause such Exchange Offer
Registration Statement to remain effective until the closing of the Exchange
Offer and (iv) use its best efforts to consummate the Exchange Offer within 150
days following the date hereof. The Exchange Shares will be issued under the
Certificate of Designation. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Exchange Offer,
it being the objective of such Exchange Offer to enable each Holder (other than
Participating Broker-Dealers (as defined in Section 3(f))) eligible and electing
to exchange Registrable Shares for Exchange Shares (assuming that such Holder
(i) is not an affiliate of the Company within the meaning of Rule 405 under the
1933 Act, (ii) acquires the Exchange Shares in the ordinary course of such
Holder's business and
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(iii) has no arrangements or understandings with any person to participate in
the Exchange Offer for the purpose of distributing the Exchange Shares) to trade
such Exchange Shares from and after their receipt without any limitations or
restrictions under the 1933 Act and without material restrictions under the
securities laws of a reasonable number of the several states of the United
States, such that a sufficient trading market for the Exchange Shares is
available.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Exchange Offer open for not less than 20 business days
after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) use the services of the Depositary for the Exchange Offer with
respect to Shares evidenced by global certificates;
(iv) permit Holders to withdraw tendered Registrable Shares at any
time prior to the close of business, New York City time, on the last
business day on which the Exchange Offer shall remain open, by sending to
the institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Registrable Shares delivered for exchange, and a statement that
such Holder is withdrawing its election to have such Shares exchanged; and
(v) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the
Company shall:
(i) accept for exchange Registrable Shares duly tendered and not
validly withdrawn pursuant to the Exchange Offer in accordance with the
terms of the Exchange Offer Registration Statement and the letter of
transmittal which is an exhibit thereto;
(ii) deliver, or cause to be delivered, to the Transfer Agent for
cancellation all Registrable Shares so accepted for exchange by the
Company; and
(iii) cause the Transfer Agent promptly to authenticate and deliver
Exchange Shares to each Holder of Registrable Shares equal in amount to the
Registrable Shares of such Holder so accepted for exchange.
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Dividends on each Exchange Share will accumulate from the last date on
which dividends were paid on the Registrable Shares surrendered in exchange
therefor or, if no dividends has been paid on the Registrable Shares, from
December 29, 1997. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer, or the making of any exchange by a Holder,
does not violate applicable law or any applicable interpretation of the staff of
the SEC. Each Holder of Registrable Shares (other than Participating Broker-
Dealers) who wishes to exchange such Registrable Shares for Exchange Shares in
the Exchange Offer shall have represented that (i) it is not an affiliate (as
defined in Rule 405 under the 0000 Xxx) of the Company, (ii) any Exchange Shares
to be received by it were acquired in the ordinary course of business, (iii) at
the time of the commencement of the Exchange Offer it has no arrangement with
any person to participate in the distribution (within the meaning of the 0000
Xxx) of the Exchange Shares and (iv) it is not acting on behalf of any person
who could not make the representations in clauses (i) through (iii). The Company
shall inform the Initial Purchaser of the names and addresses of the Holders to
whom the Exchange Offer is made, and the Initial Purchaser shall have the right
to contact such Holders and otherwise facilitate the tender of Registrable
Shares in the Exchange Offer.
(b) Shelf Registration. (i) If, because of any change in law or
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applicable interpretations thereof by the staff of the SEC, the Company is not
permitted to effect the Exchange Offer as contemplated by Section 2(a) hereof,
or (ii) if for any other reason the Exchange Offer is not consummated within 150
days following the date hereof, or (iii) if any Holder (other than an Initial
Purchaser) is not eligible to participate in the Exchange Offer or (iv) upon the
written request of any Initial Purchaser (with respect to any Registrable Shares
which it acquired from the Company) following the consummation of the Exchange
Offer if any such Initial Purchaser shall hold Registrable Shares which it
acquired directly from the Company and if such Initial Purchaser is not
permitted, in the opinion of counsel to such Initial Purchaser, pursuant to
applicable law or applicable interpretation of the staff of the SEC to
participate in the Exchange Offer, the Company shall, at its own cost:
(A) as promptly as practicable, file with the SEC a Shelf
Registration Statement relating to the offer and sale of the then
outstanding Registrable Shares by the Holders from time to time in
accordance with the methods of distribution elected by the Majority Holders
of such Registrable Shares and set forth in such Shelf Registration
Statement, and use their best efforts to cause such Shelf Registration
Statement to be declared effective by the SEC by the 150th day after the
date hereof (or promptly in the event of a request by any Initial Purchaser
pursuant to clause (iv) above). In the event that the Company is required
to file a Shelf Registration Statement upon the request of any Holder
(other than an Initial Purchaser) not eligible to participate in the
Exchange Offer pursuant to clause (iii) above or upon the request of any
Initial Purchaser pursuant to clause (iv) above, the Company shall file and
use its best efforts to have declared effective by the SEC both an Exchange
