Exhibit 10.7
REGISTRATION AND ANTI-DILUTION AGREEMENT (this "Agreement") dated as
of July 10, 1997 (the "Issue Date") between WGL Holdings, Inc., a Delaware
corporation ("Holdings"), and the parties named herein (together with their
successors and assigns, the "Holders").
Terms defined in the Securities Purchase Agreement (the "Securities
Purchase Agreement") dated as of July 10, 1997 between WGL Acquisition Corp.
(the "Company"), Holdings and the purchasers named therein (the "Purchasers")
unless defined herein are used as therein defined.
WHEREAS, Holdings proposes to issue shares of Common Stock (the
"Common Stock"), as hereinafter described (the "Shares"), representing
approximately 7% of the total number of shares of Common Stock, in connection
with a private placement of an aggregate of $25,000,000 principal amount of the
Company's 13% Senior Subordinated Notes due 2007.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Shares. The Shares shall be subject to the terms set
forth in the Securities Purchase Agreement and in the Shareholders' Agreement
dated the date hereof among Holdings, the Holders and certain other shareholders
of Holdings.
Holdings or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of
Holdings' capital stock will be irrevocably authorized and directed at all times
to reserve such number of authorized shares as shall be required for purpose of
issuing shares of Common Stock upon adjustments pursuant to Section 4 hereof.
Holdings will keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of Holdings' capital stock.
Holdings will furnish such Transfer Agent a copy of all notices of adjustments
and certificates related thereto, transmitted to each holder pursuant to Section
6 hereof.
Holdings covenants that all Shares which may be issued and paid for
as provided in the Securities Purchase Agreement will, upon issue, be fully
paid, nonassessable, free of preemptive rights and free from all taxes, liens,
charges and security interests with respect to the issue thereof.
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SECTION 2. Payment of Taxes. Holdings will pay all documentary stamp
taxes attributable to the initial issuance of Shares hereunder, including Shares
issued pursuant to Section 4 hereof.
SECTION 3. obtaining Stock Exchange Listings. Holdings will from
time to time take all action which may be necessary so that the Shares will be
listed on the principal securities exchanges and markets within the United
States of America, if any, on which other shares of Common Stock are then
listed.
SECTION 4. Adjustment of Number of Shares. In the event an
adjustment is required under the terms of this Section 4, of each holder of
Shares shall have the right (the "Adjustment Right"), to purchase, at a price
equal to their par value, any or all that number of shares of Common Stock
determined pursuant to the formulas set out in this Section 4. For purposes of
this Section 4, "Common Stock" means shares now or hereafter authorized of any
class of common stock of Holdings and any other stock of Holdings, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of Holdings without limit as to per share amount. Any securities
acquired by a holder of Shares pursuant to the adjustment provisions set forth
below shall constitute Shares for purposes of this Agreement.
(a) Adjustment for Common Stock Issue.
If Holdings issues shares of Common Stock for a consideration per
share less than the current market price per share on the date Holdings fixes
the offering price of such additional shares, the number of Shares which would
be held by a holder of Shares upon exercise in full of such holder's Adjustment
Right shall be determined in accordance with the formula:
N' = N x A
-----
0 + P
-
M
where:
N' = the adjusted number of Shares which would be held by such holder
upon exercise in fully of such holder's Adjustment Right.
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N = the then current number of Shares held by such holder.
O = the number of shares outstanding immediately prior to the issuance
of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share on the date of sale of such
additional shares.
A = the number of shares outstanding immediately after the issuance of
such additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This subsection (a) does not apply to:
(1) the conversion or exchange of other securities convertible or
exchangeable for Common Stock,
(2) Common Stock issued to Holdings' employees under bona fide
employee benefit plans adopted by the Board of Directors and approved by
the holders of Common Stock when required by law, if such Common Stock
would otherwise be covered by this subsection (a) (but only to the extent
that the aggregate number of shares excluded hereby and issued on or after
the date of this Agreement shall not exceed 5% of the Common Stock
outstanding at the time of the adoption of each such plan, exclusive of
anti-dilution adjustments thereunder),
(3) Common Stock issued upon the exercise of rights or warrants
issued to the holders of Common Stock,
(4) Common Stock issued to shareholders of any person which merges
into Holdings in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger, or
(5) Common Stock issued in a bona fide public offering pursuant to a
firm commitment underwriting.
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(b) Adjustment for Convertible Securities Issue.
