EXHIBIT 4.10
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REGISTRATION RIGHTS AGREEMENT
Dated as of December 16, 1998
among
Bally Total Fitness Holding Corporation
and
Xxxxxxx Xxxxx & Co.
and
Xxxxxxxxx & Company, Inc.
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") made and entered into
this 16th day of December, 1998 among Bally Total Fitness Holding Corporation, a
Delaware corporation (the "Company"), and Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated and Xxxxxxxxx & Company, Inc.
(together, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated Decem-
ber 9, 1998, (the "Purchase Agreement"), among the Company and the Initial
Purchasers which provides for, among other things, the sale by the Company to
the Initial Purchasers of an aggregate of $75,000,000 aggregate principal amount
of the Company's 9-7/8% Series C Senior Subordinated Notes due 2007 (the
"Securities"). In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide to the Initial Purchasers
and their direct and indirect transferees the registration rights set forth in
this Agreement. The execution of this Agreement is a closing condition under the
Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"DEPOSITARY" shall mean The Depository Trust Company, or any other
depositary appointed by the Company; provided, however, that such depositary
must have an address in the Borough of Manhattan in the City of New York.
" EXCHANGE ACT" shall mean the United States Securities Exchange Act of
1934, as amended from time to time.
"EXCHANGE OFFER" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities and Original Securities pursuant
to Section 2.1 hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under the
Securities Act effected pursuant to Section 2.1 hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto and
all documents incorporated by reference therein.
"EXCHANGE PERIOD" shall have the meaning set forth in Section 2.1
hereof.
"EXCHANGE SECURITIES" shall mean the 9-7/8% Series D Senior Subordinated
Notes due 2007 issued by the Company under the Indenture containing terms
identical to the Securities in all material respects (except for references to
certain interest rate provisions, restrictions on transfers and restrictive
legends).
"HOLDER" shall mean an Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities
under the Indenture.
"INDENTURE" shall mean the Indenture dated as of December 16, 1998,
between the Company and U.S. Bank Trust National Association, as trustee,
relating to the Securities and the Exchange Securities, as the same may be
amended, supplemented, waived or otherwise modified from time to time in
accordance with the terms thereof.
"ISSUE DATE" shall mean the date on which the Securities are originally
issued under the Indenture.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the aggregate
principal amount of Outstanding (as defined in the Indenture) Registrable
Securities; provided, that whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company and other obligors on the Securities
or any Affiliate (as defined in the Indenture) of the Company shall be
disregarded in determining whether such consent or approval was given by the
Holders of such required percentage amount.
"ORIGINAL INDENTURE" shall mean the Indenture, dated as of October 7,
1997, between the Company and First Trust National Association, as trustee,
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pursuant to which the Original Securities were issued, as amended or
supplemented from time to time, in accordance with the terms thereof.
"ORIGINAL SECURITIES" shall mean the 9-7/8% Senior Subordinated Notes
due 2007 of the Company outstanding under the Original Indenture.
"PARTICIPATING BROKER-DEALER" shall mean Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated, Xxxxxxxxx and Company, Inc. and any other broker-dealer
which both makes a market in the Securities and exchanges Registrable Securities
in the Exchange Offer for Exchange Securities.
"PERSON" shall mean an individual, partnership (general or limited),
corporation, limited liability company, trust or unincorporated organization, or
a government or agency or political subdivision thereof.
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Shelf Registration Statement, and by
all other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"REGISTRABLE SECURITIES" shall mean the Securities; provided, however,
that Securities shall cease to be Registrable Securities when (i) a Registra-
tion Statement with respect to such Securities shall have been declared
effective under the Securities Act and such Securities shall have been disposed
of pursuant to such Registration Statement, (ii) such Securities have been sold
to the public pursuant to Rule 144 (or any similar provision then in force, but
not Rule 144A) under the Securities Act, (iii) such Securities shall have ceased
to be outstanding, (iv) such Securities have been exchanged for Exchange
Securities upon consummation of the Exchange Offer and are thereafter freely
tradeable by the holder thereof or (v) such Securities can be sold by the
holders thereof without limitation as to holding period or volume.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. (the "NASD") registration and filing fees, (ii) all
fees and expenses
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incurred in connection with compliance with state securities or blue sky laws
and compliance with the rules of the NASD (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection with blue
sky qualification of any of the Exchange Securities or Registrable Securities
and any filings with the NASD), (iii) all expenses of any Persons in preparing
or assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus, any amendments or supplements thereto,
any underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv) all fees
and expenses incurred in connection with the listing, if any, of any of the
Registrable Securities on any securities exchange or exchanges, (v) all rating
agency fees, (vi) the fees and disbursements of counsel for the Company and of
the independent public accountants of the Company, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, (vii) the fees and expenses of the Trustee, and any
escrow agent or custodian, (viii) the reasonable fees and disbursements of
special counsel representing the Holders of Registrable Securities, except as
otherwise provided in Section 2.3 hereof, and (ix) any fees and disbursements of
the underwriters customarily required to be paid by issuers or sellers of
securities and the reasonable fees and expenses of any special experts retained
by the Company in connection with any Registration Statement, but excluding
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of Registrable Securities by a Holder.
"REGISTRATION STATEMENT" shall mean any registration statement of the
Company which covers any of the Exchange Securities or Registrable Securities
pursuant to the provisions of this Agreement, and all amendments and supplements
to any such Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"SEC" shall mean the United States Securities and Exchange Commission or
any successor agency or government body performing the functions currently
performed by the United States Securities and Exchange Commission.
"SECURITIES ACT" shall mean the United States Securities Act of 1933, as
amended from time to time.
"SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 2.2 hereof.
