REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”) is made
and entered into effective as of January 29, 2010, by and
among Virgo-Sierra, LP (“Sierra”), Virgo-Redwood, LP (“Redwood”), Virgo-Willow, LP (“Willow”), Virgo-Magnolia, LP (“Magnolia,” and collectively with
Sierra, Redwood and Willow, “Virgo”) and Palm Harbor Homes,
Inc., a Florida corporation (the “Company”).
WHEREAS,
the parties have entered into that certain Credit Agreement by and among the
Company, Sierra, Redwood, Willow, Magnolia, and the other parties enumerated
therein, dated effective as of January 29, 2010; and
WHEREAS,
as partial consideration for Virgo entering into the Credit Agreement, the
Company issued to each of Sierra, Redwood, Willow and Magnolia a
Warrant to purchase Common Stock of the Company (the “Warrant”), pursuant
to which such entities have the right to purchase, subject to adjustments, an
aggregate of 1,296,634 shares (as adjusted from time to time, the “Warrant Shares”) of
common stock of the Company (the “Common Stock”) and,
in connection with the issuance of the Warrant, the Company and Virgo have
agreed to enter into this Agreement.
NOW,
THEREFORE, in consideration of the aforesaid, the mutual promises hereinafter
made and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows
ARTICLE
I
Definitions
Section
1.1. Definitions. The
following terms, as used herein, shall have the following meanings:
“1933 Act” means the
Securities Act of 1933, as amended.
“Advice” has the
meaning set forth in Section 2.3.16.
“Affiliate” means,
with respect to any specified entity, any other entity directly or indirectly
controlling, controlled by or under direct or indirect common control with such
specified entity. For the purposes of this definition, “control” when used
with respect to any specified entity means the power to direct the management
and policies of such entity, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled”
have meanings correlative to the foregoing. For purposes of this
definition, entity may include a corporation, partnership, limited partnership,
limited liability company, association, joint stock company, trust or joint
venture.
“Agreement” has the
meaning set forth in the preamble to this Agreement.
“Board” means the
Board of Directors of the Company.
“Business Day” means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York, New York are authorized or obligated by law or
executive order to close.
“Commission” means the
Securities and Exchange Commission or any other Federal agency from time to time
administering the 1933 Act or the Exchange Act.
“Common Stock” has the
meaning set forth in the recitals to this Agreement.
“Common Stock
Equivalent” means any securities of any Person convertible into or
exchangeable or exercisable for Common Stock (whether at the option of such
Person or of the holder of such securities), including the Warrant.
“Company” has the
meaning set forth in the preamble to this Agreement.
“Demand Notice” has
the meaning set forth in Section 2.2.1(a).
“Demand Registration”
has the meaning set forth in Section 2.2.1(a).
“Exchange Act” means
the Securities Exchange Act of 1934, as amended.
“Person” means any
individual, corporation, limited liability company, firm, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
any other entity or organization, including a government, a governmental body, a
political subdivision or an agency or instrumentality thereof.
“Piggyback
Registration” has the meaning set forth in Section 2.1.1.
“Registration” has the
meaning set forth in Section 2.3.
“Registrable
Securities” means (x) any shares of Common Stock issued or issuable upon
exercise of the Warrants, if any, and (y) any shares of Common Stock which may
be issued or distributed or be issuable in respect of such shares of Common
Stock by way of concession, stock dividend or stock split or other distribution,
recapitalization or reclassification or similar transaction including any Common
Stock issued under the Warrant, but with respect to such shares of Common Stock,
only so long as such shares are “Restricted
Securities”. A share of Common Stock shall be deemed to be a “Restricted Security”
until such time as such share (i) has been effectively registered under the 1933
Act pursuant to a registration statement with respect to the sale of such share
and disposed of pursuant to such registration statement, (ii) has been
distributed to the public pursuant to Rule 144 (or any similar provision then in
force) under the 1933 Act, (iii) has been otherwise transferred, new
certificates for it not bearing a legend restricting further transfer having
been delivered by the Company and may be publicly sold (without volume or manner
of sale restrictions) without registration under the 1933 Act or any state
securities or blue sky law then in force or (iv) has ceased to be
outstanding.
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“Request Notice” has
the meaning set forth in Section 2.2.1(a).
“Shelf Registration
Statement” means a registration statement of the Company filed with the
Commission on Form S-3 (or any successor form or other appropriate form under
the 0000 Xxx) for an offering to be made on a continuous or delayed basis
pursuant to Rule 415 under the 1933 Act (or any similar rule that may be adopted
by the Commission) covering the Registrable Securities.
“Stop Order” has the
meaning set forth in Section 2.2.3.
“Third Party” has the
meaning set forth in Section 2.1.1.