If Holdings issues any securities convertible into or exchangeable
for Common Stock for a consideration per share of Common Stock initially
deliverable upon conversion or exchange of such securities less than the current
market price per share on the date of issuance of such securities, the number of
Shares which would be held by a holder of Shares upon exercise in full of such
holder's Adjustment Right shall be determined in accordance with this formula:
N' = N x O + D
-----
0 + P
-
M
where:
N' = the adjusted number of Shares which would be held by such holder
upon exercise in full of such holder's Adjustment Right.
N = the then current number of Shares held by such holder.
O = the number of shares outstanding immediately prior to the issuance
of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share on the date of sale of such
securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or exchange
rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange
of such securities have not been issued when such securities are no longer
outstanding, then the number of Shares shall promptly be readjusted to the
number of Shares which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual
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number of shares of Common Stock issued upon conversion or exchange of such
securities.
This subsection (b) does not apply to:
(1) convertible securities issued to shareholders of any person
which merges into Holdings, or with a subsidiary of Holdings, in
proportion to their stock holdings of such person immediately prior to
such merger, upon such merger, or
(2) convertible securities issued in a bona fide public offering
pursuant to a firm commitment underwriting.
(c) Current Market Price.
In subsections (a) and (b) of this Section 10 the current market price per
share of Common Stock on any date is the average of the Quoted Prices of the
Common Stock for 30 consecutive trading days commencing 45 trading days before
the date in question. The "Quoted Price" of the Common Stock is the last
reported sales price of the Common Stock as reported by NASDAQ, National Market
System, or if the Common Stock is listed on a securities exchange, the last
reported sales price of the Common Stock on such exchange which shall be for
consolidated trading if applicable to such exchange, or if neither so reported
or listed, the last reported bid price of the Common Stock. In the absence of
one or more such quotations, the Board of Directors of Holdings shall determine
the current market price (i) based on the most recently completed arm's-length
transaction between Holdings and a person other than an Affiliate of Holdings
and the closing of which occurs on such date or shall have occurred within the
six months preceding such date, (ii) if no such transaction shall have occurred
on such date or within such six-month period, the value of the security most
recently determined as of a date within the six months preceding such date by a
nationally recognized investment banking firm or appraisal firm which is not an
Affiliate of Holdings (an "Independent Financial Advisor") or (iii) if neither
clause (i) nor (ii) is applicable, the value of the security determined as of
such date by an Independent Financial Advisor.
(d) Consideration Received.
For purposes of any computation respecting consideration received
pursuant to subsections (a) and (b) of this Section 4, the following shall
apply:
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(1) in the case of the issuance of shares of Common Stock for cash,
the consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any commissions, discounts or other
expenses incurred by Holdings for any underwriting of the issue or
otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors (irrespective of the
accounting treatment thereof), whose determination shall be conclusive,
and described in a Board resolution;
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by Holdings for the
issuance of such securities plus the additional minimum consideration, if
any, to be received by Holdings upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this subsection).
(e) When De Minimis Adjustment May Be Deferred.
No adjustment in the number of Shares need be made unless the
adjustment would require an increase or decrease of at least 1% in the number of
Shares held by each holder. Any adjustments that are not made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Section shall be made to the nearest
1/100th of a share.
(f) When No Adjustment Required.
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
(g) Notice of Adjustment.
Whenever the number of Shares may be adjusted, Holdings shall
provide the notices required by Section 6 hereof.
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(h) Notice of Certain Transactions.
If:
(1) Holdings takes any action that would require an adjustment in
the number of Shares pursuant to subsection (a) or (b) of this Section 4;
(2) Holdings takes any action that would require a supplemental
Registration and Anti-Dilution Agreement pursuant to subsection (i) of
this Section 4; or
(3) there is a liquidation or dissolution of Holdings,
Holdings shall mail to holders of Shares a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. Holdings shall mail the notice at least 15
days before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
(i) Reorganization of Company.
If Holdings consolidates or merges with or into, or transfers or
leases all or substantially all its assets to, any person, upon consummation of
such transaction the Adjustment Right shall automatically become exercisable for
the kind and amount of securities, cash or other assets which the holder of
Shares would have owned immediately after the consolidation, merger, transfer or
lease if the holder had exercised the Adjustment Right immediately before the
effective date of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation or
merger if other than Holdings, or the person to which such sale or conveyance
shall have been made, shall enter into a supplemental Registration and
Anti-Dilution Agreement so providing and further providing for registration
rights and adjustments which shall be as nearly equivalent as may be practical
to the registration rights adjustments provided for in this Agreement. The
successor company shall mail to holders of Shares a notice describing the
supplemental Registration and Anti-Dilution Agreement.
If the issuer of securities deliverable upon exercise of Adjustment
Rights under the supplemental Registration and Anti-Dilution Agreement is an
affiliate of the formed, surviv-
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ing, transferee or lessee corporation, that issuer shall join in the
supplemental Registration and Anti-Dilution Agreement.