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"SHELF REGISTRATION STATEMENT" shall mean a shelf registration statement
of the Company pursuant to the provisions of Section 2.2 of this Agreement
which covers all of the Registrable Securities on an appropriate form under Rule
415 under the Securities Act, or any similar rule that may be adopted by the
SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"TRUSTEE" shall mean the trustee with respect to the Securities under
the Indenture.
2. REGISTRATION UNDER THE SECURITIES ACT.
2.1 EXCHANGE OFFER. (a) The Company shall use its best efforts to
(i) prepare and, as soon as practicable but not later than
90 days following the Issue Date, file with the SEC an Exchange Offer
Registration Statement with respect to a proposed Exchange Offer and the
issuance and delivery, in exchange for the Registrable Securities and
the Original Securities, of a like principal amount of Exchange
Securities,
(ii) cause the Exchange Offer Registration Statement to be
declared effective under the Securities Act no later than 150 days
following the Issue Date,
(iii) keep the Exchange Offer Registration Statement
effective until the closing of the Exchange Offer, and
(iv) cause the Exchange Offer to be consummated not later
than 180 days following the Issue Date.
(b) The Exchange Securities will be issued under, and entitled to
the benefits of, the Indenture. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Exchange Offer,
it being the objective of such Exchange Offer, among other things, to enable
each Holder eligible and electing to exchange Registrable Securities for
Exchange Securities (assuming that such Holder (i) is not an affiliate of the
Company within the meaning of Rule 405 under the Securities Act, (ii) is not a
broker-dealer tendering Registrable
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Securities acquired directly from the Company for its own account, (iii)
acquired the Exchange Securities in the ordinary course of such Holder's
business and (iv) at the time of the commencement of the Exchange Offer has no
arrangements or understandings with any person to participate in the
"distribution" (within the meaning of the Securities Act) of the Exchange
Securities) to transfer such Exchange Securities from and after their receipt
without any volume or holding period limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of a
substantial proportion of the several states of the United States.
(c) In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder and each holder of Original
Securities a copy of the Prospectus forming part of the Exchange Offer
Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a
period of not less than 30 days after the date notice thereof is mailed
to the Holders and the holders of Original Securities (or longer if
required by applicable law) (such period referred to herein as the
"Exchange Period");
(iii) utilize the services of the Depositary for the
Exchange Offer;
(iv) permit Holders and holders of Original Securities to
withdraw tendered Registrable Securities or Original Securities at any
time prior to 5:00 p.m. (Eastern Standard Time), on the last business
day of the Exchange Period, by sending to the institution specified in
the notice, a telegram, telex, facsimile transmission or letter setting
forth the name of such holder, the principal amount of Registrable
Securities or Original Securities delivered for exchange, and a state
ment that such holder is withdrawing his election to have such securi-
ties exchanged;
(v) notify each Holder that any Registrable Security not
tendered will remain outstanding and continue to accrue interest, but
will not retain any rights under this Agreement (except in the case of
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the Initial Purchasers and Participating Broker-Dealers as provided
herein); and
(vi) otherwise comply in all respects with all applicable
laws relating to the Exchange Offer.
(d) As soon as practicable after the close of the Exchange
Offer, the Company shall:
(i) accept for exchange all Registrable Securities and
Original Securities duly tendered and not validly withdrawn pursuant to
the Exchange Offer in accordance with the terms of the Exchange Offer
Registration Statement and the letter of transmittal which shall be an
exhibit thereto;
(ii) deliver, or cause to be delivered, to the applicable
trustee for cancellation all Registrable Securities and Original Securi-
ties so accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver
Exchange Securities to each Holder of Registrable Securities and each
holder of Original Securities so accepted for exchange in a principal
amount equal to the principal amount of the securities of such holder so
accepted for exchange.
(e) Interest on each Exchange Security will accrue from the last
date on which interest was paid on the Registrable Securities or the Original
Securities surrendered in exchange therefor or, if no interest has been paid on
the Registrable Securities or the Original Securities, from October 15, 1998.
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. In addition, the acceptance of tendered securities may
be conditioned on (i) the due tendering of such securities in accordance with
the Exchange Offer, and (ii) in the case of Registrable Securities, the Holder
thereof making certain customary representations, including representations that
such Holder is not an affiliate of the Company within the meaning of Rule 405
under the Securities Act, that all Exchange Securities to be received by it
shall be acquired in the ordinary course of its business and that at the time of
the consummation of the Exchange Offer it shall have no arrangement or
understanding with any person to participate in the distribution
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(within the meaning of the Securities Act) of the Exchange Securities, and any
such other representations as may be reasonably necessary under applicable SEC
rules, regulations or interpretations to render the use of Form S-4 or other
appropriate form under the Securities Act available. To the extent permitted by
law, the Company shall inform the Initial Purchasers of the names and addresses
of the Holders and holders of Original Securities to whom the Exchange Offer is
made, and the Initial Purchasers shall have the right to contact such holders
and otherwise facilitate the tender of Registrable Securities and Original
Securities in the Exchange Offer.
