DISCOVERY ZONE, INC.
$20,000,000 13 1/2% SENIOR COLLATERALIZED NOTES DUE 2002
SERIES A WARRANTS TO PURCHASE 601,585,205 SHARES OF COMMON STOCK
OR
601,585,205 SHARES OF NON-VOTING COMMON STOCK
SERIES B REDEEMABLE WARRANTS TO PURCHASE 265,405,238 SHARES
OF COMMON STOCK OR 265,405,238 SHARES OF NON-VOTING COMMON STOCK
REGISTRATION RIGHTS AGREEMENT
July 17, 1998
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
DISCOVERY ZONE, INC., a Delaware corporation (the "Company" or
the "Issuer"), is issuing and selling to ▇▇▇▇▇▇▇▇▇ & Company, Inc. (the "Initial
Purchaser"), upon the terms set forth in the Purchase Agreement, dated July 9,
1998 between the Company and the Initial Purchaser (the "Purchase Agreement"),
20,000 units (each, a "Unit" and collectively, the "Units"), each Unit
consisting of one $1,000 principal amount of the Company's 13 1/2% Senior
Collateralized Notes due 2002 (each, a "Note," collectively, the "Notes"),
seventeen detachable warrants (each, a "Series A Warrant," and collectively, the
"Series A Warrants"), each to purchase 1,769.36825 shares of common stock, par
value $.00017 per share, of the Company (the "Voting Common Stock") or, subject
to the conditions set forth in the Warrant Agreement (as defined herein),
1,769.36825 shares of non-voting common stock, par value $.00017 per share, of
the Company ("Non-Voting Common Stock") and one detachable redeemable warrant
(each, a "Series B Warrant" and collectively, the "Series B Warrants"), each to
purchase 780.6036 shares of the Company's Common Stock or, subject to the
conditions set forth in the Warrant Agreement, 780.6036 shares of the Company's
Non-Voting Common Stock. As an inducement to the Initial Purchaser to enter in
to the Purchase Agreement, the Company agrees with the Initial Purchaser, for
the benefit of the Holders (as defined below) of the Securities (as
defined below) (including, without limitation, the Initial Purchaser), as
follows:
1. Definitions
-----------
Capitalized terms that are used herein without definition and are
defined in the Purchase Agreement shall have the respective meanings ascribed to
them in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:
Additional Interest: See Section 4(a).
Advice: See last paragraph of Section 6.
Agreement: This Registration Rights Agreement dated as of the Closing
Date, between the Company, and the Initial Purchaser.
Applicable Period: See Section 2(e).
Business Day: A day that is not a Saturday, a Sunday or a day on which
banking institutions in the city of New York are authorized or required by law
or executive order to be closed.
Closing Date: July 17, 1998.
Collateral Agreements: The Pledge Agreement, Escrow Agreement, Security
Agreement, Trademark Assignment Subsidiary Pledge Agreement, Pledge Possession
Agreement, Mortgage and Subsidiary Security Agreements.
Common Stock: See the first introductory paragraph to this Agreement.
Company: See the first introductory paragraph to this Agreement.
Day: Unless otherwise expressly provided, a calendar day.
Effectiveness Date: The 180th day after the Closing Date.
Effectiveness Period: See Section 3(a)
Escrow Agreement: The Escrow Agreement referred to in the Indenture.
Event Date: See Section 4(b)
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Note: 13 1/2% Senior Collateralized Notes due 2002, Series B,
of the Issuer, including the guarantees endorsed
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thereon, identical in all material respects to the Notes, except for references
to series and restrictive legends.
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 120th day after the Closing Date.
Holder: Any registered holder of Registrable Notes.
Indemnified Party: See Section 8(c).
Indemnifying Party: See Section 8(c).
Indenture: The Indenture, dated as of the Closing Date, among the
Company, the existing Subsidiary Guarantors and Firstar Bank of Minnesota, as
trustee, pursuant to which the Notes are being issued, as amended or
supplemented from time to time in accordance with the terms hereof.
Initial Purchaser: See the first introductory paragraph to this
Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 6(o).
Issuer: See the first introductory paragraph to this Agreement.
Mortgage: The Mortgage referred to in the Indenture.
NASD: National Association of Securities Dealers, Inc.
Non-Voting Common Stock: See the first introductory paragraph to this
Agreement.
Notes: See the first introductory paragraph to this Agreement.
Notes Prospectus: The prospectus included in any Notes Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Notes covered by such Notes Registration Statement,
and all other amendments and supplements to such prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such prospectus.
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Notes Registration Statement: Any registration statement of the Issuer
filed with the SEC under the Securities Act, (including, but not limited to, the
Exchange Registration Statement, the Shelf Registration and any subsequent Shelf
Registration) that covers any of the Registrable Notes pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
Participating Broker-Dealer: See Section 2(e).
Person: An individual, trustee, corporation, partnership, limited
liability company, joint stock company, trust, unincorporated association,
union, business association, firm, government or agency or political subdivision
thereof, or other legal entity.
Piggy-Back Registration: See Section 11(b).
Pledge Agreement: The Pledge Agreement referred to in the Indenture.
Pledge Possession Agreement: The Pledge Possession Agreement referred
to in the Indenture.
Private Exchange: See Section 2(f).
Private Exchange Notes: See Section 2(f).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities covered by such Registration
Statement, and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Purchase Agreement: See the first introductory paragraph to this
Agreement.
Records: See Section 6(o).
Registrable Notes: (i) Notes, (ii) Private Exchange Notes and (iii) any
Exchange Notes received in the Exchange Offer, in each case, that may not be
sold without restriction under federal or state securities laws.
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Registrable Warrant Shares: Any of (i) the Warrant Shares (whether or
not the related Warrants have been exercised) and (ii) any other securities
issued or issuable with respect to any Warrant Shares by way of stock dividends
or stock splits or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. As to any particular
Registrable Warrant Shares, such securities shall cease to be Registrable
Warrant Shares when (i) a Warrants Registration Statement with respect to the
offering of such securities by the Holder thereof shall have been declared
effective under the Securities Act and such securities shall have been disposed
of by such Holder pursuant to such Warrants Registration Statement, (ii) such
securities are eligible for sale to the public pursuant to Rule 144(k) (or any
similar provision then in force, but not Rule 144A) or are all otherwise
eligible for sale under Rule 144 by such Holder in the current calendar quarter,
or (iii) such securities shall have been otherwise transferred by such Holder
and new certificates for such securities not bearing a legend restricting
further transfer shall have been delivered by the Company or its transfer agent
and subsequent disposition of such securities shall not require registration or
qualification under the Securities Act or any similar state law then in force.
Registration Statement: Any Notes Registration Statement or Warrant
Shares Registration Statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer or such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: The Notes, the Private Exchange Notes, the Exchange Notes,
the Warrants and the Warrant Shares.
Security Agreement: The Security Agreement referred to in the
Indenture.
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Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Selling Holder: A Holder who is selling Registrable Warrant Shares in
accordance with Section 11 hereof.
Shelf Notice: See Section 2(j).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
Subsidiary Guarantor: Each subsidiary of the Issuer that guarantees the
obligations of the Issuer under the Notes and Indenture.
Subsidiary Pledge Agreement: The Subsidiary Pledge Agreement referred
to in the Indenture.
Subsidiary Security Agreements: The Subsidiary Security Agreements
referred to in the Indenture.
TIA: The Trust Indenture Act of 1939, as amended.
Trademark Assignment: The Trademark Assignment referred to in the
Indenture.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
Underwritten registration or underwritten offering: A registration in
which securities of the Issuer are sold to an underwriter for reoffering to the
public.
Units: See the first introductory paragraph to this Agreement.
Voting Common Stock: See the first introductory paragraph to this
Agreement.
Warrant Agreement: The Warrant Agreement referred to in the Indenture.