If this subsection (i) applies, subsections (a) and (b) of this
Section 4 do not apply.
(j) Company Determination Final.
Any determination that Holdings or the Board of Directors must make
pursuant to subsection (a), (b), (c), (d) or (f) of this Section 4 is
conclusive.
(k) When Issuance or Payment May Be Deferred.
In any case in which this Section 4 shall require that an adjustment
in the number of Shares be made effective as of a record date for a specified
event, Holdings may elect to defer until the occurrence of such event (i)
issuing to the holder of Shares subject to any Adjustment Right exercised after
such record date the Shares issuable upon such exercise over and above the
Shares and other capital stock of Holdings, if any, issuable upon such exercise
on the basis of the current number of Shares issuable upon exercise of such
Adjustment Right and (ii) paying to such holder any amount in cash in lieu of a
fractional share pursuant to Section 5; provided, however, that Holdings shall
deliver to such holder a due xxxx or other appropriate instrument evidencing
such holder's right to receive such additional Shares and cash upon the
occurrence of the event requiring such adjustment.
(1) No Dilution or Impairment.
If any event shall occur as to which the provisions of this Section
4 are not strictly applicable but the failure to make any adjustment would
adversely affect the ownership interest in Holdings and rights represented by
the Shares in accordance with the essential intent and principles of this
Section, then, in each such case, Holdings shall appoint an investment banking
firm of recognized national standing, or any other financial expert that does
not (or whose directors, officers, employees, affiliates or stockholders do not)
have a direct or material indirect financial interest in Holdings or any of its
subsidiaries, who has not been, and, at the time it is called upon to give
independent financial advice to Holdings, is not (and none of its directors,
officers, employees, affiliates or stockholders are) a promoter, director or
officer of Holdings or any of its subsidiaries, which shall give their opinion
upon the adjustment, if any, on a basis consistent with
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the essential intent and principles established in this Section 4, necessary to
preserve, without dilution, the ownership interest in Holdings and other rights
represented by each Share. Upon receipt of such opinion, Holdings will promptly
mail a copy thereof to the holders of the Shares and shall make the adjustments
described therein.
Holdings will not, by amendment of its certificate of incorporation
or through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Agreement, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of each holder of the Shares against
dilution or other impairment. Without limiting the generality of the foregoing,
Holdings (1) will take all such action as may be necessary or appropriate in
order that Holdings may validly and legally issue fully paid and nonassessable
shares of Common Stock on the exercise of the Adjustment Rights from time to
time outstanding and (2) will not take any action which results in any
adjustment of the number of Shares issuable upon exercise of such Adjustment
Rights if the total number of Shares issuable after the action upon the exercise
of all of the Adjustment Rights would exceed the total number of shares of
Common Stock then authorized by Holdings' certificate of incorporation and
available for the purposes of issue upon such exercise. A consolidation, merger,
reorganization or transfer of assets involving the Company covered by Section
4(i) shall not be prohibited by or require any adjustment under this subsection
(1).
(m) Exercise of Adjustment Right.
In the event that a holder of Shares is granted an Adjustment Right
pursuant to this Section 4, such holder shall have 30 days from the later of the
date of any action requiring an adjustment and the date notice of such action is
provided pursuant to Section 6 hereof to exercise such Adjustment Right. Any
Adjustment Right may be exercised by delivery of a notice to Holdings in the
form of the Election to Purchase attached hereto (which form shall be included
in each notice of an adjustment sent to holders of Shares) along with, if
required by such form, a certified check payable to the order of Holdings in an
amount equal to the aggregate par value of the additional Shares to be issued to
such holder pursuant to its exercise of the Adjustment Right. Upon delivery of
such form and, if required, such payment, Holdings shall promptly cause the
addi-
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tional Shares to be issued and delivered to such holder or to another person or
address specified in writing by such holder.
SECTION 5. Fractional Interests. Any Adjustment Rights may be
exercised in full or in part; provided that Holdings shall not be required to
issue fractional Shares on the exercise of Adjustment Rights. If more than one
Adjustment Right shall be exercised at the same time by the same holder, the
number of full Shares which shall be issuable upon the exercise thereof shall be
computed on the basis of the aggregate number of Shares purchasable on exercise
of the Adjustment Rights so requested to be exercised. If any fraction of a
Share would, except for the provisions of this Section 5, be issuable on the
exercise of any Adjustment Rights (or specified portion thereof), Holdings shall
pay an amount in cash equal to the product of (i) such fraction of a Adjustment
Right Share and (ii) the difference between the current market price of a share
of Common Stock and its par value.