2.2 SHELF REGISTRATION. In the event that
(i) any changes in law, SEC rules or regulations or
applicable interpretations thereof by the staff of the SEC do not permit
the Company to effect the Exchange Offer as contemplated by Section 2.1
hereof,
(ii) if for any other reason the Exchange Offer Registra-
tion Statement is not declared effective within 150 days following the
Issue Date or the Exchange Offer is not consummated within 180 days
after the Issue Date,
(iii) upon the request of the Initial Purchasers acquiring a
majority of the initial aggregate principal amount of the Securities
with respect to any Registrable Securities which it acquired directly
from the Company and, with respect to other Registrable Securities held
by it, if such Initial Purchasers are not permitted, in the reasonable
opinion of counsel to such Initial Purchasers, pursuant to applicable
law or applicable interpretations of the staff of the SEC, to partici-
xxxx in the Exchange Offer or otherwise receive securities that are
freely tradeable without restriction or limitation as to holding period
or volume under the Securities Act and applicable blue sky or state
securities laws or
(iv) a Holder is not permitted by applicable law to
participate in the Exchange Offer based upon advice of counsel to the
effect that such Holder may not be legally able to participate in the
Exchange Offer or does not receive Exchange Securities pursuant to the
Exchange Offer which are fully tradeable by the Holder without
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restriction or limitation as to holding period or volume under the
Securities Act and under applicable blue sky or state securities laws,
then in case of each of clauses (i) through (iv) the Company shall, at its
cost:
(a) As promptly as practicable, file with the SEC, and thereafter
shall use its best efforts to cause to be declared effective as promptly as
practicable but no later than 150 days after the Issue Date (or, in the case of
a request by the Initial Purchasers acquiring a majority of the initial
aggregate principal amount of the Securities, within 60 days of such request), a
Shelf Registration Statement relating to the offer and sale of the Registrable
Securities by the Holders from time to time in accordance with the methods of
distribution elected by the Majority Holders participating in the Shelf
Registration and set forth in such Shelf Registration Statement.
(b) Subject to Section 2.4(b), use its best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period of two
years after its effective date (or one year after its effective date in the case
of a request solely by Initial Purchasers) from the date the Shelf Registration
Statement is declared effective by the SEC, or for such shorter period that will
terminate when all Registrable Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement or cease
to be outstanding or otherwise to be Registrable Securities.
(c) Notwithstanding any other provisions hereof, use its best
efforts to ensure that (i) any Shelf Registration Statement and any amendment
thereto and any Prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any Shelf Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any Prospectus
forming part of any Shelf Registration Statement, and any supplement to such
Prospectus (as amended or supplemented from time to time), does not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements, in light of the circumstances under which they
were made, not misleading.
(d) If necessary, supplement or amend the Shelf Registration
Statement, as required by Section 3(b) below, and furnish to the Holders copies
of
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any such supplement or amendment promptly after its being used or filed with the
SEC.
The Company shall not be required to include any Registrable Securities
of a Holder in any Shelf Registration Statement pursuant to this Agreement
unless such Holder furnishes to the Company, within 5 business days after
receipt by such Holder of a request therefor, such information as the Company
may reasonably request for use in connection with such Shelf Registration
Statement.
2.3 EXPENSES. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2.1 or 2.2 hereof. Except
as provided herein, each Holder shall pay all expenses of its counsel,
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to the
Shelf Registration Statement.
2.4 EFFECTIVENESS. (a) The Company will be deemed not to have used
its best efforts to cause the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, to become, or to remain, effective
during the requisite period if the Company voluntarily takes any affirmative
action that would, or omits to take any action which omission would, result in
any such Registration Statement not being declared effective or in the holders
of Registrable Securities covered thereby not being able to exchange or offer
and sell such Registrable Securities during that period as and to the extent
contemplated hereby, unless (i) such action is reasonably believed by the
Company to be required by applicable law or (ii) with respect to the
effectiveness of a Shelf Registration Statement, such action or omission is
taken or made by the Company in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, so long as the Company complies with the
requirements of Section 3(k) hereof, if applicable.
(b) The Company may suspend the availability of the Shelf Regis-
tration Statement and the use of any Prospectus which is a part thereof (i) for
one period not to exceed 60 days in any six month period or (ii) for up to four
periods not to exceed an aggregate of 90 days in any 12 month period, if such
suspension is effected in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, so long as the Company promptly complies
with the requirements of Section 3(k) hereof, if applicable.
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(c) An Exchange Offer Registration Statement pursuant to Section
2.1 hereof or a Shelf Registration Statement pursuant to Section 2.2 hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have become effective during the period of such
interference, until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume.
2.5 INTEREST. In the event that (a) the Exchange Offer Registration
Statement is not filed with the SEC on or prior to the 90th day following the
Issue Date, (b) the Exchange Offer Registration Statement has not been declared
effective on or prior to the 150th day following the Issue Date, or (c) the
Exchange Offer is not consummated on or prior to the 180th day following the
Issue Date or a Shelf Registration Statement is not declared effective on or
prior to the 150th day following the Issue Date (or, if a Shelf Registration
Statement is required to be filed because of the request of the Initial
Purchasers acquiring a majority of the initial aggregate principal amount of the
Securities, 60 days following such request by such Initial Purchasers that the
Company file the Shelf Registration Statement) (each such event referred to in
clauses (a) through (c) above, a "Registration Default"), the interest rate
borne by the Securities (except in the case of clause (c), in which case only
the Securities which have not been exchanged in the Exchange Offer) shall be
increased by an amount equal to one-quarter of one percent (0.25 %) per annum
upon the occurrence of any Registration Default, which rate (as increased as
aforesaid) will increase by an additional one quarter of one percent (0.25%)
each 90-day period that such additional interest continues to accrue under any
such circumstance, with an aggregate maximum increase in the interest rate equal
to one percent (1%) per annum. Following the cure of all Registration Defaults
the accrual of additional interest will cease and the interest rate will revert
to the original rate. Upon (w) the filing of the Exchange Offer Registration
Statement after the 90-day period described in clause (a) above, (x) the
effectiveness of the Exchange Offer Registration Statement after the 150-day
period described in clause (b) above, or (y) the consummation of the Exchange
Offer after the 180-day period or the effectiveness of a Shelf Registration
Statement after the 150-day period (or the 60-day period), as the case may be,
described in clause (c) above, and provided that none of the conditions set
forth in clauses (a), (b) and (c) above continues to exist, a Registration
Default will be deemed to be cured.