“Third Party
Registration” has the meaning set forth in Section 2.1.3.
“Virgo” has the
meaning set forth in the preamble to this Agreement.
“Warrant(s)” has the
meaning set forth in the recitals to this Agreement.
“Warrant Shares” has
the meaning set forth in the recitals to this Agreement.
ARTICLE
II
Registration
and Related Rights
Section
2.1. Company
Registration.
2.1.1.
Right to Piggyback on
Company Registration of Common Stock. Subject to Section
2.1.3, if the Company proposes, on its own initiative or at the request of a
party holding rights to demand registrations of the Common Stock other than
under this Agreement (a “Third Party”) to
register any Common Stock under the 1933 Act in connection with the offering of
a primary issuance or, in the case of such Third Party, a secondary issuance, of
such Common Stock on any form other than Form S-4 or Form S-8 or any form
substituting therefor (except for a registration in connection with an exchange
offer of securities solely to existing securityholders of the Company) and such
proposal would result in the filing of a registration statement with the
Commission in connection therewith at any time, the Company shall at such time
promptly give Virgo, and any successor, assign or transferee of Virgo then
owning Registrable Securities (collectively, the “Holders”) written
notice of such determination no later than thirty (30) days prior to the
proposed filing date (such proposed filing date to be specified by the Company
in the written notice) of the registration statement to be prepared in
connection with such proposed registration. Any Holder wishing to
register all or any portion of such Holder’s Registrable Securities pursuant to
such proposed registration (a “Piggyback
Registration”) must give written notice to the Company of its intent to
participate in such proposed registration no later than fifteen (15) days after
receipt of the notice delivered by the Company. Subject to the
allocations set forth in Section 2.1.3, upon receipt of such written request of
any such Holder, the Company will use its reasonable best efforts to effect the
registration under the 1933 Act of all Registrable Securities which the Company
has been so requested to register by the Holders. Any
Holder holding Registrable Securities that has requested to be included in such
registration may elect, in writing at least twenty (20) Business Days prior to
the effective date of the registration statement filed in connection with such
registration, not to register such Registrable Securities in such
registration.
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2.1.2.
Selection of
Underwriters. If the Company or, in the case of a Third Party
Registration, such Third Party, in its sole discretion decides a Piggyback
Registration shall be underwritten, the Company, or such Third Party, as the
case may be, shall have sole discretion in the selection of any underwriter or
underwriters to manage such Piggyback Registration.
2.1.3.
Priority on Piggyback
Registrations. If the managing underwriter or underwriters of
a Piggyback Registration (or in the case of a Piggyback Registration not being
underwritten, holders of a majority of the shares of Common Stock proposed to be
registered) advise the Company in writing that in its or their opinion the
number of shares of Common Stock proposed to be sold in such Piggyback
Registration exceeds the number which can be sold, or would adversely affect the
price at which the Common Stock could be sold in such offering, the Company will
include in such Piggyback Registration only that number of shares of Common
Stock which, in the opinion of such underwriter or underwriters (or in the case
of a Piggyback Registration not being underwritten, holders of a majority of the
shares of Common Stock proposed to be registered), can be sold in such offering
without so affecting such price. The shares of Common Stock to be
included in such Piggyback Registration shall be apportioned (a) first, in the
case of a primary issuance by the Company, to any shares of Common Stock that
the Company proposes to sell, or in the case of a registration at the request of
a Third Party, to any shares of Common Stock that such Third Party proposes to
sell; and (b) second, pro rata among any shares
of Common Stock proposed to be sold by any Holder, according to the total number
of shares of Common Stock requested for inclusion by each Holder, or in such
other proportions as shall be mutually agreed to among such selling
Holders.
Section
2.2 Demand Registration
Rights.
2.2.1. Right to Demand
Registration.
(a) If,
at any time one or more of the Holders holding Registrable Securities
representing 2.0% or more in the aggregate of the then outstanding Common Stock
(assuming conversion or exercise of all Common Stock Equivalents held by the
Holders into Common Stock at the then conversion price or exercise price)
submits a written request (a “Request Notice”) to
the Company for registration with the Commission under and in accordance with
the provisions of the 1933 Act of all or part of the Registrable Securities then
owned by such Holder or Holders (a “Demand
Registration”), the Company shall thereupon, as expeditiously as
possible, use its reasonable best efforts to file a registration statement with
the Commission and have the registration statement declared effective by the
Commission and the number of Registrable Securities as to which such request is
made shall represent not less than 2.0% of the then outstanding Common Stock and
Common Stock Equivalents. The Holders acknowledge that, within ten
(10) days after receipt of such Request Notice, the Company will serve written
notice of such registration request to all other Holders (the “Demand Notice”), and,
subject to the pro rata allocations set
forth in Section 2.2.4, the Company will include in such Demand Registration all
such shares of Common Stock held by the Holders with respect to which the
Company has received a written request for inclusion therein within twenty (20)
days after the giving of the Demand Notice. Any Demand Registration
representing 4.5% or more in the aggregate of the then outstanding Common Stock
(assuming conversion or exercise of all Common Stock Equivalents held by the
Holders into Common Stock at the then conversion price or exercise price) shall,
at the majority of the Holders’ option, be underwritten by one or more
underwriters and shall be subject to Section 2.2.2 if such Demand Registration
has not previously been designated an underwritten offering.