SECTION 6. Notices to Holders. Upon any event which may require
adjustment of the number of Shares pursuant to Section 4, Holdings shall
promptly thereafter (i) cause to be filed with Holdings a certificate which
includes the report of a firm of independent public accountants of recognized
standing selected by the Board of Directors of Holdings (who may be the regular
auditors of Holdings) setting forth the number of Shares issuable upon exercise
of the Adjustment Right in respect of each Share and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based, which certificate shall be conclusive evidence of the correctness of the
matters set forth therein, and (ii) cause to be given to each of the registered
holders of the Shares at his or her address appearing on the share register
written notice of such adjustments by first-class mail, postage prepaid. Where
appropriate, such notice may be given in advance and included as a part of the
notice required to be mailed under the other provisions of this Section 6.
SECTION 7. Registration Rights.
(a) Demand Registration.
(1) Request for Registration. At any time after the earlier of July
10, 2002 or the date of any initial public offering (the "IPO") of any capital
stock of Holdings or one of its subsidiaries, the Holder or Holders of in excess
of 25% of the outstanding Registrable Securities may make a written request for
registration under the Securities Act ("Demand Regis-
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tration") of all or part of its or their Registrable Securities; provided that
Holdings shall not be obligated to effect more than two Demand Registrations in
respect of the Registrable Securities. Such request will specify the number of
Registrable Securities proposed to be sold and will also specify the intended
method of disposition thereof. Within 10 days after receipt of such request,
Holdings will give written notice of such registration request to all other
Holders of Registrable Securities and include in such registration all
Registrable Securities with respect to which Holdings has received written
requests for inclusion therein from the Holders thereof within 15 Business Days
after receipt by the applicable Holder of Holdings' notice. Each such request
will also specify the aggregate number of Registrable Securities to be
registered and the intended method of disposition thereof.
(2) Effective Registration and Expenses. A registration will not
count as a Demand Registration until it has become effective (unless the Holders
demanding such registration withdraw the Registrable Securities, in which case
such demand will count as a Demand Registration unless the Holders of such
Registrable Securities agree to pay all Registration Expenses (as hereinafter
defined) relating to such registration). Except as provided above, Holdings will
pay all Registration Expenses in connection with any registration initiated as a
Demand Registration, whether or not it becomes effective.
(3) Priority on Demand Registrations. If the Holders of a majority
of the Registrable Securities to be registered in a Demand Registration so
elect, the offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of an underwritten offering. In such event, if
the managing Underwriter or Underwriters of such offering advise Holdings and
the Holders in writing that in their opinion the Registrable Securities
requested to be included in such offering is sufficiently large to materially
and adversely affect the success of such offering, Holdings will include in such
registration the number of Registrable Securities which in the opinion of such
managing Underwriter or Underwriters can be sold without any such material
adverse effect, and such amount shall be allocated pro rata among the Holders of
Registrable Securities on the basis of the amount of Registrable Securities
requested to be included in such registration by each such Holder. To the extent
Registrable Securities in a number equal to or exceeding one half of the
Registrable Securities so requested to be registered are excluded from the
offering, the Holders of Registrable Securities, as a group, shall have the
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right to one additional Demand Registration under this section with respect to
Registrable Securities.
(4) Selection of Underwriters. If any Demand Registration is in the
form of an underwritten offering, the Holders of a majority of the aggregate
number of the outstanding Registrable Securities shall designate the Underwriter
or a group of Underwriters to be utilized in connection with a public offering
of the applicable issue of Registrable Securities.
(5) Deferral. Notwithstanding anything to the contrary contained
herein, Holdings shall not be obligated to prepare and file, or cause to become
effective, any registration statement pursuant to this Section 7(a) hereof at
any time when, in the good faith judgment of its Board of Directors, the filing
thereof at the time requested or the effectiveness thereof after filing should
be delayed to permit Holdings to include in the registration statement Holdings'
financial statements (and any required audit opinion thereon) for the then
immediately preceding fiscal year or fiscal quarter, as the case may be. The
filing of a registration statement by Holdings cannot be deferred pursuant to
the provisions of the immediately preceding sentence beyond the time that such
financial statements (or any required audit opinion thereon) would be required
to be filed with the Commission as part of Holdings' Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, as the case may be, if Holdings were then
obligated to file such reports. Notwithstanding anything to the contrary
contained herein, Holdings shall not be obligated to cause a registration
statement previously filed pursuant to this Section 13 to become effective, and
may suspend sales by the Holders of Registrable Securities under any
registration that has previously become effective, at any time when, in the good
faith judgment of its Board of Directors, it reasonably believes that the
effectiveness of such registration statement or the offering of securities
pursuant thereto would materially adversely affect a pending or proposed
acquisition, merger, recapitalization, consolidation, reorganization or similar
transaction or negotiations, discussions or pending proposals with respect
thereto; provided that deferrals pursuant to this sentence shall not exceed, in
the aggregate, 120 days in any calendar year. The filing of a registration
statement, or any amendment or supplement thereto, by Holdings cannot be
deferred, and the rights of Holders of Registrable Securities to make sales
pursuant to an effective registration statement cannot be suspended, pursuant to
the provisions of the immediately preceding sentence for more than 15 days after
the abandonment or consummation of any of the foregoing proposals or transac-
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tions or, in any event, for more than 30 days after the date of the Board's
determination pursuant to the immediately preceding sentence of this Section 7
(a) (5).