Offer Registration Statement pursuant to Section 2(a) with respect to all
Registrable Shares and a Shelf Registration Statement (which may be a
Registration
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Statement combined with the Exchange Offer Registration Statement) with
respect to offers and sales of Registrable Shares held by such Holder or
such Initial Purchaser after completion of the Exchange Offer;
(B) use its best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of two years from the Closing
Time (or one year from the date the Shelf Registration Statement is
declared effective if such Shelf Registration Statement is filed upon the
request of any Initial Purchaser pursuant to clause (iv) above) or such
shorter period which will terminate when all of the Registrable Shares
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or all of the Registrable Shares become
eligible for resale pursuant to Rule 144 under the 1933 Act without volume
restrictions; and
(C) notwithstanding any other provisions hereof, use its best efforts
to ensure that (i) any Shelf Registration Statement and any amendment
thereto and any Prospectus forming part thereof and any supplement thereto
complies in all material respects with the 1933 Act, (ii) any Shelf
Registration Statement and any amendment thereto does not, when it becomes
effective, 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 not misleading and (iii) any Prospectus forming part of
any Shelf Registration Statement, and any supplement to such Prospectus (as
amended or supplemented from time to time), does not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
The Company further agrees, if necessary, to supplement or amend the
Shelf Registration Statement if reasonably requested by the Majority Holders
with respect to information relating to the Holders and otherwise as required by
Section 3(b) below, to use all reasonable efforts to cause any such amendment to
become effective and such Shelf Registration to become usable as soon as
practicable thereafter and to furnish to the Holders of Registrable Shares
copies of any such supplement or amendment promptly after its being used or
filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses in
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connection with the registration pursuant to Section 2(a) and 2(b). Each Holder
shall pay all expenses of its counsel other than as set forth in the preceding
sentence, underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Shares pursuant
to the Shelf Registration Statement.
(d) Effective Registration Statement. (i) The Company will be deemed
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not to have used its best efforts to cause a Registration Statement to become,
or to remain, effective during the requisite periods set forth herein if the
Company voluntarily takes any action that would
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result in any such Registration Statement not being declared effective or in the
Holders of Registrable Shares covered thereby not being able to exchange or
offer and sell such Registrable Shares during that period unless (A) such action
is required by applicable law or (B) such action is taken by the Company in good
faith and for valid business reasons (but not including avoidance of the
Company's obligations hereunder), including a material corporate transaction, so
long as the Company promptly complies with the requirements of Section 3(k)
hereof, if applicable.
(ii) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that if, after it has been declared effective, the
offering of Exchange Shares pursuant to a Registration Statement is interfered
with by any stop order, injunction or other order or requirement of the SEC or
any other governmental agency or court, such Registration Statement will be
deemed not to have been effective during the period of such interference, until
the offering of Exchange Shares pursuant to such Registration Statement may
legally resume.
(e) Liquidated Damages. In the event that (i) the Exchange Offer
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Registration Statement is not filed with the SEC on or prior to the 45th day
following the date hereof, (ii) the Exchange Offer Registration Statement is not
declared effective on or prior to the 120th day following the date hereof or
(iii) the Exchange Offer is not consummated prior to the 150th day following the
date hereof or a Shelf Registration Statement with respect to the Registrable
Shares is not declared effective on or prior to the 150th day following the date
hereof, the dividend rate borne by the Shares shall be increased by one-quarter
of one percent per annum following such 45-day period in the case of clause (i)
above, following such 120-day period in the case of clause (ii) above or
following such 150-day period in the case of clause (iii) above, which dividend
rate will be increased by an additional one-quarter of one percent per annum for
each 90-day period that any additional dividends continue to accumulate,
provided that the aggregate increase in such dividend rate will in no event
exceed one percent per annum. Upon (x) the filing of the Exchange Offer
Registration Statement after the 45-day period described in clause (i) above,
(y) the effectiveness of the Exchange Offer Registration Statement, after the
120-day period described in clause (ii) above or (z) consummation of the
Exchange Offer, or the effectiveness of the Shelf Registration Statement, as the
case may be, after the 150-day period described in clause (iii) above, the
dividend rate borne by the Shares from the date of such filing, effectiveness or
consummation, as the case may be, will be reduced to the original dividend rate
if the Company is otherwise in compliance with this paragraph; provided,
however, that, if after any such reduction in dividend rate, a different event
specified in clauses (i), (ii) or (iii) above occurs, the dividend rate will
again be increased and thereafter reduced pursuant to the foregoing conditions.