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(b) All
Holders requesting registration of their Registrable Securities pursuant to this
Section 2.2.1 shall specify the aggregate number of Registrable Securities
proposed to be registered and the intended methods of disposition
thereof. The Holders shall collectively be entitled to request, three
Demand Registrations (the last of which shall be a Shelf Registration Statement
pursuant to Rule 415 under the 1933 Act to be effective for not less than 180
days) pursuant to which a registration statement covering Registrable Securities
shall be filed with and declared effective by the Commission, the expenses of
which shall be borne by the Company in accordance with Section 2.4, and no more
than one Demand Registration may be requested by any Holder in any 12-month
period. If, following the effective date of any registration
statement filed pursuant to a Demand Registration, any Holder whose Registrable
Securities are to be included in such Demand Registration pursuant to this
Section 2.2.1 elects, by giving written notice to the Company not later than
thirty (30) days after such effective date, not to dispose of its Registrable
Securities because of a material adverse change or event in the business,
condition (financial or otherwise), or assets of the Company and its
subsidiaries, taken as a whole, or because of a material adverse change or event
with respect to the Company and its subsidiaries, taken as a whole, not
disclosed in the final prospectus prepared in connection with such Demand
Registration, then such Demand Registration shall not count as one of the three
Demand Registrations permitted hereunder unless shares of Common Stock
representing 1% or more of the then outstanding Common Stock, including Common
Stock Equivalents, are sold pursuant to the registration statement prepared in
connection with such Demand Registration within thirty (30) days of the
effective date of such registration statement and prior to the occurrence of
such material adverse change or event.
(c) If
at the time of any Request Notice (i) the Company is engaged in a registered
public offering as to which the Holders had the right to include their
Registrable Securities, whether as a Piggyback Registration or otherwise, (ii)
the Company is engaged in any other activity outside of the ordinary course of
business, such as a merger, consolidation, recapitalization or acquisition
which, in the good faith judgment of the Board, would be materially and
adversely affected by the requested registration or (iii) the Board makes a good
faith determination that the public disclosures required to be made in the
requested registration statement would have a material and adverse impact on the
business, financial condition or prospects of the Company, the Company may at
its option direct that such request be delayed for a period of not more than
ninety (90) days, which right to delay may be exercised by the Company only one
time in respect of each Demand Registration.
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2.2.2. Selection of
Underwriters. If a proposed Demand Registration
involves either a firm or best efforts underwritten offering, the Company shall
have the right, subject to approval by the Holders of a majority of the shares
covered by the Request Notice (which approval shall not be unreasonably withheld
or delayed), to select the underwriter or underwriters to manage such Demand
Registration.
2.2.3. Effective Registration
Statement. A registration requested pursuant to
this Section 2.2 shall not be deemed to have been effected unless the
registration statement prepared in connection therewith has become effective
unless, within seventy-five (75) days after such registration statement has
become effective (135 days in the case of the Shelf Registration Statement), the
offering of Registrable Securities pursuant to such registration statement is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court (collectively, a “Stop Order”), in
which case such registration shall be deemed not to have been
effected. Notwithstanding the preceding sentence, if any such Stop
Order is rescinded, the effective period shall continue upon such rescission and
be extended by the number of days by which such Stop Order reduced the effective
period.
2.2.4. Priority on Demand
Registrations. If the managing underwriter or
underwriters of a Demand Registration initiated under this Agreement advise the
Company in writing that in its or their opinion the number of shares of Common
Stock proposed to be sold in such Demand Registration exceeds the number which
can be sold, or would adversely affect the price at which the Common Stock could
be sold in such offering, the Company will include in such registration only
that number of shares of Common Stock which, in the opinion of such underwriter
or underwriters, can be sold in such offering without so affecting such
price. The shares of Common Stock to be included in such Demand
Registration shall be apportioned (x) first, to shares of Common Stock held by
Holders (pro rata as among such Holders based on the number of shares of Common
Stock requested for inclusion by each Holder, or in such other proportions as
shall be mutually agreed to among such selling Holders) who have made a request
to be included in such Demand Registration, and (y) second, pro rata among any other
shares of Common Stock proposed to be included in such Demand Registration,
including any shares proposed to be sold by the Company pursuant to such Demand
Registration.