(b) Piggy-Back Registration.
(1) If Holdings proposes to file a registration statement under the
Securities Act with respect to an offering (including an IPO) by Holdings for
its own account or for the account of any of its security holders of any class
of equity security (other than a registration statement on Form S-4 or S-8 (or
any substitute form that may be adopted by the Commission) or a registration
statement in connection with an exchange offer or offering to Holdings' existing
security holders), then Holdings shall give written notice of such proposed
filing to the Holders of Registrable Securities as soon as practicable (but in
no event less than ten Business Days before the anticipated filing date), and
such notice shall offer such Holders the opportunity to register such number of
Registrable Securities as each such Holder may request (a "Piggy-Back
Registration").
(2) Holdings shall use its best efforts to cause the managing
Underwriter or Underwriters of a proposed underwritten offering to permit the
Registrable Securities requested to be included in the registration statement
for such offering to be included on the same terms and conditions as any similar
securities of Holdings or of such other security holders included therein.
Notwithstanding the foregoing, if the managing Underwriter or Underwriters of
such offering deliver a written opinion to Holdings that either because of (i)
the kind or combination of securities which the Holders, Holdings and any other
persons or entities intend to include in such offering or (ii) the size of the
offering which the Holders, Holdings and such other persons intend to make, are
such that the success of the offering would be materially and adversely affected
by inclusion of the Registrable Securities requested to be included, then (a) in
the event that the size of the offering is the basis of such managing
Underwriter's opinion, the amount of securities to be offered for the accounts
of Holders shall be reduced pro rata (according to the Registrable Securities
and other securities proposed for registration by Persons ("Non-Priority
Persons") other than Holdings (if such registration was initially to be filed
for the account of Holdings) or the other Persons for whose account such
registration was initially to be filed) to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount
recommended by such managing Underwriter or Underwriters; pro-
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vided that if securities are being offered for the account of Non-Priority
Persons other than holders of Registrable Securities, then with respect to the
Registrable Securities intended to be offered by Holders, the proportion by
which the amount of such class of securities intended to be offered by Holders
is reduced shall not exceed the proportion by which the amount of such class of
securities intended to be offered by Non-Priority Persons other than holders of
Registrable Securities is reduced; and (b) in the event that the kind (or
combination) of securities to be offered is the basis of such managing
Underwriter's opinion, (x) the Registrable Securities to be included in such
offering shall be reduced as described in clause (a) above (subject to the
proviso in clause (a)) or (y) if the actions described in clause (x) would, in
the judgment of the managing Underwriter, be insufficient to substantially
eliminate the adverse effect that inclusion of the Registrable Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering.
Holdings will pay all Registration Expenses (as defined herein) in
connection with each registration of Registrable Securities.
(c) Registration Procedures.
If and whenever Holdings is required to use its best efforts to
effect the registration of any Registrable Securities under the Securities Act,
Holdings will promptly:
(1) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such securities, make all required
filings with the NASD and use best efforts to cause such registration
statement to become effective;
(2) prepare and file with the Securities and Exchange Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered
by such registration statement until such time as all of such securities
have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such
registration statement, but in no event for a period of more
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than one year after such registration statement becomes effective;
(3) furnish to counsel (if any) elected by holders of a majority (by
number of shares) of the Registrable Securities covered by such
registration statement copies of all documents proposed to be filed with
the Securities and Exchange Commission in connection with such
registration, which documents will be subject to the review of such
counsel;
(4) furnish to each seller of such securities such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits, except that
Holdings shall not be obligated to furnish any seller of securities with
more than two copies of such exhibits), such number of copies of the
prospectus included in such registration statement (including such
preliminary prospectus and any summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request in order to facilitate the disposition of
the securities owned by such seller;
(5) use its commercially reasonable efforts to register or qualify
such securities covered by such registration statement under such other
securities or Blue Sky Laws of such jurisdictions as each seller shall
request, and do any and all other acts and things which may be necessary
or advisable to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that Holdings
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified, or to consent to general service of process in any such
jurisdiction;
(6) furnish to each seller a signed counterpart, addressed to the
sellers, of
(i) an opinion of counsel for Holdings, dated the effective
date of the registration statement, and
(ii) subject to the accountants obtaining the necessary
representations as specified in Statement on Auditing Standards No.