If the Company issues a notice that the Shelf Registration Statement is unusable
pending the announcement of a material corporate transaction or otherwise
pursuant to Section 3(k) hereof, or such a notice is required under applicable
securities laws to be issued by the Company, and the aggregate number of days in
any consecutive twelve-month period for which all such notices are issued or
required to be issued exceeds 30 days per occurrence or more than 60 days in the
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aggregate, then the dividend rate borne by the Shares will be increased by one-
quarter of one percent per annum following the date that such Shelf Registration
Statement ceases to be usable beyond the period permitted above, which rate
shall be increased by an additional one-quarter of one percent per annum for
each subsequent 90-day period that such additional dividends continue to
accumulate; provided that the aggregate increase in such annual dividend rate
may in no event exceed one percent. Upon the Company declaring that the Shelf
Registration Statement is usable after the dividend rate has been increased
pursuant to the preceding sentence, the dividend rate borne by the Shares will
be reduced to the original dividend rate if the Company is otherwise in
compliance with this paragraph; provided, however, that if after any such
reduction in dividend rate the Shelf Registration Statement again ceases to be
usable beyond the period permitted above, the dividend rate will again be
increased and thereafter reduced pursuant to the foregoing conditions.
(f) Specific Enforcement. Without limiting the remedies available to
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the Initial Purchaser and the Holders, the Company acknowledges that any failure
by the Company to comply with its obligations under Sections 2(a) and 2(b)
hereof may result in material irreparable injury to the Initial Purchaser or the
Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchaser or any Holder may obtain such relief
as may be required to specifically enforce the Company's obligations under
Sections 2(a) and 2(b) hereof.
3. Registration Procedures. In connection with the obligations of
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the Company with respect to the Registration Statements pursuant to Sections
2(a) and 2(b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement, within
the time period specified in Section 2, on the appropriate form under the
1933 Act, which form (i) shall be selected by the Company, (ii) shall, in
the case of a Shelf Registration, be available for the sale of the
Registrable Shares by the selling Holders thereof and (iii) shall comply as
to form in all material respects with the requirements of the applicable
form required by the SEC and include or incorporate by reference all
financial statements required by the SEC to be filed therewith, and use
their best efforts to cause such Registration Statement to become effective
and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to (i) the Exchange Offer Registration Statement as may be
necessary under applicable law to keep such Exchange Offer Registration
Statement effective for the period required to comply with Section 2(a)
(except to the extent the Company is unable to consummate the Exchange
Offer and the Company complies with Section 2(b), subject in all respects
to Section 3(f) hereof), and (ii) the Shelf Registration Statement as may
be necessary under applicable law to keep such Shelf Registration Statement
effective for the
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period required pursuant to Section 2(b) hereof; cause each Prospectus to
be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the 1933 Act; and
comply with the provisions of the 1933 Act with respect to the disposition
of all securities covered by each Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the selling Holders thereof;
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Shares, at least ten days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Shares is being
filed and advising such Holders that the distribution of Registrable Shares
will be made in accordance with the method elected by the Majority Holders;
and (ii) furnish to each Holder of Registrable Shares, to counsel for the
Initial Purchaser, to counsel for the Holders and to each underwriter of an
underwritten offering of Registrable Shares, if any, without charge, as
many copies of each Prospectus, including each preliminary Prospectus, and
any amendment or supplement thereto and such other documents as such Holder
or underwriter may reasonably request, including financial statements and
schedules and, if the Holder so requests, all exhibits (including those
incorporated by reference) in order to facilitate the public sale or other
disposition of the Registrable Shares; and (iii) subject to the last
paragraph of Section 3, hereby consent to the use of the Prospectus,
including each preliminary Prospectus, or any amendment or supplement
thereto by each of the selling Holders of Registrable Shares in connection
with the offering and sale of the Registrable Shares covered by the
Prospectus or any amendment or supplement thereto;
(d) use its best efforts to register or qualify the Registrable
Shares under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Shares covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Shares shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the SEC, to cooperate with
the Holders in connection with any filings required to be made with the
NASD, keep each such registration or qualification effective during the