2.2.5. Additional
Rights. If the Company at any time after the date hereof
grants to any other holders of Common Stock or Common Stock Equivalents any
rights to request the Company to effect the registration under the 1933 Act of
any such shares of Common Stock on terms more favorable to such holders than the
terms set forth in this Agreement, the terms of this Agreement shall be deemed
amended or supplemented to the extent necessary to provide the Holders with the
same, more favorable terms. The Company shall not grant any other
Person rights to register securities of the Company on terms which are more
favorable than the rights of the Holders pursuant to this
Agreement.
Section
2.3 Registration
Procedures. It shall be a condition precedent to
the obligations of the Company and any underwriter or underwriters to take any
action pursuant to this Article II that the Holders requesting inclusion in any
Piggyback Registration, Shelf Registration Statement or Demand Registration
(collectively referred to as a “Registration”)
furnish to the Company such information regarding them, the Registrable
Securities held by them, the intended method of disposition of such Registrable
Securities, and such agreements regarding indemnification, disposition of such
securities and the other matters referred to in this Article II as the Company
may reasonably request and as may be required in connection with any action to
be taken by the Company or any such underwriter. With respect to any
Registration which includes Registrable Securities held by a Holder, the Company
shall, subject to Sections 2.1 and 2.2;
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2.3.1. Prepare
and file with the Commission a registration statement on the appropriate form
prescribed by the Commission within ninety (90) days after the end of the period
within which requests for registration may be given to the Company, file with
the Commission any necessary amendments to the registration statement with
respect to such Registrable Securities and use its reasonable best efforts to
cause such registration statement to become effective. At least five
(5) Business Days prior to filing a registration statement and at least three
(3) Business Days prior to the filing of a prospectus or any amendments or
supplements to a registration statement or a prospectus, the Company shall
furnish to the holders of the Registrable Securities covered by such
registration statement and the underwriter or underwriters, if any, copies of or
drafts of all such documents proposed to be filed, which documents shall be
subject to the reasonable review of such holders and underwriters, if any, and
such persons shall have three (3) Business Days to provide any written comments
to the registration statement or prospectus, as applicable. If
comments are not provided within such time period, the Company shall file any
registration statement or amendment thereto or any prospectus or any supplement
thereto. Any comments timely submitted shall be considered by the
Company.
2.3.2. Prepare
and file with the Commission such amendments and post-effective amendments to
such registration statement and any documents required to be incorporated by
reference therein as may be necessary to keep the registration statement
effective for a period of time as necessary to complete the offering, which
period shall be not less than ninety (90) days (or 180 days in the case of the
Shelf Registration Statement) (or such shorter period that shall terminate when
all Registrable Securities covered by such registration statement have been sold
or withdrawn, but not prior to the expiration of the time period referred to in
Section 4(3) of the 1933 Act and Rule 174 thereunder, if applicable); cause the
prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the 1933 Act (or any
successor rule); and comply with the provisions of the 1933 Act applicable to it
with respect to the disposition of all Registrable Securities covered by such
registration statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement or supplement to the prospectus;
2.3.3. Furnish
to each such Holder, without charge, at least one electronic or paper (if
printed) conformed copy of the registration statement and any post-effective
amendment thereto, upon request, and such number of copies of the prospectus
(including each preliminary prospectus) and any amendments or supplements
thereto, and any exhibits or documents incorporated by reference therein as any
such Holder or underwriter or underwriters, if any, may request in order to
facilitate the disposition of the securities being sold by any such Holder (it
being understood that the Company consents to the use of the prospectus and any
amendment or supplement thereto by any such Holder covered by the registration
statement and the underwriter or underwriters, if any, in connection with the
offering and sale of the securities covered by the prospectus or any amendments
or supplements thereto);
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2.3.4. Immediately
notify each such Holder, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, when the Company becomes aware of
the occurrence of any event as a result of which the prospectus included in such
registration statement (as then in effect) contains any untrue statement of
material fact or omits to state a material fact necessary to make the statements
therein (in the case of the prospectus or any preliminary prospectus, in light
of the circumstances under which they were made) not misleading and, as promptly
as practicable thereafter, prepare and file with the Commission and furnish a
supplement or amendment to such prospectus so that, as thereafter delivered to
the Holders (a reasonable number of such amended and supplemented prospectuses
having been delivered to the Holders), such prospectus will not contain 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;
2.3.5. Use
its reasonable best efforts to cause all securities included in such
registration statement to be listed, by the date of the first sale of securities