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2.6 SPECIFIC ENFORCEMENT. Without limiting the remedies available to
the Initial Purchasers and the Holders, the Company acknowledges that any
failure by the Company to comply with its obligations under Section 2.1 and
Section 2.2 hereof may result in material irreparable injury to the Initial
Purchasers or the Holders for which there is no adequate remedy at law, that it
would not be possible to measure damages for such injuries precisely and that,
in the event of any such failure, the Initial Purchasers or any Holder may
obtain such relief as may be required to specifically enforce the Company's
obligations under Section 2.1 and Section 2.2 hereof.
3. REGISTRATION PROCEDURES.
In connection with the obligations of the Company with respect to
Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Company
shall:
(a) prepare and file with the SEC a Registration Statement,
within the relevant time period specified in Section 2, on an appropriate form
under the Securities Act, which form (i) shall be selected by the Company, (ii)
shall, in the case of a Shelf Registration, be available for the sale of the
Registrable Securities by the selling Holders thereof, (iii) shall comply as to
form in all material respects with the requirements of the applicable form and
include or incorporate by reference all financial statements required by the SEC
to be filed therewith or incorporated by reference therein, and (iv) shall
comply in all respects with the applicable regulations under the Securities Act,
and use its best efforts to cause such Registration Statement to become
effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary
under applicable law to keep such Registration Statement effective for the
applicable period; and cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in effect) under the Securities Act and comply
with the provisions of the Securities Act applicable to it with respect to the
disposition of such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the selling
Holders thereof described in this Agreement (including sales by any
Participating Broker-Dealer);
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(c) in the case of a Shelf Registration, (i) notify each Holder
of Registrable Securities, at least five days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Securities is being filed
and advising such Holders that the distribution of Registrable Securities will
be made in accordance with the method selected by the Majority Holders
participating in the Shelf Registration, (ii) furnish to each Holder of
Registrable Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the
Holder so requests, all exhibits in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) subject to the last
paragraph of this Section 3, hereby consent to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders of Registrable
Securities in connection with the offering and sale of the Registrable
Securities covered by the Prospectus or any amendment or supplement thereto;
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Securities shall reasonably request by the time the applicable Registration
Statement is declared effective by the SEC, and do any and all other acts and
things which may be reasonably necessary or advisable to enable each such Holder
and underwriter to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the Company
shall not be required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), or (ii) take any action which would subject
it to general service of process or taxation in any such jurisdiction where it
is not then so subject;
(e) notify promptly each Holder of Registrable Securities under a
Shelf Registration or any Participating Broker-Dealer who has notified the
Company that it is utilizing the Exchange Offer Registration Statement as
provided in paragraph (f) below and, if requested by such Holder or
Participating Broker-Dealer, confirm such notice in writing promptly:
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(i) when a Registration Statement has become effective and
when any post-effective amendments and supplements thereto become
effective,
(ii) of any request by the SEC or any state securities
authority for post-effective amendments and supplements to a
Registration Statement and Prospectus or for additional information
after the Registration Statement has become effective,
(iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose,
(iv) in the case of a Shelf Registration, if, between the
effective date of a Registration Statement and the closing of any sale
of Registrable Securities covered thereby, the representations and
warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any, relating
to the offering cease to be true and correct in all material respects,
(v) of the happening of any event or the discovery of any
facts during the period a Shelf Registration Statement is effective
which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which requires the
making of any changes in such Registration Statement or Prospectus in
order to make the statements therein not misleading, and
(vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities or the Exchange Securities, as the case may be, for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose;
(f) in the case of the Exchange Offer Registration Statement,
(i) include in the Exchange Offer Registration Statement a
section entitled "Plan of Distribution," which section shall (A) be
reasonably acceptable to the Initial Purchasers acquiring a majority of
the initial aggregate principal amount of the Securities and (B)
contain a summary statement of the positions taken or policies made by
the staff of the SEC with respect to
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the potential "underwriter" status of any broker-dealer that holds
Registrable Securities acquired for its own account as a result of
market-making activities or other trading activities and that will be
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
of Exchange Securities to be received by such broker-dealer in the
Exchange Offer, whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in
the reasonable judgment of the Initial Purchasers and their counsel,
represent the prevailing views of the staff of the SEC, including a
statement that any such broker-dealer who receives Exchange Securities
for Registrable Securities pursuant to the Exchange Offer may be deemed
a statutory underwriter and must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Securities,
(ii) furnish to each Participating Broker-Dealer who has
delivered to the Company the notice referred to in Section 3(e),
without charge, as many copies of each Prospectus included in the
Exchange Offer Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such
Participating Broker-Dealer may reasonably request,
(iii) subject to the last paragraph of this Section 3,
hereby consent to the use of the Prospectus forming part of the Exchange
Offer Registration Statement or any amendment or supplement thereto, by
any person subject to the prospectus delivery requirements of the SEC,