period such Registration Statement is required to be effective and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Shares owned by such Holder; provided,
however, that the Company shall not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(d) or (ii) take
any action which would subject it to general service of process or taxation
in any such jurisdiction if it is not then so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Shares and counsel for such Holders promptly and, if requested
by such Holder or counsel, confirm such advice in writing promptly (i) when
a Registration Statement has become
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effective and when any post-effective amendments and supplements thereto
become effective, (ii) of any request by the SEC or any state securities
authority for post-effective amendments and supplements to a Registration
Statement and Prospectus or for additional information after the
Registration Statement has become effective, (iii) of the issuance by the
SEC or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Shares
covered thereby, the representations and warranties of the Company
contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to such offering cease to be true
and correct in all material respects, (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification 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 or the discovery of any facts during the period a Shelf
Registration Statement is effective which makes any statement made in such
Shelf Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such Shelf
Registration Statement or Prospectus in order to make the statements
therein not misleading and (vii) of any determination by the Company that a
post-effective amendment to a Registration Statement would be appropriate;
(f) (A) in the case of the Exchange Offer, (i) include in the
Exchange Offer Registration Statement a "Plan of Distribution" section
covering the use of the Prospectus included in the Exchange Offer
Registration Statement by broker-dealers who have exchanged their
Registrable Shares for Exchange Shares for the resale of such Exchange
Shares, (ii) furnish to each broker-dealer who desires to participate in
the Exchange Offer, without charge, as many copies of each Prospectus
included in the Exchange Offer Registration Statement, including any
preliminary prospectus, and any amendment or supplement thereto, as such
broker-dealer may reasonably request, (iii) include in the Exchange Offer
Registration Statement a statement that any broker-dealer who holds
Registrable Shares acquired for its own account as a result of market-
making activities or other trading activities (a "Participating Broker-
Dealer"), and who receives Exchange Shares for Registrable Shares pursuant
to the Exchange Offer, may be a statutory underwriter and must deliver a
prospectus meeting the requirements of the 1933 Act in connection with any
resale of such Exchange Shares, (iv) subject to the last paragraph of
Section 3, hereby consent to the use of the Prospectus forming part of the
Exchange Offer Registration Statement or any amendment or supplement
thereto, by any broker-dealer in connection with the sale or transfer of
the Exchange Shares covered by the Prospectus or any amendment or
supplement thereto, and (v) include in the transmittal letter or similar
documentation to be executed by an exchange offeree in order to participate
in the Exchange Offer (x) the following provision:
13
"If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Shares. If the undersigned is a broker-
dealer that will receive Exchange Shares for its own account in
exchange for Registrable Shares, it represents that the Registrable
Shares to be exchanged for Exchange Shares were acquired by it as a
result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of such
Exchange Shares pursuant to the Exchange Offer; however, by so
acknowledging and by delivering a prospectus, the undersigned will not
be deemed to admit that it is an "underwriter" within the meaning of
the 1933 Act;"
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in subclause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, the broker-dealer
will not be deemed to admit that it is an underwriter within the meaning
of the 1933 Act;
(B) to the extent any Participating Broker-Dealer participates in the
Exchange Offer, the Company shall use its best efforts to cause to be
delivered at the request of an entity representing the Participating
Broker-Dealers (which entity shall be the Initial Purchaser, unless it
elects not to act as such representative) only one, if any, "cold comfort"
letter with respect to the Prospectus in the form existing on the last date
for which exchanges are accepted pursuant to the Exchange Offer and with
respect to each subsequent amendment or supplement, if any, effected during
the period specified in clause (C) below;
(C) to the extent any Participating Broker-Dealer participates in the
Exchange Offer, the Company shall use its best efforts to maintain the
effectiveness of the Exchange Offer Registration Statement for a period of
one year following the closing of the Exchange Offer; and
(D) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement as would
otherwise be contemplated by Section 3(b), or take any other action as a
result of this Section 3(f), for a period exceeding 180 days after the last
date for which exchanges are accepted pursuant to the Exchange Offer (as
such period may be extended by the Company) and Participating Broker-
Dealers shall not be authorized by the Company to, and shall not, deliver
such Prospectus after such period in connection with resales contemplated
by this Section 3.