72, a "comfort" letter signed by the independent public accountants
who have
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certified Holdings' financial statements included in the
registration statement,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to changes subsequent to the date of
such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letter delivered to the underwriters
in underwritten public offerings of securities;
(7) notify each seller of any securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and at the request of any such seller prepare
and furnish to such seller a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus
shall not include 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 in the light of the circumstances then
existing;
(8) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but not
more than eighteen months, beginning with the first month after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act;
(9) use its best efforts to list such securities on any securities
exchange on which the Common Stock is then listed, if such securities are
not already so listed and if such listing is then permitted under the
rules of such exchange, and to provide a transfer agent and registrar for
such Registrable Securities not later than the effective date of such
registration statement; and
- 17 -
(10) in any underwritten offering, use its best efforts to cause the
indemnity and contribution terms between the sellers and the underwriters
to be no more burdensome to the sellers than the indemnity and
contribution terms between the sellers and Holdings set forth in Section
7(d) hereof.
Holdings may require each seller of any securities as to which any
registration is being effected to furnish to Holdings such information regarding
such seller and the distribution of such securities as Holdings may from time to
time reasonably request in writing and as shall be required by law in connection
therewith. Each such holder agrees to furnish promptly to Holdings all
information required to be disclosed in order to make the information previously
furnished to Holdings by such holder not materially misleading.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from Holdings of the happening of any event of the kind described in
Section 7(c) (7) hereof, such holder will promptly discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 7(c) (7)
hereof. If so directed by Holdings, each holder of Registrable Securities will
deliver to Holdings (at Holdings' expense) all copies, 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. In the
event Holdings shall give any such notice, the period mentioned in Section 7(c)
(2) hereof shall be extended 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
each seller of any Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended prospectus
contemplated by Section 7(c) (7) hereof.
In connection with any underwritten offering, all Registrable
Securities to be included in such registration shall be subject to the related
underwriting agreement and no person may participate in such registration unless
such person agrees to sell such person's securities on the basis provided in the
underwriting arrangement approved by the persons for whose account such
underwritten registration is initially filed and completes and executes all
customary questionnaires, indemnities, underwriting agreements and other
reasonable documents
- 18 -
which must be executed under the terms of such underwriting arrangements.
(d) Indemnification.
(1) Indemnification by Holdings. Holdings agrees to indemnify and
hold harmless each Holder of Registrable Securities, its officers, directors,
partners, employees and agents and each Person who controls such Holder within
the meaning of either Section 15 of the Securities Act or Section 20(a) of the
Exchange Act (each such person being sometimes hereinafter referred to as an
"Indemnified Holder") from and against all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation and legal expenses)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any registration statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except insofar as (i) such losses, claims, damages, liabilities or expenses
arise out of or are based upon any such untrue statement or omission or
allegation thereof based upon information relating to such Indemnified Holder
and furnished in writing to Holdings by such Indemnified Holder expressly for
use therein, or (ii) such losses, claims, damages, liabilities (or proceedings
in respect thereof) or expenses result from such Indemnified Holder selling
Registrable Securities to a person asserting the existence of an untrue
statement or alleged untrue statement or omission or alleged omission in a
preliminary prospectus and to whom there was not given or sent, at or prior to
the written confirmation of the sale of such Registrable Securities, a copy of
the final prospectus or of the final prospectus as then amended or supplemented
in any case where such delivery is required by the Securities Act but only if
(x) such statement or omission was corrected in such final prospectus prior to
such written confirmation and such Indemnified Holder was furnished copies of
such final prospectus in sufficient quantity, prior to such written confirmation
and (y) the claims asserted by such person do not include allegations of other
untrue statements or omissions made in such preliminary prospectus or final
prospectus which was not corrected in the final prospectus or in the prospectus
as then amended or supplemented, respectively, which allegations are upheld by a
final judgment. This indemnity will be in addition to any liability which
Holdings may otherwise have.