including all Participating Broker-Dealers, in connection with the sale
or transfer of the Exchange Securities covered by the Prospectus or any
amendment or supplement thereto,
(iv) use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such 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 Securities,
(v) include in the transmittal letter or similar
documentation to be executed by an exchange offeree in order to
participate in the Exchange Offer the following provision:
15
"If the exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of
market-making activities or other trading activities, it will
deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of Exchange Securities received
in respect of such Registrable Securities pursuant to the
Exchange Offer; provided, that by delivering a Prospectus in
connection with the exchange of Registrable Securities, the
broker-dealer will not be deemed to admit that it is an
underwriter within the meaning of the Securities Act;"
(vi) to deliver to the Initial Purchasers on behalf of the
Participating Broker-Dealers upon the effectiveness of the Exchange
Offer Registration Statement (A) an opinion of Benesch, Friedlander,
Xxxxxx & Xxxxxxx LLP substantially in the form attached hereto as
Exhibit A, (B) an officers' certificate substantially in the form
customarily delivered in a public offering of debt securities and (C) a
comfort letter or comfort letters in customary form if permitted by
Statement on Auditing Standards No. 72 of the American Institute of
Certified Public Accountants (or if such a comfort letter is not
permitted, an agreed upon procedures letter in customary form) at least
as broad in scope and coverage as the comfort letter or comfort letters
delivered to the Initial Purchasers in connection with the initial sale
of the Securities to the Initial Purchasers;
(g) (i) in the case of an Exchange Offer, furnish counsel for the
Initial Purchasers and (ii) in the case of a Shelf Registration, furnish counsel
for the Holders of Registrable Securities copies of any comment letters received
from the SEC or any other request by the SEC or any state securities authority
for amendments or supplements to a Registration Statement and Prospectus or for
additional information;
(h) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(i) in the case of a Shelf Registration, furnish to each selling
Holder of Registrable Securities, and each underwriter, if any, without charge,
at least one conformed copy of each Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
(without documents incorporated therein by reference and all exhibits thereto,
unless requested);
16
(j) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends; and enable such Registrable Securities to
be in such denominations consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the underwriters, if any, may
reasonably request at least two business days prior to the closing of any sale
of Registrable Securities;
(k) in the case of a Shelf Registration, upon the occurrence of
any event or the discovery of any facts, each as contemplated by Sections
3(e)(ii), 3(e)(iii), 3(e)(v) and 3(e)(vi) hereof, use its best efforts to
prepare a supplement or post-effective amendment to the Registration Statement
or the related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities or Participating Broker-Dealers, such
Prospectus will not contain at the time of such delivery any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(l) obtain a CUSIP number for all Exchange Securities not later
than the effective date of a Registration Statement, and provide the Trustee
with printed certificates for the Exchange Securities in a form eligible for
deposit with the Depositary;
(m) (i) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Securities or Registrable Securities, as the case
may be, (ii) cooperate with the Trustee and the Holders to effect such changes
to the Indenture as may be required for the Indenture to be so qualified, as
necessary, in accordance with the terms of the TIA and (iii) execute, and use
its best efforts to cause the Trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable the Indenture to be so qualified, as necessary,
in a timely manner;
(n) in the case of a Shelf Registration, enter into agreements
(including customary underwriting agreements) and take all other customary and
appropriate actions in order to expedite or facilitate the disposition of such
Registrable Securities and in such connection whether or not an underwriting
17
agreement is entered into and whether or not the registration is an underwritten
registration:
(i) make such representations and warranties to the
Holders of such Registrable Securities and the underwriters, if any, in
form, substance and scope as are customarily made by issuers to
underwriters in similar underwritten offerings as may be reasonably
requested by them;
(ii) obtain opinions of counsel to the Company and updates
thereof (which opinions (in form, scope and substance) and counsel shall
be reasonably satisfactory to the managing underwriters, if any, and the
Holders of a majority in principal amount of the Registrable Securities
being sold) addressed to each selling Holder and the underwriters, if
any, covering the matters customarily covered in opinions requested in
sales of securities or underwritten offerings and such other matters as
may be reasonably requested by such Holders and underwriters;
(iii) obtain "cold comfort" letters and updates thereof from
the Company's independent certified public accountants addressed to the
underwriters, if any, and use reasonable efforts to have such letters
addressed to the selling Holders of Registrable Securities (to the
extent consistent with Statement on Auditing Standards No. 72 of the
American Institute of Certified Public Accounts), such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters to underwriters in connection with similar
underwritten offerings and such other matters as reasonably requested by
such selling Holders and any underwriters;
(iv) enter into a securities sales agreement with the
Holders and an agent of the Holders providing for, among other things,
the appointment of such agent for the selling Holders for the purpose of
soliciting purchases of Registrable Securities, which agreement shall be
in form, substance and scope customary for similar offerings;
(v) if an underwriting agreement is entered into, cause
the same to set forth indemnification provisions and procedures
18
substantially equivalent to the indemnification provisions and proce-
dures set forth in Section 4 hereof with respect to the underwriters and
all other parties to be indemnified pursuant to said Section or, at the
request of any underwriters, in the form customarily provided to such
underwriters in similar types of transactions; and
(vi) deliver such documents and certificates as may be
reasonably requested and as are customarily delivered in similar
offerings to the Holders of a majority in principal amount of the
Registrable Securities being sold and the managing underwriters, if any.