(g) (A) in the case of an Exchange Offer, furnish counsel for the
Initial Purchaser and (B) in the case of a Shelf Registration, furnish
counsel for the Holders of Registrable Shares copies of any request by the
SEC or any state securities authority for
14
amendments or supplements to a Registration Statement and Prospectus or for
additional information;
(h) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement as soon as
practicable and provide notice as soon as practicable to each Holder of the
withdrawal of any such order;
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Shares, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(j) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Shares to facilitate the timely preparation and
delivery of certificates representing Registrable Shares to be sold and not
bearing any restrictive legends; and cause such Registrable Shares to be in
such denominations (consistent with the provisions of the Certificate of
Designation) and registered in such names as the selling Holders or the
underwriters, if any, may reasonably request at least one business day
prior to the closing of any sale of Registrable Shares;
(k) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Section
3(e)(vi) hereof, use their best efforts to prepare a supplement or post-
effective amendment to a Registration Statement or the related Prospectus
or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Shares, such Prospectus will not contain at the time of such
delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
agrees to notify each Holder to suspend use of the Prospectus as promptly
as practicable after the occurrence of such an event, and each Holder
hereby agrees to suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or
omission. At such time as such public disclosure is otherwise made or the
Company determines that such disclosure is not necessary, in each case to
correct any misstatement of a material fact or to include any omitted
material fact, the Company agrees promptly to notify each Holder of such
determination and to furnish each Holder such numbers of copies of the
Prospectus, as amended or supplemented, as such Holder may reasonably
request;
(l) obtain CUSIP number for all Exchange Shares, or Registrable
Shares, as the case may be, not later than the effective date of a
Registration Statement; and provide the Transfer Agent with printed
certificates for the Exchange Shares or the Registrable Shares, as the case
may be, in a form eligible for deposit with the Depositary;
15
(m) (i) cause the Exchange Debenture Indenture to be qualified under
the Trust Indenture Act of 1939, as amended (the "TIA"), in connection with
the registration of the Exchange Shares, or Registrable Shares, as the case
may be, (ii) cooperate with the Trustee and the Holders to effect such
changes to the Exchange Debenture Indenture as may be required for the
Exchange Debenture Indenture to be so qualified in accordance with the
terms of the TIA and (iii) execute, and use their best efforts to cause the
Trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the
SEC to enable the Exchange Debenture Indenture to be so qualified in a
timely manner;
(n) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and
appropriate actions (including those reasonably requested by the Majority
Holders) in order to expedite or facilitate the disposition of such
Registrable Shares and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration:
(i) make such representations and warranties to the Holders of
such Registrable Shares and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in similar underwritten offerings as may be reasonably requested by
them;
(ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any,
and the holders of a majority in liquidation preference of the
Registrable Shares being sold) addressed to each selling Holder and
the underwriters, if any, covering the matters customarily covered in
opinions requested in sales of securities or underwritten offerings
and such other matters as may be reasonably requested by such Holders
and underwriters;
(iii) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the
underwriters, if any, and will use best efforts to have such letters
addressed to the selling Holders of Registrable Shares, such letters
to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters to underwriters in connection with
similar underwritten offerings;
(iv) enter into a securities sales agreement with the Holders and
an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose of
soliciting purchases of Registrable
16
Shares, which agreement shall be in form, substance and scope
customary for similar offerings;
(v) if an underwriting agreement is entered into, cause the same
to set forth indemnification provisions and procedures substantially
equivalent to the indemnification provisions and procedures set forth
in Section 5 hereof with respect to the underwriters and all other
parties to be indemnified pursuant to said Section; and
(vi) deliver such documents and certificates as may be reasonably
requested and as are customarily delivered in similar offerings.
The above shall be done at (i) the effectiveness of such Shelf Registration
Statement (and, if appropriate, each post-effective amendment thereto) and
(ii) each closing under any underwriting or similar agreement as and to the
extent required thereunder. In the case of any underwritten offering, the
Company shall provide written notice to the Holders of all Registrable
Shares of such underwritten offering at least 30 days prior to the filing
of a prospectus supplement for such underwritten offering. Such notice
shall (x) offer each such Holder the right to participate in such
underwritten offering, (y) specify a date, which shall be no earlier than
10 days following the date of such notice, by which such Holder must inform
the Company of its intent to participate in such underwritten offering and
(z) include the instructions such Holder must follow in order to
participate in such underwritten offering;
(o) in the case of a Shelf Registration, make available for inspection
by representatives of the Holders of the Registrable Shares and any
underwriters participating in any disposition pursuant to a Shelf
Registration Statement and any counsel or accountant retained by such
Holders or underwriters, upon reasonable notice, at reasonable times and in
a reasonable manner, all relevant financial and other records, pertinent
corporate documents and properties of the Company reasonably requested by
any such persons, and cause the respective officers, directors, employees,
and any other agents of the Company to supply all relevant information
reasonably requested by any such representative, underwriter, special
counsel or accountant in connection with such Shelf Registration Statement;
provided, however, that such Persons shall first agree in writing with the
Company and the Subsidiary Debenture Guarantors that any information that
is reasonably and in good faith designated by the Company and the
Subsidiary Debenture Guarantors as confidential at the time of delivery of
such information shall be kept confidential by such Persons, unless (i)
disclosure of such information is required by court or administrative order
or is necessary to respond to inquiries of regulatory authorities, (ii)
disclosure of such information is required by law (including any disclosure
requirements pursuant to Federal securities laws in connection with the
filing of such Shelf Registration Statement or use of any Prospectus),
(iii) such information becomes generally available to the public
17
other than as a result of a disclosure or failure to safeguard such
information by such Person or (iv) such information becomes available to
such Person from a source other than the Company and the Subsidiary
Debenture Guarantors and such source is not bound by a confidentiality
agreement; and provided, further, that the foregoing investigation shall be
coordinated on behalf of the Holders by one representative designated by
and on behalf of such Holders and any such confidential information shall
be available from such representative to such Holders so long as any Holder
agrees to be bound by such confidentiality agreement.