pursuant to such registration statement, on each national securities exchange or
market on which the Common Stock is then listed;
2.3.6. Make
every reasonable effort to obtain the withdrawal of any Stop Order suspending
the effectiveness of the registration statement or other order suspending the
use of any preliminary or final prospectus at the earliest possible
moment;
2.3.7. Subject
to the time limitations specified in Section 2.3.2, if requested by the managing
underwriter or underwriters or any such Holder, promptly incorporate in a
prospectus supplement or post-effective amendment such information with respect
to the offering as the managing underwriter or underwriters or such Holder
reasonably requests to be included therein, including, without limitation, with
respect to the number of shares being sold by such Holder to such underwriter or
underwriters, the purchase price being paid therefor by such underwriter or
underwriters and with respect to any term of the underwritten offering of the
securities to be sold in such offering; and make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
being notified of the matters to be incorporated in such prospectus supplement
or post-effective amendment;
2.3.8. Prior
to the date on which the registration statement is declared effective, use its
reasonable best efforts to register or qualify, and cooperate with such Holders,
the underwriter or underwriters, if any, and their counsel in connection with
the registration or qualification of, the securities covered by the registration
statement for offer and sale under the securities or blue sky laws of each state
and other jurisdiction of the United States as such Holders or managing
underwriter or underwriters, if any, requests in writing, use its reasonable
best efforts to keep each such registration or qualification effective,
including through new filings, or amendments or renewals, during the period such
registration statement is required to be kept effective and do any and all other
acts or things necessary or advisable to enable the disposition in all such
jurisdictions of the Registrable Securities covered by the applicable
registration statement; provided, however, the Company shall not be required to
subject itself to service of process in any state in which it is not then
subject to service of process;
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2.3.9. Enter
into such customary agreements (including an underwriting agreement in customary
form) and take such other actions customarily taken by registrants, if any, as
the Holders or the underwriters may reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
2.3.10. Obtain
a “comfort” letter or letters from the Company’s independent public accountants
in customary form and covering matters of the type customarily covered by
“comfort” letters as the Holders or the underwriters, if any, may reasonably
request, dated the date of execution of the underwriting agreement, if
applicable, and brought down to the closing under the underwriting
agreement;
2.3.11. Obtain
for delivery to the Holders holding Registrable Securities covered by such
registration statement and to the underwriter or underwriters, if any, an
opinion or opinions from counsel for the Company dated the effective date of the
registration statement, or in the event of an underwritten offering, the date of
the closing under the underwriting agreement, in customary form, scope and
substance, which counsel and opinions shall be reasonably satisfactory to a
majority of the Holders and the underwriter or underwriters, if any, and their
respective counsel;
2.3.12. Make
available for inspection by any Holder holding Registrable Securities covered by
such registration statement, by any underwriter participating in any disposition
to be effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by any such seller or any such underwriter,
all pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company’s officers, directors,
employees and independent public accountants to make themselves available to
discuss the business of the Company and to supply all information reasonably
requested by any such Holder, underwriter, attorney, accountant or agent in
connection with such registration statement;
2.3.13. Cooperate
with such Holders and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legends) representing securities to be sold under the registration
statement, and enable such securities to be in such denominations and registered
in such names as the Holders or the managing underwriter or underwriters, if
any, may request; and
2.3.14. Use
its reasonable best efforts to cause the securities covered by the registration
statement to be registered with or approved by such other governmental agencies
or authorities within the United States as may be necessary to enable the seller
or sellers thereof or the underwriter or underwriters, if any, to consummate the
disposition of such Registrable Securities.
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2.3.15. The
Holders, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 2.3.4, shall forthwith discontinue
disposition of the securities until the Holders’ receipt of the copies of the
supplemented or amended prospectus contemplated by Section 2.3.4 or until they
are advised in writing (the “Advice”) by the
Company that the use of the prospectus may be resumed, and have received copies
of any additional or supplemental filings which are incorporated by reference in
the prospectus, and, if so directed by the Company, each Holder shall, or shall
request the managing underwriter or underwriters, if any, to, deliver to the
Company (at the Company’s expense) all copies, other than permanent file copies
then in such Holder’s possession, of the prospectus covering such securities
which is current at the time of receipt of such notice. In the event
that the Company gives any such notice, the time periods set forth in Section
2.3.4 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 securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 2.3.4 or the Advice.