- 19 -
If any action or proceeding (including any governmental
investigation or inquiry) shall be brought or asserted against an Indemnified
Holder in respect of which indemnity may be sought from Holdings, such
Indemnified Holder shall promptly notify Holdings in writing, and Holdings shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Holder and the payment of all expenses. Such
Indemnified Holder shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Holder except that
Holdings shall be responsible for the reasonable fees and expenses of such
counsel if (but only if) (a) Holdings has agreed to pay such fees and expenses
or (b) Holdings shall have failed to assume the defense of such action or
proceeding and has failed to employ counsel reasonably satisfactory to such
Indemnified Holder in any such action or proceeding or (c) the named parties to
any such action or proceeding (including any inpleaded parties) include both
such Indemnified Holder and Holdings, and there are one or more legal defenses
available to such Indemnified Holder which are different from or additional to
those available to Holdings (in which case, if such Indemnified Holder notifies
Holdings in writing that it elects to employ separate counsel at the expense of
Holdings, Holdings shall not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Holder, it being understood,
however, that Holdings shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys at any time for such Indemnified Holder and any other
Indemnified Holders, which firm shall be designated in writing by such
Indemnified Holders). Holdings shall not be liable for any settlement of any
such action or proceeding effected without its written consent, but if settled
with its written consent, or if there be a final judgment for the plaintiff in
any such action or proceeding, Holdings agrees to indemnify and hold harmless
such Indemnified Holders from and against any loss or liability by reason of
such settlement or judgment.
(2) Indemnification by Holder of Registrable Securities. Each Holder
of Registrable Securities agrees to indemnify and hold harmless Holdings, its
directors and officers and each Person, if any who controls Holdings within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from
- 20 -
Holdings to such Holders, but only with respect to information relating to such
Holders furnished in writing by such Holders expressly for use in any
registration statement or prospectus, or any amendment or supplement thereto, or
any preliminary prospectus. In case any action or proceeding shall be brought
against Holdings or its directors or officers or any such controlling person, in
respect of which indemnity may be sought against a Holder of Registrable
Securities, such Holder-shall have the rights and duties given to Holdings and
Holdings or its directors or officers or such controlling person shall have the
rights and duties given to each Holder by the preceding paragraph. In no event
shall the liability of any Holder of Registrable Securities hereunder be greater
in amount than the dollar amount of the proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.
(3) Contribution. If the indemnification provided for in this
Section 7(d) is unavailable to an indemnified party under Section 7(d) (1) or
Section 7(d) (2) hereof (other than by reason of exceptions provided in those
Sections) in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of Holdings on the one hand and of the Indemnified Holder on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of Holdings on the one hand and of
the Indemnified Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by Holdings or by the Indemnified Holder and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in the
second paragraph of Section 7 (d) (1), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
Holdings and each Holder of Registrable Securities agree that it
would not be just and equitable if contribution
- 21 -
pursuant to this Section 7(d) (3) were determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7(d) (3), an Indemnified Holder
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Registrable Securities sold by such Indemnified
Holder or its affiliated indemnified Holders and distributed to the public were
offered to the public exceeds the amount of any damages which such Indemnified
Holder, or its affiliated Indemnified 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.
(4) Certain Definitions.
(i) The term "Registrable Securities" shall mean the Shares and any
other securities issued or issuable upon exercise of the Adjustment
Rights. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (A) a
registration statement with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (B)
they shall have been distributed to the public pursuant to Rule 144 (or
any successor provision) under the Securities Act, (C) they shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by Holdings and
subsequent disposition of them shall not require registration or
qualification of them under the Securities Act or any similar state law
then in force, or (D) they shall have ceased to be outstanding.
(ii) The term "Registration Expenses" shall mean all expenses
incident to Holdings' performance of or compliance with Section 7 hereof,
including, without limitation, all registration and filing fees, all fees
and expenses of complying with securities or blue sky laws, fees and other
expenses associated with filings with the National Association of
Securities Dealers, Inc. (including, if required, the reasonable fees and
expenses of any "qualified independent underwriter" and its counsel), all
printing
- 22 -
expenses, the fees and disbursements of counsel for Holdings and of its
independent public accountants, the fees and disbursements of one counsel
retained by the holders of Registrable Securities, the expenses of any
special audits made by such accountants required by or incident to such
performance and compliance, but not including (a) fees and disbursements
of more than one counsel retained by the holders of Registrable
Securities, or (b) such holders' proportionate share of underwriting
discounts and commissions.
SECTION 8. Notices to Holdings and Holders of Shares. Any notice or
demand authorized by this Agreement to be given or made by the registered holder
of any Share Certificate to or on Holdings shall be sufficiently given or made
when and if deposited in the mail, first class or registered, postage prepaid,
addressed to the office of Holdings expressly designated by Holdings at its
office for purposes of this Agreement (until the holders of Shares are otherwise
notified in accordance with this Section by Holdings), as follows:
WGL Holdings, Inc.