(p) (i) a reasonable time prior to the filing of any Exchange Offer
Registration Statement, any Prospectus forming a part thereof, any
amendment to an Exchange Offer Registration Statement or amendment or
supplement to a Prospectus, provide copies of such document to the Initial
Purchaser, and make such changes in any such document prior to the filing
thereof as the Initial Purchaser or its counsel may reasonably request;
provided, however, that the sole basis for such changes shall be to correct
a material misstatement or omission in the Exchange Offer Registration
Statement; (ii) in the case of a Shelf Registration, a reasonable time
prior to filing any Shelf Registration Statement, any Prospectus forming a
part thereof, any amendment to such Shelf Registration Statement or
amendment or supplement to such Prospectus, provide copies of such document
to the Holders of Registrable Shares, to the Initial Purchaser, to counsel
on behalf of the Holders and to the underwriter or underwriters of an
underwritten offering of Registrable Shares, if any, and make such changes
in any such document prior to the filing thereof as the Holders of
Registrable Shares, the Initial Purchaser on behalf of such Holders, their
counsel and any underwriter may reasonably request; and (iii) cause the
representatives of the Company to be available for discussion of such
document as shall be reasonably requested by the Holders of Registrable
Shares, the Initial Purchaser on behalf of such Holders or any underwriter
and shall not at any time make any filing of any such document of which
such Holders, the Initial Purchaser on behalf of such Holders, their
counsel or any underwriter shall not have previously been advised and
furnished a copy or to which such Holders, the Initial Purchaser on behalf
of such Holders, their counsel or any underwriter shall reasonably object;
(q) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Shares to be listed on any securities exchange on
which similar securities issued by the Company are then listed if requested
by the Majority Holders or by the underwriter or underwriters of an
underwritten offering of Registrable Shares, if any;
(r) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
at least 12 months which shall satisfy the provisions of Section 11(a) of
the 1933 Act and Rule 158 thereunder; and
18
(s) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter and its counsel.
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Shares to furnish to the Company such information
regarding such Holder and the proposed distribution by such Holder of such
Registrable Shares as the Company may from time to time reasonably request in
writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
or the discovery of any facts, each of the kind described in Section 3(e)(ii)-
(vi) hereof, such Holder will forthwith discontinue disposition of Registrable
Shares pursuant to a Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 3(k)
hereof, and, if so directed by the Company, such Holder will deliver to the
Company (at its expense) all copies in its possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Shares current at the time of receipt of such notice. If the
Company shall give any such notice to suspend the disposition of Registrable
Shares pursuant to a Shelf Registration Statement as a result of the happening
of any event or the discovery of any facts, each of the kind described in
Section 3(e)(vi) hereof, the Company shall be deemed to have used their best
efforts to keep the Shelf Registration Statement effective during such period of
suspension provided that the Company shall use its best efforts to file and have
declared effective (if an amendment) as soon as practicable an amendment or
supplement to the Shelf Registration Statement and shall extend the period
during which the Registration Statement shall be maintained effective pursuant
to this Agreement by the number of days during the period from and including the
date of the giving of such notice to and including the date when the Holders
shall have received copies of the supplemented or amended Prospectus necessary
to resume such dispositions.
4. Underwritten Registrations. If any of the Registrable Shares
--------------------------
covered by any Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Majority Holders of such Registrable
Shares included in such offering.
No Holder of Registrable Shares may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
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.