Section
2.4 Registration
Expenses. In the case of any Registration, the Company shall
bear all of the costs and expenses of such Registration (including, without
limitation, the expenses of preparing any registration statement, Commission and
state “blue sky” filings, registration and qualification fees, the cost of
providing any legal opinion or “comfort” letters requested by the Holders and
printing costs) and reasonable legal fees or expenses of one counsel for the
Holders (such counsel being subject to the reasonable approval of the
Company). The Company shall not be responsible for registration or
qualification fees or underwriter’s discounts or commissions that are
attributable to the Registrable Securities of a Holder. In connection
with any Registration, the Company shall be required to obtain independent
outside counsel that is sophisticated in securities law matters and that is
reasonably satisfactory to a majority of the Holders that have shares of Common
Stock included in such Registration. For purposes of this Agreement,
Xxxxx Lord Xxxxxxx & Xxxxxxx LLP shall be deemed to qualify as counsel for
the Company.
Section
2.5 Indemnification and
Contribution.
2.5.1. Indemnification by the
Company. The Company agrees to indemnify and hold harmless
each Holder, its officers, directors, advisors and agents and each Person who
controls (within the meaning of the 1933 Act or the Exchange Act) such Person
from and against all losses, claims, damages, liabilities (or actions or
proceedings in respect thereof, whether or not such Person is a party thereto)
and expenses (including but not limited to reasonable cost of investigation and
reasonable legal expenses) arising out of or based upon any untrue or allegedly
untrue statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus in which such Holder is participating or in
any document incorporated by reference therein or any omission or alleged
omission to state therein a material fact necessary to make the statements
therein (in the case of the prospectus or any preliminary prospectus, in light
of the circumstances under which they were made) not misleading, except insofar
as the same are caused by, based upon or contained in any information with
respect to such Holder furnished in writing to the Company by such Holder
expressly for use therein. The foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Holder from whom the Person asserting such loss, claim, damage or liability
purchased shares of Common Stock if it is determined that it was the
responsibility of such Holder to provide such Person with a current copy of the
prospectus and such current copy of the prospectus would have cured such loss,
claim, damage or liability. The Company shall also indemnify, if
applicable and if requested, underwriters (as such term is defined in the 1933
Act), their officers and directors and each Person who controls such Persons
(within the meaning of the 1933 Act and the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Holders.
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2.5.2. Indemnification by the
Holders. In connection with any Registration in which a Holder
is participating, such Holder shall furnish to the Company in writing such
information and affidavits with respect to such Holder as the Company may
reasonably request for use in connection with any registration statement or
prospectus and the Holders agree to indemnify and hold harmless the Company, its
directors, officers and agents and each Person who controls (within the meaning
of the 1933 Act and the Exchange Act) the Company from and against any losses,
claims, damages, liabilities (or actions or proceedings in respect thereof,
whether or not the Company is a party thereto) and expenses (including
reasonable cost of investigation and reasonable legal expense) arising out of or
based upon any untrue statement of a material fact or any omission to state a
material fact necessary to make the statements in the registration statement or
prospectus or preliminary prospectus (in the case of the prospectus or
preliminary prospectus, in light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information or affidavit with respect
to such Holder furnished in writing to the Company by such Holder expressly for
use therein. The amount recoverable by the Company from the Holder
under this indemnification provision together with any amounts recovered from
the Holders under Section 3.7 hereof shall not exceed the amount of net proceeds
received by all Holders from the sale of Registrable Securities in connection
with any such Registration. The indemnity agreement contained in this
Section 2.5.2 shall not apply to amounts paid in settlement of any loss, claim,
damage, liability or action arising pursuant to a Registration if such
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld or delayed). Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Company or any of the prospective sellers, or any of their respective
Affiliates, directors, officers or controlling Persons and shall survive the
transfer of such securities by such seller. Each Holder shall also
indemnify, if applicable and if requested, underwriters (as such term is defined
in the 1933 Act), their officers and directors and each Person who controls such
Persons (within the meaning of the 1933 Act and the Exchange Act) to the same
extent as provided above with respect to the indemnification of the
Company.
2.5.3. Conduct of Indemnification
Proceedings. Any Person entitled to indemnification hereunder
shall (x) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (y) unless in a written legal
opinion of counsel, such counsel advises that a conflict of interest may exist
between such indemnified and indemnifying party, permit the indemnifying party
to assume the defense of such claim, with counsel reasonably satisfactory to the
indemnified party. The failure to so notify the indemnifying party
shall relieve the indemnifying party from any liability hereunder with respect
to the action to the extent that such failure materially prejudices the
indemnifying party. Whether or not such defense is assumed by the
indemnifying party, the indemnifying party shall not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld or delayed). No indemnifying party shall
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation. An indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in a written legal opinion
of counsel, such counsel advises a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the
reasonable fees and expenses of such additional counsel or
counsels.