The above shall be done at (i) the effectiveness of such Registration Statement
(and each post- effective amendment thereto) and (ii) each closing under any
underwriting or similar agreement as and to the extent required thereunder;
(o) in the case of a (i) Shelf Registration, or (ii) Prospectus
contained in an Exchange Offer pursuant to Section 2.1 which is required to be
delivered under the Securities Act by a Participating Broker-Dealer who seeks to
sell Exchange Securities, make available for inspection by representatives of
the Holders of the Registrable Securities and any such Participating
Broker-Dealer, as the case may be, and any underwriters participating in any
disposition pursuant to a Shelf Registration Statement and any counsel or
accountant retained by such Holders, Participating Broker Dealers or
underwriters, all pertinent financial and other records, pertinent corporate
documents and properties of the Company reasonably requested by any such
persons, and cause the respective officers, directors, employees, and any other
agents of the Company to supply all information reasonably requested by any such
representative, underwriter, counsel or accountant in connection with a
Registration Statement or Prospectus, and make such representatives of the
Company available for discussion of such documents as shall be reasonably
requested by the Initial Purchasers; provided, that any such records, documents,
properties and such information that is designated in writing by the Company,
in good faith, as confidential at the time of delivery of such records,
documents, properties or information shall be kept confidential by any such
representative, underwriter, counsel or accountant and shall be used only in
connection with such Registration Statement or Prospectus, unless such
information has become available (not in violation of this Agreement) to the
public generally or through a third party without an accompanying obligation of
confidentiality, and except that such representative, underwriter, counsel or
accountant shall have no liability, and shall not be in breach of this
provision, if disclosure
19
of such confidential information is required by law or pursuant to a subpoena,
court order or regulatory or agency requirement, and the Company shall be
entitled to request that such representative, underwriter, counsel or accountant
sign a confidentiality agreement to the foregoing effect;
(p) (i) in the case of an Exchange Offer Registration Statement,
a reasonable time prior to the filing of any Exchange Offer Registration
Statement, any Prospectus forming a part thereof, any amendment to an Exchange
Offer Registration Statement or amendment or supplement to such Prospectus,
provide copies of such document to the Initial Purchasers and make such changes
in any such document prior to the filing thereof as the Initial Purchasers may
reasonably request within five business days after receipt of such document, and
make the representatives of the Company available for discussion of such
document as shall be reasonably requested by the Initial Purchasers; and
(ii) in the case of a Shelf Registration, a reasonable time
prior to filing any Shelf Registration Statement, any Prospectus forming
a part thereof, any amendment to such Shelf Registration Statement or
amendment or supplement to such Prospectus, provide copies of such
document to the Holders of Registrable Securities who are then to be a
seller of Registrable Securities thereunder, to the Initial Purchaser,
to counsel on behalf of the Holders and to the underwriter or
underwriters of an underwritten offering of Registrable Securities, if
any, make such changes in any such document prior to the filing thereof
as the Initial Purchasers, the counsel to the Holders or the underwriter
or underwriters reasonably request within 5 business days after receipt
of such document and make the representatives of the Company available
for discussion of such document as shall be reasonably requested by the
Holders of Registrable Securities, the Initial Purchasers on behalf of
such Holders, or any underwriter;
(q) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Securities to be listed on any securities exchange on
which similar debt securities issued by the Company are then listed if requested
by the Majority Holders; or if requested by the underwriter or underwriters of
an underwritten offering of Registrable Securities, if any;
20
(r) in the case of a Shelf Registration, use its best efforts to
cause the Registrable Securities to be rerated by the appropriate rating
agencies, if so requested by the Majority Holders, or if requested by the
underwriter or underwriters of an underwritten offering of Registrable
Securities, if any;
(s) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering at least 12
months which shall satisfy the provisions of Section 11 (a) of the Securities
Act and Rule 158 thereun der;
(t) cooperate and assist in any filings required to be made with
the NASD and, in the case of a Shelf Registration, in the performance of any due
diligence investigation by any underwriter and its counsel (including any
"qualified independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD); and
(u) upon consummation of an Exchange Offer, obtain a customary
opinion of counsel to the Company addressed to the Trustee for the benefit of
all Holders of Registrable Securities participating in the Exchange Offer, and
which includes an opinion that (i) the Company has duly authorized, executed and
delivered the Exchange Securities and the related indenture, and (ii) each of
the Exchange Securities and related indenture constitute a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its respective terms (with customary exceptions).
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Securities to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably request
in writing.
For so long as the Company fails to timely effect the Exchange Offer or
file any Shelf Registration Statement and maintain the effectiveness of any
Shelf Registration Statement as provided herein, the Company shall not file any
Registration Statement with respect to any securities (within the meaning of
Section 2(l) of the Securities Act) of the Company other than Registrable
Securities.
21
If any of the Registrable Securities covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the underwriter or
underwriters and manager or managers that will manage such offering will be
selected by the Majority Holders of such Registrable Securities included in such
offering and shall be acceptable to the Company. No Holder of Registrable
Securities may participate in any underwritten registration hereunder unless
such Holder (a) agrees to sell such Holder's Registrable Securities 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.
In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any notice from the Company of the happening of any event or the
discovery of any facts, each of the kind described in Sections 3(e)(ii),
3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(k) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at its expense) all copies in such Holder's
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. If the Company shall give any such notice to suspend the
disposition of Registrable Securities pursuant to a Shelf Registration Statement
as a result of the happening of any event or the discovery of any facts, each of
the kind described in Sections 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof,
the Company shall be deemed to have used its best efforts to keep the Shelf
Registration Statement effective during such period of suspension provided that
the Company shall use its best efforts to file and have declared effective (if
an amendment) as soon as practicable an amendment or supplement to the Shelf
Registration Statement and shall extend the period during which the Shelf
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions.
22
4. INDEMNIFICATION, CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the Initial
Purchasers, each Holder, each Participating Broker-Dealer, each Person who
participates as an underwriter (any such Person being an "Underwriter"), their
respective affiliates, and each Person, if any, who controls any of such parties
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act and each of their respective directors, officers, employees and
agents, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Regis-
tration Statement (or any amendment or supplement thereto) pursuant to
which Exchange Securities or Registrable Securities were registered
under the Securities Act, including all documents incorporated therein
by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or arising out of any untrue state-
ment or alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; provided that (subject
to Section 4(d) below) any such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by any
indemnified party, except to the extent otherwise expressly provided in
Section 4(c) hereof), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding
23
by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense whatsoever to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Initial Purchasers, such Holder, Participating Broker-Dealer or
Underwriter (or any person controlling such Initial Purchasers, Holder,
Participating Broker-Dealer or Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) expressly for use in a
Registration Statement (or any amendment or supplement thereto) or any
Prospectus (or any amendment or supplement thereto); provided, further, that
such indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Initial Purchasers, Holder, Participating Broker-Dealer or
Underwriter (or any persons controlling such Initial Purchasers, Participating
Broker-Dealer, Holder or Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) (i) from whom the person
asserting such loss, claim, damage or liability purchased the Securities which
are the subject thereof if such person did not receive a copy of the final
Prospectus (or the final Prospectus as amended or supplemented) at or prior to
the confirmation of the sale of such Securities to such person in any case where
the Company complied with its obligations under Sections 3(c) and 3(f)(A)(ii)
hereof and any such untrue statement or omission or alleged untrue statement or
omission of a material fact contained in such preliminary prospectus (or any
amendment or supplement thereto) was corrected in the final Prospectus (or the
final Prospectus as amended or supplemented) or (ii) if it resulted from the
use of the Prospectus during a period when the use of the Prospectus has been
suspended in accordance with Section 2.4(b) or Sections 3(e)(ii), 3(e)(iii),
3(e)(v) and 3(e)(vi) hereof; provided, in each case, that Holders received prior
notice of such suspension.