10,000 Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: President
with a copy to
Xxxxxx X. Xxxxx, Esq.
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Any notice pursuant to this Agreement to be given by Holdings to the
registered holder(s) of any Share Certificate shall be sufficiently given when
and if deposited in the mail, first class or registered, postage prepaid,
addressed (until Holdings is otherwise notified in accordance with this Section
by such holder) to such holder at the address appearing on the share register of
Holdings.
SECTION 9. Supplements and Amendments. Holdings may from time to
time supplement or amend this Agreement without the approval of any holders of
Share Certificates in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which Holdings
- 23 -
may deem necessary or desirable and which shall not in any way adversely affect
the interests of the holders of Share Certificates. Any amendment or supplement
to this Agreement that has an adverse effect on the interests of holders shall
require the written consent of registered holders of a majority of the then
outstanding Shares (excluding Shares held by Holdings or any of its Affiliates).
The consent of each holder of a Share affected shall be required for any
amendment pursuant to which the number of Shares purchasable upon exercise of an
Adjustment Right would be decreased (other than in accordance with Section 4 or
5 hereof).
SECTION 10. Successors. All the covenants and provisions of this
Agreement by or for the benefit of Holdings shall bind and inure to the benefit
of its respective successors and assigns hereunder.
SECTION 11. Termination. This Agreement (except for Section 7 (d))
shall terminate at 5:00 p.m., New York City time on July 10, 2007.
SECTION 12. Governing Law. THIS AGREEMENT AND EACH SHARE CERTIFICATE
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF SAID STATE.
SECTION 13. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than Holdings and
the registered holders of the Share Certificates any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of Holdings and the registered holders of the Share
Certificates and the Shares. Nothing herein shall prohibit or limit Holdings
from entering into an agreement providing holders of securities which may
hereafter be issued by Holdings with such registration rights exercisable at
such time or times and in such manner as the Board of Directors shall deem in
the best interests of Holdings so long as the performance by Holdings of its
obligations under such other agreement will not cause Holdings to breach its
obligations hereunder to the Holders.
SECTION 14. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
- 24 -
(Signature Page Follows]
[Signature Page of Registration and Anti-Dilution Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
WGL HOLDINGS INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.,
Managing General Partner
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT FUNDING, INC.
By:
-----------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT CORPORATION
As Manager
By:
-----------------------------------------
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
[Signature Page of Registration and Anti-Dilution Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
WGL HOLDINGS INC.
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.,
Managing General Partner
By: /s/ Xxx Xxxxx
-----------------------------------------
Name: Xxx Xxxxx
Title: Vice President
DLJ INVESTMENT FUNDING, INC.
By: /s/ Xxx Xxxxx
-----------------------------------------
Name: Xxx Xxxxx
Title: Vice President
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT CORPORATION
As Manager
By: /s/ Xxx Xxxxx
-----------------------------------------
Name: Xxx Xxxxx
Title: Vice President
THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
[Signature Page of Registration and Anti-Dilution Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
WGL HOLDINGS INC.
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.,
Managing General Partner
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT FUNDING, INC.
By:
-----------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT CORPORATION
As Manager
By:
-----------------------------------------
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ A. Xxxx Xxxxxxx
-----------------------------------------
Name: A. Xxxx Xxxxxxx
Title: Vice President
By:
-----------------------------------------
Name:
Title:
[Signature Page of Registration and Anti-Dilution Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
WGL HOLDINGS INC.
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.,
Managing General Partner
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT FUNDING, INC.
By:
-----------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
As Manager
By:
-----------------------------------------
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By:
-----------------------------------------
Name:
Title:
Xxxxxxxxx Xxxxxx & Xxxxxxxx Securities
Corporation
By: /s/ Xxx Xxxxx
-----------------------------------------
Name: Xxx Xxxxx
Title: Vice President
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Adjustment Right)
The undersigned hereby irrevocably elects to exercise the Adjustment
Right to receive _________ shares of Common Stock and herewith (check item)
(i) tenders payment for such shares to the order of WGL Holdings,
Inc. in the amount of $_________ in accordance with the terms hereof; or
(ii) converts its Adjustment Right, in whole or in part, into a
number of shares of Common Stock determined by dividing (a) the aggregate
current market price of the number of shares of Common Stock for which its
Adjustment Right is being exercised, minus the aggregate par value of such
number of shares and transfer taxes, if any, by (b) the current market
price of one Share.
The undersigned requests that a certificate for such shares be
registered in the name of ___________________, whose address is
___________________________, and that such shares be delivered to
__________________, whose address is ____________.
Signature: __________________________
Date:
Signature Guaranteed:
A-1