11
2.5.4. Contribution. If
for any reason the indemnification provided for in the preceding Sections 2.5.1
and 2.5.2 is unavailable to an indemnified party as contemplated by the
preceding Sections 2.5.1 and 2.5.2 for any reason, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. Notwithstanding the foregoing, if the indemnifying
party is any Holder, any contribution pursuant to this Section 2.5.4 shall be
several and not joint, and shall be limited to the amount of net proceeds
received by such Holder from the sale of Registrable Securities in connection
with the applicable Registration.
2.5.5. Other
Indemnification. Indemnification similar to that set forth in
the preceding subdivisions of this Section 2.5 (with appropriate modifications)
shall be given by the Company with respect to any required registration or other
qualification of securities under any Federal or state law or regulation or
governmental authority other than the 1933 Act.
Section
2.6 Exchange Act
Reports. The Company agrees that it will use its reasonable
best efforts to file in a timely manner all reports required to be filed by it
pursuant to the Exchange Act to the extent the Company is required to file such
reports. Upon the reasonable request of Virgo, the Company will
furnish Virgo with such information as may be necessary to enable Virgo to
effect sales pursuant to Rule 144A.
Section
2.7 Restrictions on Public Sale
by Holder of Securities. To the extent not inconsistent with
applicable law and requested by the managing underwriter or underwriters, any
Holder whose Registrable Securities are included in a Registration relating in
whole or in part to an underwritten public offering agrees not to effect any
public sale or distribution of the issue being registered or any similar
security of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, including a public sale pursuant to Rule 144
under the 1933 Act, during the fourteen (14) days prior to, and during the
180-day period beginning on, the effective date of such registration statement
(except as part of such Registration).
Section
2.8 Participation in
Registrations. No Holder may participate in any Registration
hereunder unless such Holder (x) agrees to sell such Holder’s securities on the
basis provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (y) completes and executes all
questionnaires, powers of attorney, underwriting agreements and other documents
customarily required under the terms of such underwriting
arrangements.
12
Section
2.9 Remedies. Virgo
shall have the right and remedy to have the provisions of Sections 2.1 and 2.2
specifically enforced by any court having jurisdiction in the event that the
Company breaches such provisions, and the Company shall reimburse Virgo for the
reasonable costs of the expenses for counsel for Virgo incurred in connection
with such proceeding.
ARTICLE
III
Miscellaneous
Section
3.1. Notices. All
notices or other communications required or permitted to be given hereunder
shall be in writing and shall be delivered by hand or sent by prepaid telex,
cable or telecopy or sent, postage prepaid, by registered, certified or express
mail or reputable overnight courier service and shall be deemed given when so
delivered by hand, telexed, cabled or facsimile, or if mailed, three (3) days
after mailing (one (1) Business Day in the case of express mail or overnight
courier service), as follows:
if to the Company, to:
Palm
Harbor Homes, Inc.
00000
Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000-0000
Attn: Xx.
Xxxxx Xxxxx
Facsimile:
(000) 000-0000
with a
copy to (which copy shall not constitute notice):
Xxxxx
Lord Bissell & Liddell LLP
0000 Xxxx
Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000
Attn: Xxxx
X. Xxxxx, Esq.
Facsimile:
(000) 000-0000:
if to Virgo, to:
Virgo-Sierra,
LP
000
Xxxxxxx Xxxxxx, X0 00
Xxx Xxxx,
Xxx Xxxx 00000
Attn: Xxx
Xxxxxxx
Facsimile: (000)
000-0000
Virgo-Redwood,
LP
000
Xxxxxxx Xxxxxx, X0 00
Xxx Xxxx,
Xxx Xxxx 00000
Attn: Xxx
Xxxxxxx
Facsimile: (000)
000-0000
13
Virgo-Willow,
LP
000
Xxxxxxx Xxxxxx, X0 00
Xxx Xxxx,
Xxx Xxxx 00000
Attn: Xxx
Xxxxxxx
Facsimile: (000)
000-0000
Virgo-Magnolia,
LP
000
Xxxxxxx Xxxxxx, X0 00
Xxx Xxxx,
Xxx Xxxx 00000
Attn: Xxx
Xxxxxxx
Facsimile: (000)
000-0000
with a copy to (which copy
shall not constitute notice):
Xxxxxxxx
& Xxxxxxxx LLP
000
Xxxxxx Xxxxxx
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000)
000-0000
Attention:
Xxxxxx Xxxxxxxx, Esq.
Section
3.2. Binding Effect;
Benefits. This Agreement shall be binding upon and inure to
the benefit of the parties to this Agreement and their respective successors,
transferees and assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any Person other than the parties to this
Agreement, the other Holders, if any, and their respective successors or assigns
any legal or equitable right, remedy or claim under or in respect of any
agreement or any provision contained herein.
Section
3.3. Waiver. Any
party hereto may, by written notice to any other party (x) extend the time for
the performance of any of the obligations or other actions of such other party
under this Agreement to the extent that such obligations or other actions are
due to the party giving notice; (y) waive compliance with any of the conditions
or covenants of such other party contained in this Agreement to the extent that
such conditions or covenants relate to the party giving notice; and (z) waive or
modify performance of any of the obligations of such other party under this
Agreement to the extent that such obligations are due to the party giving
notice. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant or
agreement contained herein. Neither the waiver by any party hereto of a
breach of any provision hereof or any preceding or succeeding breach nor the
failure by any party to exercise any right or privilege hereunder shall be
deemed a waiver of such party’s rights or privileges hereunder nor shall it be
deemed a waiver of such party’s rights to exercise the same at any subsequent
time or times hereunder.
14
Section
3.4. Amendments. No
amendment or modification in respect of this Agreement shall be effective unless
it shall be in writing and signed by the Company and the Holders of a majority
of the Registrable Securities. Any such amendment or modification in
respect of this Agreement executed by or on behalf of the Holders shall bind
each other Holder, if any, to the terms and conditions thereof. The
Company agrees that all holders of Registrable Securities shall be notified by
the Company in advance of any proposed amendment or modification of this
Agreement, but failure to give such notice shall not in any way affect the
validity of any such amendment or modification. In addition, promptly
after obtaining the written consent of the holders as herein provided, the
Company shall transmit a copy of any amendment or modification which has been
adopted to all holders of Registrable Securities then outstanding, but failure
to transmit copies shall not in any way affect the validity of any such
amendment or modification.
Section
3.5. Assignability. Neither
this Agreement nor any right, remedy, obligation or liability arising hereunder
or by reason hereof shall be assignable by either the Company or Virgo (other
than by Virgo in connection with, and in compliance with the terms and
conditions of, a transfer, in whole or in part, of the Registrable Securities),
or any transferee of the foregoing. Any assignment in violation of
this Section 3.5 shall be void and of no force or effect.
Section
3.6. Governing
Law. This Agreement, and any dispute arising out of, relating
to or in connection with this Agreement, shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
Sate of New York or any other jurisdictions) that would cause the application of
the laws of any jurisdictions other than the State of New York.
Section
3.7. Attorney
Fees. Subject to Section 2.5.2, a party found by a court of
competent jurisdiction in a final, non-appealable order, to be in breach of this
Agreement shall, on demand, indemnify and hold harmless the other parties hereto
from and against all reasonable out-of-pocket expenses, including legal fees,
incurred by such other parties by reason of the enforcement and protection of
their rights under this Agreement. The payment of such expenses is in
addition to any other relief to which such other parties may be
entitled.
Section
3.8. Section and Other
Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
Section
3.9. Counterparts. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered to
the other parties.
Section
3.10. Entire
Agreement. This Agreement and the instruments referenced
herein constitute the entire agreement among the parties hereto with respect to
the subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to
herein. This Agreement and the instruments referenced herein
supersede all prior agreements and understandings among the parties with respect
to the subject matter hereof.
15
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
effective as of the date first written above.
|
PALM
HARBOR HOMES, INC.
|
||
|
By:
|
/s/ Xxxxx Xxxxxx | |
|
Name: Xxxxx
Xxxxxx
|
||
|
Title:
President and Chief Executive
Officer
|
||
| VIRGO-SIERRA, LP | ||||
|
By:
|
Virgo
Investment Group, LLC, its General
Partner |
|||
|
By:
|
/s/ Xxxxx Xxxxxx | |||
|
Name: Xxxxx
Xxxxxx
|
||||
|
Title: Managing
Member
|
||||
| VIRGO-REDWOOD, LP | ||||
|
By:
|
Virgo
Investment Group, LLC, its General
Partner |
|||
|
By:
|
/s/ Xxxxx Xxxxxx | |||
|
Name: Xxxxx
Xxxxxx
|
||||
|
Title: Managing
Member
|
||||
| VIRGO-WILLOW, LP | ||||
|
By:
|
Virgo
Investment Group, LLC, its General
Partner |
|||
|
By:
|
/s/ Xxxxx Xxxxxx | |||
|
Name: Xxxxx
Xxxxxx
|
||||
|
Title: Managing
Member
|
||||
[Registration
Rights Agreement Signature Page]
| VIRGO-MAGNOLIA, LP | ||||
|
By:
|
Virgo
Investment Group, LLC, its General
Partner |
|||
|
By:
|
/s/ Xxxxx Xxxxxx | |||
|
Name: Xxxxx
Xxxxxx
|
||||
|
Title: Managing
Member
|
||||
17