19
5. Indemnification and Contribution. (a) The Company shall
--------------------------------
indemnify and hold harmless each Initial Purchaser, each Holder, including
Participating Broker-Dealers, their respective affiliates, and their respective
directors, officers, employees, agents and each Person, if any, who controls any
of such parties within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
(or any amendment thereto) pursuant to which Exchange Shares or Registrable
Shares were registered under the 1933 Act, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
5(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expenses whatsoever, as incurred (including
fees and disbursements of counsel chosen by any indemnified party),
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any court or governmental
agency or body, commenced or threatened, or any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) of this Section 5(a);
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Initial Purchaser, any Holder, including Participating Broker-Dealers, expressly
for use in the Registration Statement (or any amendment or supplement thereto)
or the Prospectus (or any amendment or supplement thereto). The foregoing
indemnity with respect to any untrue statement contained in or any omission from
a Prospectus shall not inure to the benefit of any Initial Purchaser, Holder (in
its capacity as Holder), including Participating Broker-Dealers (or any person
who controls such party within the meaning of Section 15 of the 1933 Act or
20
Section 20 of the 0000 Xxx) from whom the person asserting any such loss,
liability, claim, damage or expense purchased any of the Shares that are the
subject thereof, was not sent or given a copy of such Prospectus (as amended or
supplemented) by such Initial Purchaser or such selling Holder (in its capacity
as Holder) to the extent such Initial Purchaser or such Holder (in its capacity
as Holder) was required by law to deliver such Prospectus as amended or
supplemented, at or prior to the written confirmation of the sale of such Shares
and the untrue statement contained in or the omission from such Prospectus was
corrected in such amended or supplemented Prospectus, unless such failure
resulted from noncompliance by the Company with its obligations hereunder to
furnish such Initial Purchaser or such Holder (in its capacity as Holder) as the
case may be, with copies of such Prospectus as amended or supplemented.
(b) In the case of a Shelf Registration, each Holder agrees,
severally and not jointly, to indemnify and hold harmless the Company, each
Initial Purchaser and the other selling Holders and each of their respective
directors and officers (including each officer of the Company who signed the
Registration Statement) and each Person, if any, who controls the Company, any
Initial Purchaser or any other selling Holder within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act, against any and all loss,
liability, claim, damage and expense whatsoever described in the indemnity
contained in Section 5(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Holder, as the case may be,
expressly for use in the Registration Statement (or any amendment thereto), or
the Prospectus (or any amendment or supplement thereto); provided, however, that
no such Holder shall be liable for any claims hereunder in excess of the amount
of net proceeds received by such Holder from the sale of Registrable Shares
pursuant to such Shelf Registration Statement.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to either paragraph (a) or
paragraph (b) above, such person (the "indemnified party") shall give notice as
promptly as reasonably practicable to each person against whom such indemnity
may be sought (the "indemnifying party"), but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of such action; provided, however,
that counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In no event shall
the indemnifying party or parties be liable for the fees and expenses of more
than one counsel (in addition to any local counsel) for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled, to
21
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such action
on behalf of such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party will not be liable to such indemnified party
under this Section 5 for any subsequent legal or other expenses incurred
pursuant to such action, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, selected by any indemnified party in the case of
Section 5(a), representing the indemnified parties under such paragraph (a) who
are parties to such action or actions) or (ii) the indemnifying party does not
promptly retain counsel satisfactory to the indemnified party or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the consent of the indemnifying party. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 5 hereof (whether or not the indemnified parties are actual or potential
parties thereof), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Except with respect to fees and expenses not required to be
reimbursed pursuant to the assumption of the defense of an action in accordance
with Section 5(c) above, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, such indemnifying party agrees that it shall be liable for
any settlement of the nature contemplated by Section 5(a)(ii) hereof effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice
22
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) If the indemnification provided for in any of the indemnity
provisions set forth in this Section 5 is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by such indemnifying party or parties on the one hand, and
such indemnified party or parties on the other hand from the offering of the
Exchange Shares or Registrable Shares included in such offering or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of such indemnifying party or
parties on the one hand, and such indemnified party or parties on the other
hand, in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party or
parties on the one hand, and such indemnified party or parties on the other hand
shall be determined by reference to, among other things, whether any such untrue
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by such indemnifying
party or parties and such indemnified party or parties and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Initial Purchaser and the Holders
of the Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 5 were determined by pro rata allocation
(even if the Initial Purchaser was treated as one entity, and the Holders were
treated as one entity, for such purpose) or by another method of allocation
which does not take account of the equitable considerations referred to above in
Section 5. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
5 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by an governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any 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 0000 Xxx) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 5,
each person, if any, who controls an Initial Purchaser or Holder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as such Initial Purchaser or Holder, and each
director of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company. The parties hereto agree that any
underwriting discount or commission or
23
reimbursement of fees paid to any Initial Purchaser pursuant to the Purchase
Agreement shall not be deemed to be a benefit received by any Initial Purchaser
in connection with the offering of the Exchange Securities or Registrable
Securities in such offering.