(b) Each Holder severally, but not jointly, agrees to indemnify
and hold harmless the Company, the Initial Purchasers, each Underwriter and the
other selling Holders, and each of their respective directors, officers,
employees and agents, and each Person, if any, who controls the Company, the
Initial Purchasers, any Underwriter or any other selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any and all loss, liability,
24
claim, damage and expense described in the indemnity contained in Section 4(a)
hereof, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Shelf Registration Statement
(or any amendment thereto) or any Prospectus included therein (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company expressly for use in the Shelf Registration
Statement (or any amendment thereto) or such Prospectus (or any amendment or
supplement thereto); provided, however, that no such Holder shall be liable for
any claims hereunder in excess of the amount of net proceeds received by such
Holder from the sale of Registrable Securities pursuant to such Shelf
Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder, but
failure so to notify an indemnifying party shall not relieve such indemnifying
party from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. Notwithstanding the foregoing, if it so elects within a
reasonable time after receipt of such notice, an indemnifying party, jointly
with any other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and approved by the indemnified
parties defendant in such action (which approval shall not be unreasonably
withheld), unless such indemnified parties reasonably object to such assumption
on the ground that there may be legal defenses available to them which are
different from or in addition to those available to such indemnifying party. If
an indemnifying party assumes the defense of such action, the indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action. In no event shall
the indemnifying party or parties be liable for the fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be
25
sought under this Section 4 (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 4(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 4 is for
any reason unavailable to, or insufficient to hold harmless, an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand, the Holders on another hand, and the Initial Purchasers on another hand,
from the offering of the Securities, the Exchange Securities and the Registrable
Securities (taken together) included in such offering or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand, the
Holders on another hand and the Initial Purchasers on another hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative benefits received by the Company from the offering of the
Securities, the Exchange Securities and the Registrable Securities (taken
together) included in such offering shall in each case be deemed to include the
proceeds received by the Company in connection with the offering of the
Securities pursuant to the Purchase Agreement. The parties hereto agree that any
underwriting discount or commission or reimbursement of fees paid to the Initial
Purchasers pursuant to the
26
Purchase Agreement shall not be deemed to be a benefit received by the Initial
Purchasers in connection with the offering of the Exchange Securities or
Registrable Securities included in such offering.
The relative fault of the Company on the one hand, the Holders on
another hand, and the Initial Purchasers on another hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, the Holders or the Initial
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Holders and the Initial Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section 4 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 4. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
4 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 4, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities sold by them were offered exceeds the amount
of any damages which such Initial Purchasers have 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 1 l(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4, each Person, if any, who controls an
Initial Purchaser or Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such Initial Purchaser or Holder, and each director of the Company, each
officer of the
27
Company who signed the Registration Statement and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Company. The Initial Purchasers' respective obligations to contribute pursuant
to this Section 4 are several in proportion to the principal amount of
Securities set forth opposite their respective names in Schedule A to the
Purchase Agreement and not joint.
5. MISCELLANEOUS.
5.1 Rule 144 and Rule 144A. For so long as the Company is subject to
the reporting requirements of Section 13 or 15 of the Exchange Act, the Company
covenants that it will file the reports required to be filed by it under the
Securities Act and Section 13(a) or 15(d) of the Exchange Act and the rules and
regulations adopted by the SEC thereunder. If the Company ceases to be so
required to file such reports, the Company covenants that it will upon the
request of any Holder of Registrable Securities (a) make publicly available such
information as is necessary to permit sales pursuant to Rule 144 under the
Securities Act, (b) deliver such information to a prospective purchaser as is
necessary to permit sales pursuant to Rule 144A under the Securities Act and it
will take such further action as any Holder of Registrable Securities may
reasonably request, and (c) take such further action that is reasonable in the
circumstances, in each case, to the extent required from time to time to enable
such Holder to sell its Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such rule may be amended from time to time, (ii)
Rule 144A under the Securities Act, as such rule may be amended from time to
time, or (iii) any similar rules or regulations hereafter adopted by the SEC.
Upon the request of any Holder of Registrable Securities, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
5.2 No Inconsistent Agreements. The Company has not entered into and
the Company will not after the date of this Agreement enter into any agreement
which is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holders hereunder do not in any way conflict with the
rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements.
28
5.3 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or departure.
5.4 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, facsimile, telecopier, or any courier guaranteeing
overnight delivery (a) if to a Holder, at the most current address given by such
Holder to the Company by means of a notice given in accordance with the
provisions of this Section 5.4, which address initially is the address set forth
in the Purchase Agreement with respect to the Initial Purchasers; and (b) if to
the Company, initially at the Company's address set forth in the Purchase
Agreement, and thereafter at such other address of which notice is given in
accordance with the provisions of this Section 5.4.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; two business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt is acknowledged, if telecopied or facsimiled; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustee under the
Indenture, at the address specified in such Indenture.
5.5 Successor and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Purchase Agreement. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities such person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement, including
the restrictions on resale set forth in this
29
Agreement and, if applicable, the Purchase Agreement, and such person shall be
entitled to receive the benefits hereof.
5.6 Third Party Beneficiaries. The Initial Purchasers (even if the
Initial Purchasers are not Holders of Registrable Securities) shall be
beneficiaries to the agreements made hereunder by the Company, and shall have
the right to enforce such agreements directly to the extent they deem such
enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder. Each Holder of Registrable Securities shall be a third party
beneficiary to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights hereunder. Other than the foregoing
sentences, nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any person, firm or corporation, other than the Initial
Purchasers, the Holders, including Participating Broker-Dealers, each under-
writer who participates in an offering of Registrable Securities, their
respective affiliates, and the Company and their respective successors and the
controlling persons, directors, officers, employees, and agents referred to in
Section 4 and their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole benefit of the Initial Purchasers, the Holders and
the Company and the other persons referenced by the preceding sentences and
their heirs and legal representatives, and for the benefit of no other person,
firm or corporation.
5.7 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.
5.8 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
5.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.
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5.10 Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
5.11 Entire Agreement. This Agreement constitutes the entire contract
between the parties hereto relative to the subject matter hereof. Any previous
agreement among the parties hereto relative to the subject matter hereof is
superseded by this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BALLY TOTAL FITNESS HOLDING
CORPORATION
By: /s/ Xxxx X. Xxxxx
-------------------------------
Name: Xxxx X. Xxxxx
Title: Executive Vice President
Confirmed and accepted as
of the date first above
written:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: /s/ Xxxxx Xxxxx
-------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
XXXXXXXXX & COMPANY, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Executive Vice President
Exhibit A to
Registration Rights Agreement
FORM OF OPINION OF COUNSEL
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxxxx & Company, Inc.
c/o Merrill Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
RE: Bally Total Fitness Holding Corporation 9-7/8% Series C Senior
Subordinated Notes due 2007
Ladies and Gentlemen:
We have acted as counsel for Bally Total Fitness Holding Corporation, a
Delaware corporation (the "Company"), in connection with the sale by the Company
to the Initial Purchasers (as defined below) of $75,000,000 aggregate principal
amount of 9-7/8% Series C Senior Subordinated Notes due 2007 (the "Notes") of
the Company pursuant to the Purchase Agreement dated December __, 1998 (the
"Purchase Agreement") among the Company and Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated and Xxxxxxxxx & Company, Inc. (together, the "Initial
Purchasers") and the filing by the Company of an Exchange Offer Registration
Statement (the "Registration Statement") in connection with an Exchange Offer to
be effected pursuant to the Registration Rights Agreement, dated December __,
1998 (the "Registration Rights Agreement") between the Company and the Initial
Purchasers. This opinion is furnished to you pursuant to Section 3(f)(vi)(A) of
the Registration Rights Agreement. Unless otherwise defined herein, capitalized
terms used in this opinion that are defined in the Registration Rights Agreement
are used herein as so defined.
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. In rendering this opinion, as to
all matters of fact relevant to this opinion, we have assumed the completeness
and accuracy of, and are relying solely upon, the representations, warranties
and agreements of the Company and the Initial Purchasers set forth in the
Purchase Agreement
and the statements set forth in certificates of public officials and officers of
the Company, without making any independent investigation or inquiry with
respect to the completeness or accuracy of such representations, warranties,
agreements or statements. This opinion is limited to the laws of the United
States of America and the laws of the State of Delaware.
Based on and subject to the foregoing, we are of the opinion that the
Exchange Offer Registration Statement and the Prospectus (other than the
financial statements, notes or schedules thereto and other financial data and
supplemental schedules included therein or omitted therefrom and the Form T-1,
as to which we need express no opinion), comply as to form in all material
respects with the requirements of the Securities Act and the applicable rules
and regulations promulgated under the Securities Act.
In addition, although we have not undertaken to determine independently,
and do not assume any responsibility for, the accuracy or completeness of the
statements in the Registration Statement and the Prospectus, we have
participated in conferences with officers and other representatives of the
Company and representatives of the independent public accountants of the
Company at which the contents of the Registration Statement and Prospectus were
discussed and we have reviewed certain other documents. We are not passing upon
and do not assume any responsibility for the accuracy, completeness or fairness
of such statements contained in the Registration Statement and the Prospectus,
and we make no representation that we have independently verified the accuracy,
completeness or fairness of such statements. Without limiting the foregoing, we
assume no responsibility for, and have not independently verified, the accuracy,
completeness or fairness of the financial and statistical data included in or
excluded from the Registration Statement and the Prospectus. Although certain
portions of the Registration Statement and the Prospectus (including financial
statements) have been included therein on the authority of "experts" within the
meaning of the Securities Act, we are not such experts with respect to any
portion of the Registration Statement and the Prospectus, including, without
limitation, such financial statements or schedules or the other financial or
statistical data included therein.
On the basis of the foregoing, we confirm to you that no information has
come to our attention that would cause us to believe that the Registration
Statement, at the time it became effective or as of the date hereof, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any
2
amendment or supplement thereto, at the time the Prospectus was issued, at the
time any such amended or supplemented Prospectus was issued or upon consummation
of the Exchange Offer, included or includes an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
3
This opinion is being furnished to you solely for your benefit in
connection with the transaction contemplated by the Registration Rights
Agreement, and may not be used for any other purpose or relied upon by any
person other than you. Except with our prior written consent, the opinions
herein expressed are not to be used, circulated, quoted or otherwise referred to
in connection with any transactions other than those contemplated by the
Registration Rights Agreement by or to any other person.
Very truly yours,
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