Warrant Shares Registration Expenses: All expenses incident to the
Company's performance of or compliance with Section 11 of this Agreement,
including, without limitation, all SEC and stock exchange or NASD registration
and filing fees and expenses, fees and expenses of compliance with securities or
blue sky laws (including, without limitation, reasonable fees and disbursements
of counsel for any underwriters in connection with blue sky qualifications of
the Registrable Warrants), preparing, printing, filing, duplicating and
distributing a Warrants Registration Statement and the related Prospectus, the
cost of printing stock
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certificates, the cost and charges of any transfer agent, rating agency fees,
printing expenses, messenger, telephone and delivery expenses, fees and
disbursements of any counsel for the Company and all independent certified
public accountants, the fees and disbursements of underwriters customarily paid
by issuers or sellers of securities (but not including any underwriting
discounts or commissions or transfer taxes, if any, attributable to the sale of
Registrable Warrant Shares by Selling Holders), fees and expenses of one counsel
for the Selling Holders and other reasonable out-of-pocket expenses of the
Selling Holders.
Warrant: Individually, a Series A Warrant or a Series B Warrant.
Warrants: Collectively, the Series A Warrants and the Series B
Warrants.
Warrants Prospectus: The prospectus included in any Warrant Shares
Registration Statement (including, without limitation, any prospectus subject to
completion and a prospectus that includes any information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Warrants covered by such Warrant
Shares Registration Statement, and all other amendments and supplements to such
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
Warrant Shares: The shares of Common Stock issuable upon exercise of
the Warrants.
Warrant Shares Registration Filing Date: A date on or before the date
occurring 90 days after the effectiveness date of a registration statement filed
with the SEC in connection with an initial public offering of the Common Stock,
provided, however, that, upon the written request of the managing underwriter of
such initial public offering such date may be extended to the date 180 days
following the effectiveness date of such initial public offering.
Warrant Shares Registration Statement: See Section 11(a).
2. Exchange Offer
--------------
(a) The Issuer shall (and shall cause any existing Subsidiary
Guarantor to) (i) prepare and file with the SEC promptly after the date hereof,
but in no event later than the Filing Date, a registration statement (the
"Exchange Registration Statement") on an appropriate form under the Securities
Act with respect to an offer (the "Exchange Offer") to the Holders of
Registrable Notes to issue and deliver to such Holders, in
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exchange for the Notes, a like aggregate principal amount of Exchange Notes,
(ii) use their best efforts to cause the Exchange Registration Statement to
become effective as promptly as practicable after the filing thereof, but in no
event later than the Effectiveness Date, (iii) keep the Exchange Registration
Statement effective until the consummation of the Exchange Offer in accordance
with its terms and (iv) unless the Exchange Offer would not be permitted by a
policy of the SEC, commence the Exchange Offer and use their best efforts to
issue on or prior to 30 Business Days after the date on which the Exchange
Registration Statement is declared effective, Exchange Notes in exchange for all
Notes tendered prior thereto in the Exchange Offer. The Exchange Offer shall not
be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the staff of the SEC.
(b) The Exchange Notes shall be issued under, and entitled to
the benefits of, (i) the Indenture or a trust indenture that is identical to the
Indenture (other than such changes as are necessary to comply with any
requirements of the SEC to effect or maintain the qualifications thereof under
the TIA), (ii) the Security Agreement or a security agreement that is identical
to the Security Agreement and (iii) the Escrow Agreement or an agreement that is
identical to the Escrow Agreement.
(c) Interest on each Exchange Note and Private Exchange Note
will accrue from the last interest payment due date on which interest was paid
on the Notes surrendered in exchange therefor or, if no interest have been paid
on the Notes, from the date of original issue of the Notes. Each Exchange Note
and Private Exchange Note shall bear interest at the rate set forth thereon;
provided, that interest with respect to the period prior to the issuance thereof
shall accrue at the rate or rates borne by the Notes from time to time during
such period.
(d) The Issuer may require each Holder who participates in the
Exchange Offer to represent (i) that any Exchange Notes received by it will be
acquired in the ordinary course of its business, (ii) that at the time of the
commencement of the Exchange Offer such Holder has not entered into any
arrangement or understanding with any Person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Notes in violation of
the provisions of the Securities Act, (iii) that if such Holder is an affiliate
of the Issuer within the meaning of the Securities Act, that it will comply with
the registration and prospectus delivery requirements of the Securities Act to
the extent applicable to it, (iv) if such Holder is not a broker-dealer, that it
is not engaged in, and does not intend to engage in, the distribution of the
Notes and (v) if such Holder is a Participating Broker-Dealer, that it will
deliver a Prospectus in connection with any resale of the Exchange Notes.
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(e) The Issuer shall include within the Notes Prospectus
contained in the Exchange Registration Statement a Section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchaser, which shall
contain a summary statement of the positions taken or policies made by the staff
of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange
Offer for its own account in exchange for Notes that were acquired by it as a
result of market-making or other trading activity (a "Participating Broker-
Dealer"), whether such positions or policies have been publicly disseminated by
the staff of the SEC or such positions or policies, in the judgment of the
Initial Purchaser, represent the prevailing views of the staff of the SEC. Such
"Plan of Distribution" Section shall also allow, to the extent permitted by
applicable policies and regulations of the SEC, the use of the Notes Prospectus
by all Persons subject to the prospectus delivery requirements of the Securities
Act, including, to the extent so permitted, all Participating Broker Dealers,
and include a statement describing the manner in which Participating
Broker-Dealers may resell the Exchange Notes. The Issuer shall use its best
efforts to keep the Exchange Registration Statement effective and to amend and
supplement the Notes Prospectus contained therein, in order to permit such Notes
Prospectus to be lawfully delivered by all Persons subject to the prospectus
delivery requirements of the Securities Act for such period of time as such
Persons must comply with such requirements in order to resell the Exchange Notes
(the "Applicable Period").
(f) If, upon consummation of the Exchange Offer, the Initial
Purchaser holds any Notes acquired by it and having the status of an unsold
allotment in the initial distribution, the Company (upon the written request
from such Initial Purchaser) shall, simultaneously with the delivery of the
Exchange Notes in the Exchange Offer, issue and deliver to the Initial
Purchaser, in exchange (the "Private Exchange") for the Notes held by the
Initial Purchaser, a like principal amount of debt securities of the Company,
guaranteed by any then existing Subsidiary Guarantors and secured by the same
collateral as the Exchange Notes, that are identical in all material respects to
the Exchange Notes except for the existence of restrictions on transfer thereof
under the Securities Act and securities laws of the several states of the U.S.
(the "Private Exchange Notes") (and which are issued pursuant to the same
indenture as the Exchange Notes).
(g) In connection with the Exchange Offer, the Issuer shall:
(1) mail to each Holder a copy of the Notes
Prospectus forming part of the Exchange Registration Statement,
together with an appropriate letter of transmittal (as an exhibit
thereto) and related documents;
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(2) utilize the services of a depository for the
Exchange Offer with an address in the Borough of Manhattan, the City of
New York, which may be the Trustee or an affiliate thereof;
(3) permit Holders to withdraw tendered Registrable
Notes at any time prior to the close of business, New York time, on the
last Business Day on which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with
all applicable laws.
(h) As soon as practicable after the close of the Exchange
Offer or the Private Exchange, as the case may be, the Issuer shall:
(1) accept for exchange all Notes validly tendered
pursuant to the Exchange Offer or the Private Exchange, as the case may
be, and not validly withdrawn;
(2) deliver to the Trustee for cancellation all
Registrable Notes so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver
promptly to each Holder tendering such Notes, Exchange Notes or Private
Exchange Notes, as the case may be, equal in principal amount to the
Notes, Exchange Notes or Private Exchange Notes, as the case may be, of
such Holder so accepted for exchange.
(i) The Exchange Notes and the Private Exchange Notes may be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture, which in either event will provide that the Exchange
Notes will not be subject to the transfer restrictions set forth in the
Indenture and that the Exchange Notes, the Private Exchange Notes and the Notes,
if any, will be deemed one class of security (subject to the provisions of the
Indenture) and entitled to participate in all the security granted by the
Company pursuant to the Collateral Agreements and in any Subsidiary Guarantee as
such terms are defined in the Indenture) on an equal and ratable basis.
(j) If, (i) prior to the consummation of the Exchange Offer,
either the Issuer or the Holders of a majority in aggregate principal amount of
the outstanding Registrable Notes determines in its or their reasonable judgment
that (A) the Exchange Notes would not, upon receipt, be tradable by the Holders
thereof without restriction under the Securities Act, the Exchange Act or
applicable Blue Sky or state securities laws or (B) the interests of the Holders
under this Agreement, taken as a whole, would be materially adversely affected
by the consummation of the Exchange Offer, (ii) applicable interpretations of
the
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staff of the SEC would not permit the consummation of the Exchange Offer prior
to the Effectiveness Date, (iii) the Exchange Offer is not consummated within
180 days of the Closing Date for any reason, (iv) any holder of Private Exchange
Notes so requests in writing to the Issuer within 120 days after the
consummation of the Exchange Offer or (v) in the case of any Holder not
permitted to participate in the Exchange Offer or any Holder that participates
in the Exchange Offer but does not receive Exchange Notes on the date of the
exchange that may be sold without restriction under state and federal securities
laws (other than due solely to the status of such Holder as an affiliate of the
Issuer within the meaning of the Securities Act) and so notifies the Company
within six months of consummation of the Exchange Offer, then the Issuer (and
any then existing Subsidiary Guarantor) shall promptly deliver to the Holders
and the Trustee written notice thereof (the "Shelf Notice") and shall file an
Initial Shelf Registration pursuant to Section 3.
(k) No registration effected under this Section 2, and no
failure to effect a registration under this Section 2, shall relieve the Company
of its obligations to effect a registration upon the request of Holders of
Registrable Warrant Shares pursuant to Section 11 hereof.
3. Shelf Registration
------------------
If a Shelf Notice is delivered pursuant to Section 2(j), then
this Section 3 shall apply to all Registrable Notes. Otherwise, upon
consummation of the Exchange Offer in accordance with Section 2, the provisions
of Section 3 shall apply solely with respect to (i) Notes held by any Holder
thereof not permitted to participate in the Exchange Offer and (ii) Exchange
Notes that are not freely tradeable as contemplated by Section 2(j)(v) hereof,
provided in each case that the relevant Holder has duly notified the Issuer
within six months of the Exchange Offer as required by Section 2(j)(v).
(a) Initial Shelf Registration. The Issuer shall as promptly
as practicable file (and shall cause any then existing Subsidiary Guarantor to
file) with the SEC a Notes Registration Statement for an offering to be made on
a continuous basis pursuant to Rule 415 covering all of the Registrable Notes
(the "Initial Shelf Registration"). If the Issuer (and any then existing
Subsidiary Guarantor) has not yet filed an Exchange Registration Statement, the
Issuer shall file (and shall cause any then existing Subsidiary Guarantor to
file) with the SEC the Initial Shelf Registration on or prior to the Filing Date
and shall use its best efforts to cause such Initial Shelf Registration to be
declared effective under the Securities Act on or prior to the Effectiveness
Date. Otherwise, the Issuer shall use its best efforts to file (and shall cause
any then existing Subsidiary Guarantor to file) with the SEC the Initial Shelf
Registration within 20 days of the delivery of the Shelf Notice and shall use
its best efforts to cause such Shelf Registration
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to be declared effective under the Securities Act as promptly as practicable
thereafter. The Initial Shelf Registration shall be on Form S-1 or another
appropriate form permitting registration of such Registrable Notes for resale by
Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Issuer and Subsidiary
Guarantors shall not permit any securities other than the Registrable Notes to
be included in any Shelf Registration. No Holder of Registerable Notes shall be
entitled to include any of its Registrable Notes in any Shelf Registration
pursuant to this Agreement unless such Holder furnishes to the Issuer and the
Trustee in writing, within 30 days after receipt of a request therefor, such
information as the Issuer and the Trustee after conferring with counsel with
regard to information relating to Holders that would be required by the SEC to
be included in such Shelf Registration or Prospectus included therein, may
reasonably request for inclusion in any Shelf Registration or Prospectus
included therein. The Issuer shall use its best efforts to keep the Initial
Shelf Registration continuously effective under the Securities Act until the
date which is 36 months from the Closing Date (the "Effectiveness Period"), or
such shorter period ending when (i) all Registrable Notes covered by the Initial
Shelf Registration have been sold in the manner set forth and as contemplated in
the Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering
all of the Registrable Notes has been declared effective under the Securities
Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period (other than because of the
sale of all of the securities registered thereunder), the Issuer shall use its
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 5 Business Days of such
cessation of effectiveness amend such Shelf Registration in a manner to obtain
the withdrawal of the order suspending the effectiveness thereof, or file (and
cause any then existing Subsidiary Guarantor to file) an additional "shelf"
Notes Registration Statement pursuant to Rule 415 covering all of the
Registrable Notes (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, the Issuer shall use its best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as practicable
after such filing and to keep such Subsequent Shelf Registration continuously
effective for a period equal to the number of days in the Effectiveness Period
less the aggregate number of days during which the Initial Shelf Registration or
any Subsequent Shelf Registrations was previously continuously effective. As
used herein the term "Shelf Registration" means the Initial Shelf Registration
and any Subsequent Shelf Registrations
(c) Supplements and Amendments. The Issuer shall promptly
supplement and amend any Shelf Registration if required by the rules,
regulations or instructions applicable to the
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registration form used for such Shelf Registration, if required by the
Securities Act, or if reasonably requested by the Holders of a majority in
aggregate principal amount of the Registrable Notes covered by such Shelf
Registration or by any underwriter of such Registrable Notes.
(d) No registration effected under this Section 3, and no
failure to effect a registration under this Section 3, shall relieve the Company
of its obligations to effect a registration upon the request of Holders of
Registrable Warrant Shares pursuant to Section 11 hereof.
4. Additional Interest
(a) The Issuer acknowledges and agrees that the Holders of
Registrable Notes will suffer damages if the Issuer fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuer agrees to pay, as liquidated damages, cash interest on the Notes
("Additional Interest") under the circumstances and to the extent set forth
below (each of which shall be given independent effect):
(i) if neither the Exchange Registration Statement nor the
Initial Shelf Registration has been filed on or prior to the Filing
Date, then commencing on the day after the Filing Date, Additional
Interest shall accrue on the Notes over and above any stated interest
at a rate of 0.25% per annum of the principal amount of such Notes for
the first 90 days commencing on the Filing Date, such Additional
Interest rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 90-day period;
(ii) if neither the Exchange Registration Statement nor the
Initial Shelf Registration is declared effective on or prior to the
Effectiveness Date, then commencing on the Effectiveness Date,
Additional Interest shall accrue on the Notes over and above any stated
interest at a rate of 0.25% per annum of the principal amount of such
Notes for the first 90 days immediately following the Filing Date, such
Additional Interest rate increasing by an additional 0.25% per annum at
the beginning of each subsequent 90-day period;
(iii) if (A) the Issuer (and any then existing Subsidiary
Guarantor) has not exchanged Exchange Notes for all Notes validly
tendered in accordance with the terms of the Exchange Offer on or prior
to the 210th day after the date hereof, (B) if applicable, a Shelf
Registration has been declared effective and such Shelf Registration
ceases to be effective at any time during the Effectiveness Period and
is not declared effective again within 5 Business Days, (C) pending the
announcement of a material corporate transaction, the Issuer issues a
written notice pursuant to
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Section 6(e)(v) or (vi) that a Shelf Registration Statement or Exchange
Registration Statement is unusable and the aggregate number of days in
any 365-day period for which all such notices issued or required to be
issued, have been, or were required to be, in effect exceeds 120 days
in the aggregate or 30 days consecutively, in the case of a Shelf
Registration Statement, or 15 days in the aggregate in the case of an
Exchange Registration Statement, then Additional Interest shall accrue
on the Notes over and above any stated interest at a rate of 0.25% per
annum of the principal amount of such Notes for the first 90 days
commencing on the (x) 210th day after the date hereof, in the case of
(A) above, (y) the day such Shelf Registration ceases to be effective
without being declared effective again within 5 Business Days in the
case of (B) above, or (z) the day the Exchange Registration Statement
or Shelf Registration ceased to be usable in case of clause (C) above,
such Additional Interest rate increasing by an additional 0.25% per
annum at the beginning of each such subsequent 90-day period;
provided, however, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate 1.00% per annum; and provided further, that (1)
upon the filing of the Exchange Registration Statement or Initial Shelf
Registration (in the case of (i) above), (2) upon the effectiveness of the
Exchange Registration Statement or Initial Shelf Registration (in the case of
(ii) above), or (3) upon the exchange of Exchange Notes for all Notes tendered
(in the case of (iii)(A) above), or upon the effectiveness of a Shelf
Registration which had ceased to remain effective (in the case of (iii)(B)
above), Additional Interest on the Notes as a result of such clause (or the
relevant subclause thereof), as the case may be, shall cease to accrue.
(b) The Issuer shall notify the Trustee within two Business
Days after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to clause (a)(i), (a)(ii) or (a)(iii) of this
Section 4 will be payable semi-annually, on the dates and in the manner provided
in the Indenture and whether or not any cash interest would then be payable on
such date, commencing with the first such semi-annual date occurring after any
such Additional Interest commences to accrue. The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by the
principal amount of the Notes, multiplied by a fraction, the numerator of which
is the number of days such Additional Interest rate was applicable during such
semi-annual period (determined on the basis of a 360-day year comprised of
twelve 30-day months and, in the case of a partial month, the actual number of
days elapsed), and the denominator of which is 360.
5. Hold-Back Agreements
--------------------
- 14 -
The Issuer agrees that it will not effect any public or
private sale or distribution (including a sale pursuant to Regulation D under
the Securities Act) of any securities the same as or similar to those covered by
a Registration Statement filed pursuant to Section 2 or 3 hereof, or any
securities convertible into or exchangeable or exercisable for such securities,
during the 10 days prior to, and during the 90-day period beginning on, (A) the
effective date of any Registration Statement filed pursuant to Sections 2 and 3
hereof unless the Holders of a majority in the aggregate principal amount of the
Registrable Notes to be included in such Registration Statement consent or (B)
the commencement of an underwritten public distribution of Registrable Warrant
Shares, if the managing underwriter thereof so requests.
6. Notes Registration Procedures
-----------------------------
In connection with the filing of any Notes Registration
Statement pursuant to Section 2 or 3 hereof, the Issuer shall effect such
registrations to permit the sale of such securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Notes Registration Statement filed
by the Issuer hereunder, the Issuer shall:
(a) Prepare and file with the SEC as soon as practicable after
the date hereof but in any event on or prior to the Filing Date, the Exchange
Registration Statement or if the Exchange Registration Statement is not filed
because of the circumstances contemplated by Section 2(j)(ii), a Shelf
Registration as prescribed by Section 3, and use its best efforts to cause each
such Notes Registration Statement to become effective and remain effective as
provided herein; provided that, if (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Notes Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, before filing any Notes Registration
Statement or Notes Prospectus or any amendments or supplements thereto the
Issuer shall, if requested, furnish to and afford the Holders of the Registrable
Notes to be registered pursuant to such Shelf Registration Statement, or each
Participating Broker-Dealer and to their counsel and the managing underwriters,
if any, a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference therein and
all exhibits thereto) proposed to be filed (in each case at least five business
days prior to such filing). The Issuer shall not file any such Notes
Registration Statement or Notes Prospectus or any amendments or supplements
thereto if the holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Notes Registration Statement, or any such
Participating Broker-Dealer, as the case may be,
- 15 -
their counsel, or the managing underwriters, if any, shall reasonably object.
(b) Provide an indenture trustee for the Registrable Notes,
the Exchange Notes or the Private Exchange Notes, as the case may be, and cause
the Indenture (or other indenture relating to the Registrable Notes) to be
qualified under the TIA not later than the effective date of the first
Registration Statement; and in connection therewith, to effect such changes to
such indenture as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use its best efforts to
cause such 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 such indenture to be so qualified in a timely manner.
(c) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange Registration
Statement, as the case may be, as may be necessary to keep such Notes
Registration Statement continuously effective for the Effectiveness Period or
the Applicable Period, as the case may be; cause the related Notes Prospectus to
be supplemented by any Prospectus supplement required by applicable law, and as
so supplemented to be filed pursuant to Rule 424 (or any similar provisions then
in force) promulgated under the Securities Act; and comply with the provisions
of the Securities Act and the Exchange Act applicable to it with respect to the
disposition of all securities covered by such Notes Registration Statement as so
amended or in such Notes Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-Dealer
covered by any such Prospectus. The Issuer shall not, during the Applicable
Period take any action that would result in selling Holders of the Registrable
Notes covered by a Notes Registration Statement or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable Notes or
such Exchange Notes during that period.
(d) Furnish to such selling Holders and Participating
Broker-Dealers who so request in writing (i) upon the Company's receipt, a copy
of the order of the SEC declaring such Registration Statement and any
post-effective amendment thereto effective and (ii) such reasonable number of
copies of such Registration Statement and of each amendment and supplement
thereto (in each case including any documents incorporated therein by reference
and all exhibits), (iii) such reasonable number of copies of the Prospectus
included in such Registration Statement (including each preliminary Prospectus),
and such reasonable number of copies of the final Prospectus as filed by the
Company pursuant to Rule 424(b) under the Securities Act, in conformity with the
requirements of the Securities Act, and (iv) such other documents, (including
any amendments required to be filed pursuant to clause (c) of this Section), as
any such Person may reasonably request. The Company hereby consents to the use
- 16 -
of the Prospectus by each of the selling Holders of Registrable Notes or each
such Participating Broker-Dealer, as the case may be, and the underwriters or
agents, if any, and dealers (if any), in connection with the offering and sale
of the Registrable Notes covered by, or the sale by Participating Broker-Dealers
of the Exchange Notes pursuant to, such Prospectus and any amendment thereto.
(e) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Notes Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, notify in writing the selling Holders of Registrable Notes,
or each such Participating Broker-Dealer, as the case may be, their counsel and
the managing underwriters, if any, promptly (but in any event within two
Business Days) (i) when a Notes Prospectus or any Notes Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Notes
Registration Statement or any post-effective amendment, when the same has become
effective (including in such notice a written statement that any Holder may,
upon request, obtain, without charge, one conformed copy of such Notes
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Notes Registration Statement or of any order
preventing or suspending the use of any Notes Prospectus or the initiation of
any proceedings for that purpose, (iii) if at any time when a Prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Notes the representations and warranties of the Issuer contained in
any agreement (including any underwriting agreement) contemplated by Section
6(n) hereof cease to be true and correct, (iv) of the receipt by the Issuer of
any notification with respect to the suspension of the qualification or
exemption from qualification of a Notes Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any Participating Broker-
Dealer for offer or sale in any jurisdiction, or the initiation or threatening
of any proceeding for such purpose, (v) of the happening of any event, the
existence of any condition of any information becoming known that makes any
statement made in such Notes Registration Statement or related Notes Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in, or
amendments or supplements to, such Notes Registration Statement, Notes
Prospectus or documents so that, in the case of the Notes Registration Statement
and the Notes Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (vi) of any reasonable determination
by the
- 17 -
Company that a post-effective amendment to a Notes Registration Statement would
be appropriate.
(f) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Notes Registration Statement or of any order
preventing or suspending the use of a Notes Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale in
any jurisdiction, and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible date.
(g) If (A) a Shelf Registration is filed pursuant to Section 3
or (B) a Notes Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period or (C) requested by the managing underwriters, if any, or the
Holders of a majority in aggregate principal amount of the Registrable Notes
being sold in connection with an underwritten offering, (i) promptly incorporate
in a prospectus supplement or post-effective amendment such information or
revisions to information therein relating to such underwriters or selling
Holders as the managing underwriters, if any, or such Holders or their counsel
reasonably request to be included or made therein and (ii) make all required
filings of such prospectus supplement or such post-effective amendment as soon
as practicable after the Issuer has received notification of the matters to be
incorporated in such prospectus supplements or post-effective amendment.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Notes Prospectus contained in the Exchange Registration Statement
by any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its best efforts to register or qualify, and to cooperate
with the selling Holders of Registrable Notes or each such Participating
Broker-Dealer, as the case may be, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable Notes or
Exchange Notes, as the case may be, for offer and sale under the securities or
Blue Sky laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer, or any managing underwriter or
underwriters, if any, reasonably request in writing; provided that where
Exchange Notes held by Participating Broker-Dealers or Registrable Notes are
offered other than through an underwritten offering, the Issuer agrees to cause
its counsel to perform Blue Sky investigations and file any registrations and
qualifications required to be filed pursuant to this Section 6(h); keep each
such registration or qualification (or exemption therefrom) effective during the
period such Notes Registration Statement is required to be kept effective and do
- 18 -
any and all other acts or things reasonable necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes held by Participating
Broker-Dealers or the Registrable Notes covered by the applicable Registration
Statement; provided that neither the Issuer nor any existing Subsidiary
Guarantor shall be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or (C) subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction where it is not then so subject.
(i) If (A) a Shelf Registration is filed pursuant to Section 3
or (B) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is requested to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, cooperate with the selling Holders of Registrable Notes and
the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes to be
sold, which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may reasonably
request.
(j) use its best efforts to cause the Registrable Notes
covered by any Notes Registration Statement to be registered with or approved by
such governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriter, if any, to consummate the
disposition of such Registrable Notes, except as may be required solely as a
consequence of the nature of such selling Holder's business, in which case the
Issuer will cooperate in all reasonable respects with the filing of such Notes
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Notes Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
6(e)(v) or 6(e)(vi) hereof, as promptly as practicable prepare and file with the
SEC, at the expense of the Issuer, a supplement or post-effective amendment to
the Notes Registration Statement or a supplement to the related Notes Prospectus
or any document incorporated or deemed to be incorporated therein by reference,
or file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Notes being sold thereunder or to the purchasers
of the Exchange Notes to whom such Notes Prospectus will be
- 19 -
delivered by a Participating Broker-Dealer, such Notes Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(l) Use its best efforts to cause the Registrable Notes
covered by a Notes Registration Statement to be rated with the appropriate
rating agencies, if so requested by the Holders of a majority in aggregate
principal amount of Registrable Notes covered by such Notes Registration
Statement or the managing underwriter or underwriters, if any.
(m) Prior to the initial issuance of the Exchange Notes, (i)
provide the Trustee with one or more certificates for the Registrable Notes in a
form eligible for deposit with The Depository Trust Company and (ii) provide a
CUSIP number for the Exchange Notes.
(n) If a Shelf Registration is filed pursuant to Section 3,
enter into such agreements (including an underwriting agreement in form, scope
and substance as is customary in underwritten offerings of debt securities
similar to the Notes, as may be appropriate in the circumstances) and take all
such other actions in connection therewith (including those reasonably requested
by the managing underwriters, if any, or the Holders of a majority in aggregate
principal amount of the Registrable Notes being sold) in order to expedite or
facilitate the registration or the disposition of such Registrable Notes, 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 and the underwriters, if any, with
respect to the business of the Company and its subsidiaries, and the
Registration Statement, Prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings of debt securities similar to the Notes, as may be appropriate in the
circumstances, and confirm the same if and when reasonably required; (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 aggregate
principal amount of the Registrable Notes being sold), addressed to each selling
Holder and each of the underwriters, if any, covering the matters customarily
covered in opinions of counsel to the Issuer requested in underwritten offerings
of debt securities similar to the Notes, as may be appropriate in the
circumstances; (iii) obtain "cold comfort" letters and updates thereof (which
letters and updates (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters) from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public
- 20 -
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to each of the
underwriters and each selling Holder, such letters to be in customary form and
covering ▇▇▇▇▇▇ of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings of debt securities similar to the Notes,
as may be appropriate in the circumstances, and such other matters as reasonably
requested by underwriters; and (iv) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority in principal amount of
the Registrable Notes being sold and the managing underwriters, if any, to
evidence the continued validity of the representations and warranties of the
Company and its subsidiaries made pursuant to clause (i) above and to evidence
compliance with any conditions contained in the underwriting agreement or other
similar agreement entered into by the Company.
(o) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Notes Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, make available for inspection by any selling Holder of such
Registrable Notes being sold, or each such Participating Broker-Dealer, as the
case may be, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent retained
by any such selling Holder or each such Participating Broker-Dealer, as the case
may be, or underwriter (collectively, the "Inspectors"), at the offices where
normally kept, during reasonable business hours, all financial and other records
and pertinent corporate documents of the Issuer and its subsidiaries
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise any applicable due diligence responsibilities, and cause the officers,
directors and employees of the Issuer and its subsidiaries to supply all
information reasonably requested by any such Inspector in connection with such
Notes Registration Statement. Such Records shall be kept confidential by each
Inspector and shall not be disclosed by the Inspector unless (i) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
such Notes Registration Statement, (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction,
(iii) the information in such Records is public or has been made generally
available to the public other than as a result of a disclosure or failure to
safeguard by such Inspector or (iv) disclosure of such information is, in the
opinion of counsel for any Inspector, necessary or advisable in connection with
any action, claim, suit or proceeding, directly or indirectly, involving or
potentially involving such Inspector and arising out of, based upon, related to,
or involving this agreement, or any transaction contemplated hereby or arising
hereunder. Each selling Holder of such Registrable Notes and each such
- 21 -
Participating Broker-Dealer will be required to agree that information obtained
by it as a result of such inspections shall be deemed confidential and shall not
be used by it as the basis for any market transactions in the securities of the
Issuer unless and until such is made generally available to the public. Each
selling Holder of such Registrable Notes and each such Participating
Broker-Dealer will be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Issuer and, to the extent practicable, use its best efforts to
allow the Issuer, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential at their expense.
(p) Comply with all applicable rules and regulations of the
SEC and make generally available to the security holders of the Company earnings
statements satisfying the provisions of section 11(a) of the Securities Act and
Rules 158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year) (i) commencing at
the end of any fiscal quarter in which Registrable Notes are sold to
underwriters in a firm commitment or best efforts underwritten offering and (ii)
if not sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of a Notes
Registration Statement, which statements shall cover said 12-month periods.
(q) Upon consummation of an Exchange Offer or Private
Exchange, obtain an opinion of counsel to the Company (in form, scope and
substance reasonably satisfactory to the Purchaser), addressed to the Trustee
for the benefit of all Holders participating in the Exchange Offer or Private
Exchange, as the case may be, to the effect that (i) the Company and the
existing Subsidiary Guarantors have duly authorized, executed and delivered the
Exchange Notes or the Private Exchange Notes, as the case may be, and the
Indenture, (ii) the Exchange Notes or the Private Exchange Notes, as the case
may be, and the Indenture constitute legal, valid and binding obligations of the
Company and the existing Subsidiary Guarantors, enforceable against the Company
and the existing Subsidiary Guarantors in accordance with their respective
terms, except as such enforcement may be subject to customary exceptions and
(iii) all obligations of the Company and the existing Subsidiary Guarantors
under the Exchange Notes or the Private Exchange Notes, as the case may be, and
the Indenture are secured by Liens on the assets securing the obligations of the
Company under the Notes, Indenture and Collateral Agreements.
(r) If the Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by the Holders to the
Issuers (or to such other Person as directed by the Issuer) in exchange for the
Exchange Notes of the Private
- 22 -
Exchange Notes, as the case may be, the Issuer shall mark, or caused to be
marked, on such Registrable Notes that such Registrable Notes are being
cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; provided that in no event shall such Registrable Notes be
marked as paid or otherwise satisfied.
(s) Cooperate with each seller of Registrable Notes covered by
any Notes Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Notes and their respective counsel in
connection with any filings required to be made with the NASD.
(t) Use its best efforts to take all other steps reasonably
necessary to effect the registration of the Registrable Notes covered by a Notes
Registration Statement
contemplated hereby.
The Issuer may require each seller of Registrable Notes or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuer such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Notes as the Issuer may,
from time to time, reasonably request. The Issuer may exclude from such
registration the Registrable Notes of any seller who fails to furnish such
information within a reasonable time (which time in no event shall exceed 60
days) after receiving such request.
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
receipt of any notice from the Issuer of the happening of any event of the kind
described in Section 6(e)(ii), 6(e)(iv), 6(e)(v), or 6(e)(vi), such Holder will
forthwith discontinue disposition of such Registrable Notes covered by a Notes
Registration Statement and such Participating Broker-Dealer will forthwith
discontinue disposition of such Exchange Notes pursuant to any Notes Prospectus
and, in each case, forthwith discontinue dissemination of such Prospectus until
such Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Notes Prospectus contemplated by Section 6(k), or until
it is advised in writing (the "Advice") by the Issuer that the use of the
applicable Prospectus may be resumed, and has received copies of any amendments
or supplements thereto and, if so directed by the Issuer, such Holder or
Participating Broker-Dealer, as the case may be, will deliver to the Issuer all
copies, other than permanent file copies, then in such Holder's or Participating
Broker-Dealer's possession, of the Notes Prospectus covering such Registrable
Notes current at the time of the receipt of such notice. In the event the Issuer
shall give any such notice, the Applicable Period shall be extended by the
number of days during such periods from and including the date of the giving of
such notice to and including the date when each Participating Broker-
- 23 -
Dealer shall have received (x) the copies of the supplemented or amended Notes
Prospectus contemplated by Section 6(k) or (y) the Advice.
7. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuer (other than Warrant Shares
Registration Expenses which are covered by Section 11) shall be borne by the
Issuer, whether or not the Exchange Offer or a Shelf Registration is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees, including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with any underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
as provided in Section 6(h) hereof, (ii) printing expenses, including, without
limitation, expenses of printing Prospectuses if the printing of Prospectuses is
requested by the managing underwriter or underwriters, if any, or by the Holders
of a majority in aggregate principal amount of the Registrable Notes included in
any Notes Registration Statement or by any Participating Broker-Dealer during
the Applicable Period, as the case may be, (iii) messenger, telephone and
delivery expenses incurred in connection with the performance of its obligations
hereunder, (iv) fees and disbursements of counsel for the Issuer, (v) fees and
disbursements of all independent certified public accountants referred to in
Section 6(n)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) rating agency fees, (vii) Securities Act liability insurance, if the Issuer
desires such insurance, (viii) fees and expenses of all other Persons retained
by the Issuers, (ix) internal expenses of the Issuer (including, without
limitation, all salaries and expenses of officers and employees of the Issuer
performing legal or accounting duties), (x) the expense of any annual audit,
(xi) the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange and (ii) the expenses
relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, securities sales agreements, indentures and
any other documents necessary in order to comply with this Agreement.
(b) The Company shall reimburse the Holders for the reasonable
fees and disbursements of not more than one counsel (in addition to appropriate
local counsel) chosen by the Holders of a majority in aggregate principal amount
of the Registrable Notes to be included in any Registration Statement. The
Company shall pay all documentary, stamp, transfers or other transactional taxes
attributable to the issuance or delivery of the Exchange Notes or Private
Exchange Notes in exchange for the Notes; provided that the Company shall not be
required to pay taxes payable in respect of any transfer involved in the
issuance or delivery of any Exchange Note or Private Exchange Note in a
- 24 -
name other than that of the Holder of the Note in respect of which such Exchange
Note or Private Exchange Note is being issued.
8. Indemnification
---------------
(a) Indemnification by the Company. The Company shall (and
shall cause each Subsidiary Guarantor, jointly and severally, to) without
limitation as to time, indemnify and hold harmless each Holder of Registrable
Notes, Exchange Notes, Private Exchange Notes or Registrable Warrant Shares and
each Participating Broker-Dealer selling Exchange Notes during the Applicable
Period, each Person, if any, who controls each such Holder (within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act) and
the officers, directors and partners of each such Holder, Participating
Broker-Dealer and controlling person, to the fullest extent lawful, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable costs of preparation and reasonable attorneys'
fees as provided in this Section 8) and expenses (including, without limitation,
reasonable costs and expenses incurred in connection with investigating,
preparing, pursuing or defending against any of the foregoing)(collectively,
"Losses"), as incurred, directly or indirectly caused by, related to, based
upon, arising out of or in connection with any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or form of prospectus, or in any amendment or supplement thereto, or in any
preliminary prospectus, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except insofar as such Losses are solely based upon information
relating to such Holder or Participating Broker-Dealer and furnished in writing
to the Company (or reviewed and approved in writing) by such Holder or
Participating Broker-Dealer or its counsel expressly for use therein; provided,
however, that the Company will not be liable to any Indemnified Party under this
Section 8 to the extent Losses were solely caused by an untrue statement or
omission or alleged untrue statement or omission that was contained or made in
any preliminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto if (i) the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material fact
that was the subject matter of the related proceeding, (ii) any such Losses
resulted from an action, claim or suit by any Person who purchased Registrable
Warrant Shares, Registrable Notes or Exchange Notes which are the subject
thereof from such Indemnified Party and (iii) it is established in the related
proceeding that such Indemnified Party failed to deliver or provide a copy of
the Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registrable Warrant Shares, Registrable Notes
or Exchange Notes sold to such Person if required by applicable law, unless such
- 25 -
failure to deliver or provide a copy of the Prospectus (as amended or
supplemented) was a result of noncompliance by the Issuer with Section 6 of this
Agreement. The Company shall also indemnify underwriters, selling brokers,
dealer managers and similar securities industry professionals participating in
the distribution, their officers, directors, agents and employees and each
Person who controls such Persons (within the meaning of Section 5 of the
Securities Act or Section 20(a) of the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Holders or the
Participating Broker-Dealer.
(b) Indemnification by ▇▇▇▇▇▇. In connection with any
Registration Statement, Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus in which a Holder is
participating, such Holder shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with any
Registration Statement, Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus and shall, without limitation
as to time, indemnify and hold harmless the Company, its directors and each
Person, if any, who controls the Company (within the meaning of Section 15 of
the Securities Act and Section 20(a) of the Exchange Act), and the directors,
officers, and partners of such controlling persons, to the fullest extent
lawful, from and against all Losses arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading to the extent, but only to the extent, that such losses are
finally judicially determined by a court of competent jurisdiction in a final,
unappealable order to have resulted solely from an untrue statement or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact contained in or omitted from any information so furnished in
writing by such Holder to the Company expressly for use therein. Notwithstanding
the foregoing, in no event shall the liability of any selling Holder be greater
in amount than the dollar amount of the proceeds (net of payment of all
expenses) received by such Holder upon the sale of the Registrable Notes or
Registrable Warrant Shares giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party shall promptly notify the party
or parties from which such indemnity is sought (the "Indemnifying Parties") in
writing; provided, that the failure to so notify the Indemnifying Parties shall
not relieve the Indemnifying Parties from any obligation or liability except to
the extent (but only to the
- 26 -
extent) that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal) that the Indemnifying Parties
have been prejudiced materially by such failure.
The Indemnifying Party shall have the right, exercisable by
giving written notice to an Indemnified Party, within 20 business days after
receipt of written notice from such Indemnified Party of such Proceeding, to
assume, at its expense, the defense of any such Proceeding, provided, that an
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or parties
unless: (1) the Indemnifying Party has agreed to pay such fees and expenses; or
(2) the Indemnifying Party shall have failed promptly to assume the defense of
such Proceeding or shall have failed to employ counsel reasonably satisfactory
to such Indemnified Party; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party or any of its affiliates or controlling persons, and such
Indemnified Party shall have been advised by counsel that there may be one or
more defenses available to such Indemnified Party that are in addition to, or in
conflict with, those defenses available to the Indemnifying Party or such
affiliate or controlling person (in which case, if such Indemnified Party
notifies the Indemnifying Parties in writing that it elects to employ separate
counsel at the expense of the Indemnifying Parties, the Indemnifying Parties
shall not have the right to assume the defense and the reasonable fees and
expenses of such counsel shall be at the expense of the Indemnifying Party; it
being understood, however, that, the Indemnifying Party shall not, in connection
with any one such Proceeding or separate but substantially similar or related
Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses or more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such Indemnified Party).
No Indemnifying Party shall be liable for any settlement of
any such Proceeding effected without its written consent, which shall not be
unreasonably withheld, but if settled with its written consent, or if there be a
final judgment for the plaintiff in any such Proceeding, each Indemnifying Party
jointly and severally agrees, subject to the exceptions and limitations set
forth above, to indemnify and hold harmless each Indemnified Party from and
against any and all Losses by reason of such settlement or judgment. The
Indemnifying Party shall not consent to the entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to each Indemnified Party of a release, in form and
substance reasonably satisfactory to the Indemnified Party, from all liability
in respect of such Proceeding for which such Indemnified Party would be entitled
to indemnification
- 27 -
hereunder (whether or not any Indemnified Party is a party thereto).
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an Indemnified Party or is insufficient to hold such
Indemnified Party harmless for any Losses in respect of which this Section 8
would otherwise apply by its terms (other than by reason of exceptions provided
in this Section 8), then each applicable Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall have a joint and several obligation
to contribute to the amount paid or payable by such Indemnified Party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party, on the one hand,
and Indemnified Party, on the other hand, shall be determined by reference to,
among other things, whether any 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 Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent any such statement or omission. The amount paid or payable by
an Indemnified Party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
Proceeding, to the extent such party would have been indemnified for such fees
or expenses if the indemnification provided for in Section 8(a) or 8(b) was
available to such party.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8(d), a selling Holder shall not
be required to contribute, in the aggregate, any amount in excess of such
Holder's Maximum Contribution Amount. A selling Holder's "Maximum Contribution
Amount" shall equal the excess of (i) the aggregate proceeds received by such
Holder pursuant to the sale of such Registrable Notes, Exchange Notes or
Registrable Warrant Shares over (ii) the aggregate amount of damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section 8 are in addition to any liability that the Indemnifying Parties may
have to the Indemnified Parties.
- 28 -
9. Rules 144 and 144A
------------------
The Company covenants that it shall (a) file the reports
required to be filed by it (if so required) under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder of Registrable
Notes, make publicly available other information necessary to permit sales
pursuant to Rule 144 and 144A and (b) take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Notes without registration under the Securities Act
pursuant to the exemptions provided by Rule 144 and Rule 144A. Upon the request
of any Holder, the Company shall deliver to such ▇▇▇▇▇▇ a written statement as
to whether it has complied with such information and requirements.
10. Underwritten Registrations of Registrable Notes
-----------------------------------------------
If any of the Registrable Notes covered by any Shelf
Registration is 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 Holders of a majority in aggregate principal amount of such
Registrable Notes included in such offering; provided, however, that such
investment banker or investment bankers and manager or managers must be
reasonably acceptable to the Issuer.
No Holder of Registrable Notes may participate in any
underwritten registration hereunder unless such ▇▇▇▇▇▇ (a) agrees to sell such
▇▇▇▇▇▇'s Registrable Notes 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.
11. Registration of Registrable Warrant Shares
------------------------------------------
(a) Shelf Registration of Registrable Warrant Shares. The
Company shall, on or prior to the Warrant Shares Registration Filing Date, (i)
file a registration statement covering resales of the Warrant Shares (the
"Warrant Shares Registration Statement"), (ii) use its best efforts to cause the
Warrant Shares Registration Statement to be declared effective under the
Securities Act and (iii) use its best efforts to keep effective the Warrant
Shares Registration Statement until the earlier of the tenth anniversary of the
Closing Date or such time as all of the Warrants have been exercised. The
Company shall, in the event that a Warrant Shares Registration Statement is
filed, provide to each Holder copies of the Prospectus that is a part of the
Warrant Shares Registration Statement, notify each such Holder when the Warrant
Shares Registration Statement has become effective and take such other actions
as are required to permit
- 29 -
unrestricted resales of the Warrant Shares. The Company shall require a Holder
that sells Warrant Shares pursuant to the Warrant Shares Registration Statement
to be named as a selling securityholder in the related prospectus and to deliver
a prospectus to purchasers, and any such Holder shall be bound by the provisions
of this Agreement that are applicable to such Holder (including certain
indemnification rights and obligations). Each Holder of the Warrant Shares shall
deliver information to be used in connection with the Warrant Shares
Registration Statement and provide comments on the Warrant Shares Registration
Statement within the time periods set forth in this Agreement in order to have
its Warrant Shares included in the Warrant Shares Registration Statement.
(b) Piggy-Back Registration of Registrable Warrant Shares. If
at any time after the Closing Date the Company proposes to file a registration
statement under the Securities Act with respect to an offering by the Company
for its own account or for the account of any holders of its Common Stock (other
than (i) a registration statement on Form S-4 or S-8 (or any substitute form
that may be adopted by the SEC), (ii) a registration statement filed in
connection with an exchange offer or offering of securities solely to the
Company's existing security holders or (iii) any Notes Registration Statement),
then the Company shall give written notice of such proposed filing to the
Holders of Registrable Warrant Shares as soon as practicable (but in no event
fewer than 20 days before the anticipated filing date), and such notice shall
offer such Holders the opportunity to register such number of Registrable
Warrant Shares as each Holder may request in writing within 20 days after
receipt of such written notice from the Company (which request shall specify the
Registrable Warrant Shares intended to be disposed of by such Selling Holder and
the intended method of distribution thereof) (a "Piggy-Back Registration"). The
Company shall use its best efforts to keep such Piggy-Back Registration
continuously effective under the Securities Act until at least the earlier of a)
an aggregate of 180 days after the effective date thereof or b) the consummation
of the distribution by the Holders of all of the Registrable Warrant Shares
covered thereby. The Company shall use its best efforts to cause the managing
underwriter or underwriters, if any, of such proposed offering to permit the
Registrable Warrant Shares requested to be included in a PiggyBack Registration
to be included on the same terms and conditions as any similar securities of the
Company or any other security holder included therein and to permit the sale or
other disposition of such Registrable Warrant Shares in accordance with the
intended method of distribution thereof. Any Selling Holder shall have the right
to withdraw its request for inclusion of its Registrable Warrant Shares in any
Registration Statement pursuant to this Section 11 by giving written notice to
the Company of its request to withdraw at any time prior to the filing of such
Registration Statement with the SEC. The Company will pay all Warrant Shares
Registration Expenses in connection with each registration of Registrable
Warrant Shares requested pursuant to
- 30 -
this Section 11, and each Holder of Registrable Warrant Shares shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Warrant Shares pursuant to
a Piggy-Back Registration effected pursuant to this Section 11.
No registration effected under this Section 11, and no failure
to effect a registration under this Section 11, shall relieve the Company of its
obligations to effect a registration upon the request of Holders of Registrable
Notes pursuant to Sections 2 and 3 hereof, and no failure to effect a
registration under this Section 11 and to complete the sale of securities
registered thereunder in connection therewith shall relieve the Company of any
other obligation under this Agreement.
(c) Priority in Piggy-Back Registration. In a registration
pursuant to this Section 11 involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders requesting inclusion in such
offering that in such underwriter's or underwriter's opinion the total number of
securities which the Company, the Selling Holders and any other Persons desiring
to participate in such registration intend to include in such offering is such
as to adversely affect the success of such offering, including the price at
which such securities can be sold, then the Company will be required to include
in such registration only the amount of securities which it is so advised should
be included in such registration. In such event: (x) in cases initially
involving the registration for sale of securities for the Company's own account,
securities shall be registered in such offering in the following order of
priority: ((i) first, the securities which the Company proposes to register,
((ii) second, provided that no securities proposed to be registered by the
Company have been excluded from such registration, the securities that have been
requested to be included in such registration by the Selling Holders, and ((iii)
third, provided that no securities sought to be included by the Selling Holders
have been excluded from such registration, the securities of other Persons
entitled to exercise "piggy-back" registration rights pursuant to contractual
commitments of the Company (pro rata based on the amount of securities sought to
be registered by such Persons); and (y) in cases not initially involving the
registration for sale of securities for the Company's own account, securities
shall be registered in such offering in the following order of priority: (i)
first, the securities of any Person whose exercise of a "demand" registration
right pursuant to a contractual commitment of the Company is the basis for the
registration, (ii) second, provided that no securities of any Person whose
exercise of a "demand" registration right pursuant to a contractual commitment
of the Company is the basis for such registration have been excluded from such
registration, the securities requested to be included in such registration by
the Selling Holders pursuant to this Agreement, (iii) third, provided that no
securities sought
- 31 -
to be included by the Selling Holders or such Persons have been excluded from
such registration, securities of other Persons entitled to exercise "piggy-back"
registration rights pursuant to contractual commitments of the Company (pro rata
based on the amount of securities sought be registered by such Persons) and (iv)
fourth, provided that no securities sought to be included by other Persons
entitled to exercise "piggy-back" registration rights pursuant to such
contractual commitments have been excluded from such registration, any
securities which the Company proposes to register.
(d) Suspension of Sales, etc. Subject to the next sentence of
this paragraph, the Company shall be entitled to postpone, for a reasonable
period of time, the effectiveness of, or suspend the rights of any Selling
Holders to make sales pursuant to any Warrant Shares Registration Statement
otherwise required to be prepared, filed and kept effective by it under this
Section 11; provided, however, that the duration of such postponement or
suspension may not exceed the earlier to occur of (A) 15 days after the
cessation of the circumstances described in the next sentence of this paragraph
on which such postponement or suspension is based or (B) 120 days after the date
of the determination of the Board of Directors referred to in the next sentence.
Such postponement or suspension may only be effected if the Board of Directors
of the Company determines in good faith that the effectiveness of, or sales
pursuant to, such Warrant Shares Registration Statement would materially impede,
delay or interfere with any significant financing, offer or sale of securities,
acquisition, corporate reorganization or other significant transaction involving
the Company or any of its affiliates or require disclosure of material
information which the Company has a bona fide business purpose for preserving as
confidential. If the Company shall so postpone the effectiveness of, or suspend
the rights of any Selling Holders to make sales pursuant to, a Warrant Shares
Registration Statement, it shall, as promptly as possible, notify any Selling
Holders of such determination, and the Selling Holders shall (y) have the right,
in the case of a postponement of the effectiveness of a Warrant Shares
Registration Statement, upon the affirmative vote of Selling Holders of not less
than a majority of the Registrable Warrant Shares to be included in such Warrant
Shares Registration Statement, to withdraw the request for registration by
giving written notice to the Company within 10 days after receipt of such notice
or (z) in the case of a suspension of the right to make sales, receive an
extension of the registration period referred to in Section 11(a) hereof equal
to the number of days of the suspension.
(e) Exclusion of Registrable Warrant Shares. The Company shall
not be required by this Section 11 to include Registrable Warrant Shares in a
Piggy-Back Registration if (i) in the written opinion of outside counsel to the
Company, addressed to the Holders of Registrable Warrant Shares and delivered to
them, the Holders of such Registrable Warrant Shares seeking
- 32 -
registration would be free to sell all such Registrable Warrant Shares within
the current calendar quarter without registration under Rule 144, which opinion
may be based in part upon the representation by the Holders of such Registrable
Warrant Shares seeking registration, which representation shall not be
unreasonably withheld, that each such Holder is not an affiliate of the Company
within the meaning of the Securities Act, and (ii) all requirements under the
Securities Act for effecting such sales are satisfied at such time.
(f) Obligations of Selling Holders. The Company's obligations
under this Section 11 shall be subject to the obligations of the Selling
Holders, which the Selling Holders acknowledge, to furnish all information and
materials and to take any and all actions as may be required under applicable
requirements of the SEC and to obtain any acceleration of the effective date of
a Warrant Shares Registration Statement.
(g) No Special Audit. The Company shall not be obligated to
cause any special audit to be undertaken in connection with any Piggy-Back
Registration unless such audit is requested by the underwriters with respect to
such Piggy-Back Registration.
12. Miscellaneous
-------------
(a) No Inconsistent Agreements. The Issuer has not entered, as
of the date hereof, and the Issuer shall not enter, after the date of this
Agreement, into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Securities in this
Agreement or otherwise conflicts with the provisions hereof. The Issuer has not
entered and will not enter into any agreement with respect to any of its
securities which will grant to any Person piggy-back rights with respect to a
Notes Registration Statement or a Warrant Shares Registration Statement.
(b) Adjustments Affecting Registrable Warrant Shares or
Registrable Notes. The Company shall not, directly or indirectly, take any
action with respect to the Registrable Warrant Shares or Registrable Notes as a
class that would adversely affect the ability of the Holders to include such
Registrable Warrant Shares or Registrable Notes in a registration undertaken
pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, otherwise than with the
prior written consent of (A) in circumstances that would adversely affect any
Holders of Registrable Warrant Shares or Registrable Notes, the Holders of a
majority of the Registrable Warrant Shares (treating as outstanding for this
purpose Warrant Shares issuable on exercise of unexercised Warrants) or the
Holders of not less than a
- 33 -
majority in aggregate principal amount of the then outstanding Registrable
Notes, as the case may be, and (B) in circumstances that would adversely affect
Participating Broker-Dealers, the Participating Broker-Dealers holding not less
than a majority in aggregate principal amount of the Exchange Notes held by all
Participating Broker-Dealers; provided, however, that Section 8 and this Section
12(c) may not be amended, modified or supplemented without the prior written
consent of each Holder and each Participating Broker-Dealer (including any
Person who was a Participating Broker-Dealer Holder of Registrable Warrant
Shares or Registrable Notes or Exchange Notes, as the case may be, disposed of
pursuant to any Registration Statement). Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders of Registrable Notes whose
securities are being tendered pursuant to the Exchange Offer or sold pursuant to
a Notes Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders of Registrable Notes may
be given by Holders of at least a majority in aggregate principal amount of the
Registrable Notes being tendered or being sold by such Holders pursuant to such
Notes Registration Statement.
(d) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(1) if to a Holder of Securities or to any
Participating Broker-Dealer, at the most current address of such Holder
or Participating Broker-Dealer, as the case may be, set forth on the
records of the registrar of the Warrants or the Notes, with a copy in
like manner to the Initial Purchaser as follows:
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(2) if to the Initial Purchaser, at the address
specified in Section 12(d)(1);
(3) if to the Issuer, as follows:
Discovery Zone, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
- 34 -
Attention: General Counsel
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the United States mail, postage prepaid, if
mailed, one business day after being deposited in the United States mail,
postage prepaid, if mailed, one business day after being timely delivered to a
next-day air courier guaranteeing overnight delivery, and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, including, without limitation and without the need for an express
assignment, subsequent Holders of Securities.
(f) 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.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAW. 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 CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
TO DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY
IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS SAID
- 35 -
ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Securities Held by the Issuer or Its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Securities is
required hereunder, Securities held by the Issuer or its affiliates (as such
term is defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such comment or approval was given by the Holders of such
required percentage.
(k) Third Party Beneficiaries. Holders and Participating
Broker-Dealers are intended third party beneficiaries of this Agreement and this
Agreement may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the
Purchase Agreement, the Indenture, the Notes, the Warrants, the Warrant
Agreement and the Collateral Agreements, is intended by the parties as a final
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein and any and all
prior oral or written agreements, representations, or warranties, contracts,
understanding, correspondence, conversations and memoranda between the Initial
Purchaser on the one hand and the Issuer on the other, or between or among any
agents, representatives, parents, subsidiaries, affiliates, predecessors in
interest or successors in interest with respect to the subject matter hereof and
thereof are merged herein and replaced hereby.
- 36 -
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
DISCOVERY ZONE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
and President
ACCEPTED AND AGREED TO:
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