6. Miscellaneous. (a) Rule 144 and Rule 144A. For so long as the
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Company is subject to the reporting requirements of Section 13 or 15 of the 1934
Act, the Company covenants that it will file the reports required to be filed by
it under Section 13(a) or 15(d) of the 1934 Act and the rules and regulations
adopted by the SEC thereunder, that if it ceases to be so required to file such
reports, it will upon the request of any Holder of Registrable Shares (i) make
publicly available such information as is necessary to permit sales pursuant to
Rule 144 under the 1933 Act, (ii) deliver such information to a prospective
purchaser as is necessary to permit sales pursuant to Rule 144A under the 1933
Act and it will take such further action as any Holder of Registrable Shares may
reasonably request in writing, and (iii) take such further action that is
reasonable in the circumstances, in each case, to the extent required from time
to time to enable such Holder to sell its Registrable Shares without
registration under the 1933 Act within the limitation of the exemptions provided
by (x) Rule 144 under the 1933 Act, as such Rule may be amended from time to
time, (y) Rule 144A under the 1933 Act, as such Rule may be amended from time to
time, or (z) any similar rules or regulations hereafter adopted by the SEC.
Upon the written request of any Holder of Registrable Shares, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
(b) Issuance of Exchange Debentures. In the event that the Exchange
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Debentures are issued prior to the issuance of the Exchange Shares, the
provisions herein shall apply equally in respect of the registration of any
Exchange Debentures provided that (i) changes in the dividend rate as provided
for in Section 2(e) herein shall result in corresponding changes in the interest
rate applicable to the Exchange Debentures, (ii) the term Company shall include
the Subsidiary Debenture Guarantors, (iii) the term Registrable Shares shall
include the Debenture Guarantees, and (iv) the term "Transfer Agent" shall be
substituted with the term "Trustee."
(c) No Inconsistent Agreements. The Company has not entered into nor
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will the Company on or after the date of this Agreement enter into any agreement
which is inconsistent with the rights granted to the Holders of Registrable
Shares in this Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not in any way conflict with and are
not inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(d) Amendments and Waivers. The provisions of this 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 unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Shares affected by such amendment, modification, supplement, waiver
or departure; provided, however, that no amendment, modification, supplement or
waiver or consent
24
to any departure from the provisions of Section 5 hereof shall be effective as
against any Holder of Registrable Shares unless consented to in writing by such
Holder.
(e) Notices. All notices and other communications provided for or
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permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telecopier, or any courier guaranteeing overnight delivery (i) if to
a Holder (other than an Initial Purchaser), at the most current address set
forth on the records of the Transfer Agent, (ii) if to an Initial Purchaser, at
the most current address given by such Initial Purchaser to the Company and the
Subsidiary Debenture Guarantors by means of a notice given in accordance with
the provisions of this Section 6(e), which address initially is the address set
forth in the Purchase Agreement; and (iii) if to the Company or the Subsidiary
Debenture Guarantors, initially at the address set forth in the Purchase
Agreement and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 6(e).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged, if telecopied; and on the next business day if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Transfer Agent, at
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention: Corporate Trust
Administration.
(f) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Shares in violation of the terms hereof or of the Purchase Agreement or the
Certificate of Designation. If any transferee of any Holder shall acquire
Registrable Shares, in any manner, whether by operation of law or otherwise,
such Registrable Shares shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Shares, such Person shall
be conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Company and the
Subsidiary Debenture Guarantors on the one hand, and the Initial Purchaser, on
the other hand, and shall have the right to enforce such agreements directly to
the extent it deems such enforcement necessary or advisable to protect its
rights or the rights of Holders hereunder.
25
(h) 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.
(i) Headings. The headings in this Agreement are for convenience of
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reference only and shall not limit or otherwise affect the meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
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IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(k) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
26
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TUESDAY MORNING CORPORATION
By: ________________________________
Name: Xxxx X. Xxxxxx
Title: Senior Vice President, Chief
Financial Officer and Secretary
TMI HOLDINGS, INC.
By: ________________________________
Name: Xxxx X. Xxxxxxxxxxx
Title: Senior Vice President, Secretary
and Treasurer
TUESDAY MORNING, INC.
By: ________________________________
Name: Xxxx X. Xxxxxx
Title: Senior Vice President, Chief
Financial Officer and Secretary
FRIDAY MORNING, INC.
By: ________________________________
Name: Xxxxx X. Xxxxx
Title: President and Chief Operating Officer
TMIL CORPORATION
By: ________________________________
Name: Xxxx X. Xxxxxxxxxxx
27
Title: Senior Vice President, Secretary
and Treasurer
Confirmed and accepted as of
the date first above written:
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
By: __________________________________________
Name:
Title:
