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REGISTRATION RIGHTS AGREEMENT
Dated as of October 14, 1997
by and among
CELLSTAR CORPORATION
and
BEAR, XXXXXXX & CO. INC.
and
CHASE SECURITIES INC.
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TABLE OF CONTENTS
PAGE
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1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. SHELF REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. LIQUIDATED DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. REGISTRATION PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . 8
5. REGISTRATION EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . 13
6. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7. CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8. RULE 144A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) NO INCONSISTENT AGREEMENTS. . . . . . . . . . . . . . . . . . . . 17
(c) AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . 17
(d) NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . . 18
(f) COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(h) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(j) ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 19
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of October 14, 1997 by and among CellStar Corporation, a Delaware
corporation (the "COMPANY"), and Bear, Xxxxxxx & Co. Inc. and Chase Securities
Inc. (collectively, the "INITIAL PURCHASERS"), which Initial Purchasers have
agreed to purchase from the Company up to $130,000,000 principal amount of the
Company's 5% Convertible Subordinated Notes Due 2002 (the "NOTES"), with an
option, for the sole purpose of covering over-allotments in connection with the
sale of the Notes, to purchase up to an additional $20,000,000 aggregate
principal amount of Notes, pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement, dated October 7,
1997 (the "PURCHASE AGREEMENT"), by and among the Company and the Initial
Purchasers. In order to induce the Initial Purchasers listed in Schedule I
thereto to purchase the Notes, and for the benefit of the Holders from time to
time of the Transfer Restricted Securities (as defined below), the Company has
agreed to provide the registration rights set forth in this Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
"ACT": As defined in the final paragraph of this Section 1.
"AGREEMENT": As defined in the preamble hereto.
"BUSINESS DAY": A day other than a Saturday, a Sunday, a day on which the
banking institutions in the State and City of New York are authorized or
obligated by law or executive order to close or a day that is declared a
national or New York state holiday.
"CLOSING DATE": October 14, 1997.
"COMMISSION": Securities and Exchange Commission.
"COMMON STOCK": Common Stock of the Company, par value $.01 per share, or
other securities issuable upon conversion of the Notes pursuant to the
Indenture.
"COMPANY": As defined in the preamble hereto.
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"COMPANY COUNSEL": As defined in Section 2(a) hereof.
"CONTROLLING PERSON": As defined in Section 6(a) hereof.
"DAMAGES PAYMENT DATE": Each of the semi-annual interest payment dates
provided in the Indenture, to be determined as if Notes are outstanding even if
all Notes have been converted to shares of Common Stock or are otherwise not
outstanding.
"EFFECTIVENESS PERIOD": As defined in Section 2(a)(ii) hereof.
"EFFECTIVENESS TARGET DATE": The 120th day after the Closing Date.
"EXCHANGE ACT": Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
"HOLDER": Each registered owner of any Transfer Restricted Security.
"INDEMNIFIED HOLDER": As defined in Section 6(a) hereof.
"INDENTURE": The Indenture, dated as of October 14, 1997, by and between
the Company and The Bank of New York, as trustee (the "TRUSTEE"), pursuant to
which the Notes are to be issued, as such Indenture is amended, modified or
supplemented from time to time in accordance with the terms thereof.
"INITIAL PURCHASERS": As defined in the preamble hereto.
"LIQUIDATED DAMAGES": As defined in Section 3(a) hereof.
"LOSSES": As defined in Section 6(a) hereof.
"NOTES": As defined in the preamble hereto.
"OFFERING CIRCULAR" The Offering Circular dated as of October 7, 1997,
relating to the Notes, as such Offering Circular may be amended or supplemented.
"PERSON": A corporation, an association, a partnership, an individual, a
joint venture, a joint stock company, a trust, an unincorporated organization or
a government or an agency or political subdivision thereof.
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"PROSPECTUS": The prospectus included in the Shelf Registration Statement,
as amended or supplemented including, without limitation, by any post-effective
amendments thereto, and all material incorporated by reference into such
prospectus.
"PURCHASE AGREEMENT": As defined in the preamble hereto.
"RECORD HOLDER": (i) with respect to any Damages Payment Date relating to
any Note that is a Transfer Restricted Security as to which any Liquidated
Damages have accrued, the registered Holder of such Note on the record date with
respect to the interest payment date under the Indenture on which such Damages
Payment Date shall occur and (ii) with respect to any Damages Payment Date
relating to any Common Stock that is a Transfer Restricted Security as to which
any such Liquidated Damages have accrued, the registered holder of such Common
Stock 15 days prior to such scheduled Damages Payment Date.
"REGISTRATION DEFAULT": As defined in Section 3(a) hereof.
"REQUISITE INFORMATION": As defined in Section 2(b) hereof.
"SECURITIES ACT": Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"SHELF REGISTRATION STATEMENT": As defined in Section 2(a) hereof.
"TARGETED FILING DATE": The 60th day after the Closing Date.
"TIA": The Trust Indenture Act of 1939, as amended, as in effect on the
date of the Indenture.
"TRANSFER RESTRICTED SECURITIES": Each Note, and any Common Stock issued
upon conversion of any Note, until the earliest to occur of (i) the date on
which such Note or Common Stock, as the case may be, has been effectively
registered under the Securities Act and sold in a manner contemplated by the
Shelf Registration Statement, (ii) the date on which such Note or Common Stock,
as the case may be, has been sold to the public in compliance with Rule 144
under the Securities Act (or any successor provision thereto), or is
transferable to the public pursuant to paragraph (k) of such Rule 144 (or any
successor provision thereto) or (iii) has otherwise been transferred and a new
Note or share of Common Stock not subject to transfer restrictions under the
Securities Act has been delivered by or on behalf of the Company in accordance
with the Indenture.
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"UNDERWRITTEN OFFERING": A registration in which securities of the Company
are sold to an underwriter for reoffering to the public.
References herein to the term "Holders of a majority in aggregate principal
amount of Transfer Restricted Securities" or words to a similar effect shall
mean, with respect to any request, notice, demand, objection or other action by
the holders of Transfer Restricted Securities hereunder or pursuant hereto
(each, an "ACT"), registered holders of a number of shares of then outstanding
Common Stock constituting Transfer Restricted Securities and an aggregate
principal amount of then outstanding Notes constituting Transfer Restricted
Securities, such that the sum of such shares of Common Stock and the shares of
Common Stock issuable upon conversion of such Notes constitute in excess of 50%
of the sum of all of the then outstanding shares of Common Stock constituting
Transfer Restricted Securities and the number of shares of Common Stock issuable
upon conversion of then outstanding Notes constituting Transfer Restricted
Securities. For purposes of the immediately preceding sentence, any Holder may
elect to take any Act with respect to all or any portion of the Transfer
Restricted Securities held by it and only the portion as to which such Act is
taken shall be included in the numerator of the fraction described in the
preceding sentence.
2. SHELF REGISTRATION
(a) The Company hereby agrees to use all reasonable efforts to:
(i) file with the Commission no later than the Targeted Filing Date,
a registration statement for an offering to be made on a continuous basis
pursuant to Rule 415 under the Securities Act (or any successor provision
thereto) covering all of the Transfer Restricted Securities (the "SHELF
REGISTRATION STATEMENT"); and
(ii) cause the Shelf Registration Statement to be declared effective
pursuant to the Securities Act by the Effectiveness Target Date, and use
all reasonable efforts to keep the Shelf Registration Statement
continuously effective and available for resale of the Transfer Restricted
Securities under the Securities Act for the period (the "EFFECTIVENESS
PERIOD") ending on the earlier of (A) the date that is two years after the
date on which all the Notes are issued (including those issued pursuant to
the over-allotment option granted to the Initial Purchasers in the Purchase
Agreement) to the Initial Purchasers, (B) the date on which there ceases to
be outstanding any Transfer Restricted Securities, and (C) the date on
which the Company receives an opinion from its legal counsel ("COMPANY
COUNSEL") to the effect that all Transfer Restricted Securities can be
freely traded without the continued effectiveness of the Shelf Registration
Statement.
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(b) The Company may require each Holder of Transfer Restricted Securities
as to which any registration is being effected to furnish to the Company, within
20 Business Days after written request therefor has been made by the Company,
such information regarding the distribution of such Holder's Transfer Restricted
Securities as is required by law to be disclosed in the Shelf Registration
Statement (the "REQUISITE INFORMATION"), such information to be solicited
substantially in the form of the questionnaire attached to the Offering Circular
as Annex B.
The Company shall file prospectus supplements pursuant to Rule 424
under the Securities Act (or any successor provision thereto) to amend or
supplement the Shelf Registration Statement to include in the Shelf Registration
Statement the Requisite Information as to each Holder (and the Transfer
Restricted Securities held by such Holder) that provides notice to the Company
of the Requisite Information. The Company shall file such a prospectus
supplement with the Commission no less than once every twenty Business Days if
during such period the Company receives notice from any Holder which includes
the Requisite Information with respect to any such Holder; provided, however,
that in the event the Company receives notice from any Holders which includes
the Requisite Information with respect to such Holders and such Requisite
Information pertains to at least $1,000,000 principal amount of Notes and/or a
comparable amount of underlying Common Stock, the Company shall file such a
prospectus supplement with the Commission within ten Business Days of the
receipt of such notice. The Company shall provide each Holder a copy of such
Prospectus as so amended or supplemented containing the Requisite Information
within three Business Days of filing such Prospectus with the Commission in
order to permit such Holder to comply with the prospectus delivery requirements
of the Securities Act in a timely manner with respect to any proposed
disposition of such Holder's Transfer Restricted Securities.
No Holder shall be entitled to use the Prospectus unless and until
such Holder shall have furnished the information required by this Section 2(b)
in accordance with the first or second paragraph hereof and such information
with respect to such Holder shall have been included in the Prospectus. If any
information furnished to the Company by a Holder for inclusion in the Shelf
Registration Statement or the Prospectus becomes materially misleading, such
Holder agrees (i) to furnish promptly to the Company all information required to
be disclosed in such Shelf Registration Statement in order to make the
information previously furnished to the Company not materially misleading and
(ii) to stop selling or offering for sale Transfer Restricted Securities
pursuant to the Shelf Registration Statement until such Holder's receipt of the
copies of a supplemented or amended Prospectus as contemplated by Section
4(b)(xi) hereof.
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3. LIQUIDATED DAMAGES
(a) The Company and the Initial Purchasers agree that the Holders of
Transfer Restricted Securities will suffer damages if the Company fails to
fulfill its obligations pursuant to Section 2 hereof and that it would not be
possible to ascertain the extent of such damages. Accordingly, the Company
hereby agrees to pay liquidated damages ("LIQUIDATED DAMAGES") to each Holder of
Transfer Restricted Securities under the circumstances and to the extent set
forth below:
(i) if the Shelf Registration Statement has not been filed with the
Commission on or prior to the Targeted Filing Date; or
(ii) if the Shelf Registration Statement is not declared effective by
the Commission on or prior to the Effectiveness Target Date; or
(iii) if, at any time during the Effectiveness Period for a period
of time which shall exceed 60 days in the aggregate in any 360-day period,
the Shelf Registration Statement has been declared effective by the
Commission and such Shelf Registration Statement ceases to be effective
(without being succeeded on the same day by a post-effective amendment to
such Shelf Registration Statement that cures such failure and that is
immediately declared effective) or use of the Prospectus is suspended
pursuant to Section 4(c);
(any of the foregoing, a "REGISTRATION DEFAULT"). In the event of any such
Registration Default, the Company shall pay as the sole remedy Liquidated
Damages to each Holder of Transfer Restricted Securities accruing at a rate
equal to 25 basis points (0.25%) per annum on (A) where such Transfer Restricted
Securities are Notes, the aggregate principal amount of such Notes held by such
Holder and (B) where such Transfer Restricted Securities are shares of Common
Stock issued upon conversion of Notes, the aggregate principal amount of Notes
that were converted into such shares, which rate shall in any case increase by
an additional 25 basis points (0.25%) per annum on the first day of any
subsequent 90-day period that the Registration Default remains uncured up to a
maximum rate equal to 100 basis points (1.0%) per annum. Following the cure of
all Registration Defaults relating to any Transfer Restricted Securities, the
accrual of Liquidated Damages with respect to such Transfer Restricted
Securities will cease (without in any way limiting the effect of any subsequent
Registration Default). A Registration Default under clause (i) above shall be
cured on the date that the Shelf Registration Statement is filed with the
Commission; a Registration Default under clause (ii) above shall be cured on the
date that the Shelf Registration Statement is declared effective by the
Commission; and a Registration Default under clause (iii) above shall be cured
on the date a post-effective amendment to the Shelf
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Registration Statement is declared effective or suspension of the use of the
Prospectus is withdrawn.
(b) The Company shall notify the Trustee of a Registration Default within
one Business Day after each and every date on which such a Registration Default
occurs. Liquidated Damages shall be paid by the Company to the Record Holders
on each Damages Payment Date in accordance with the procedures required by the
Indenture for the payment of interest to the various Holders of the Notes, in
the case of the Notes, or by mailing checks to their registered addresses as
they appear in the register of the Company for the Common Stock, in the case of
the Common Stock; PROVIDED, HOWEVER, that any Liquidated Damages accrued with
respect to any Note or portion thereof called for redemption on a redemption
date, repurchased in connection with a Change of Control Offer (as defined in
the Indenture) on a repurchase date, or converted into Common Stock on a
conversion date after which the Record Holders have been determined and prior to
the Damages Payment Date, shall, in any such event, be paid instead to the
holder who submitted such Note or portion thereof for redemption, repurchase or
conversion. Each obligation to pay Liquidated Damages shall be deemed to
commence accruing on the date of the applicable Registration Default and to
cease accruing when all Registration Defaults have been cured.
(c) All of the Company's obligations set forth in this Section 3 which are
outstanding with respect to any Transfer Restricted Securities at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security have been satisfied
in full.
(d) Any payments due and payable pursuant to this Section 3 shall be
subject to the provisions of Article XV of the Indenture as if such payments
were additional interest on the Notes.
4. REGISTRATION PROCEDURES
(a) The parties hereto agree that the Transfer Restricted Securities shall
not be sold in any Underwritten Offering and the Company shall in no event be
required to cooperate with or pay for any Underwritten Offering.
(b) In connection with the Shelf Registration Statement and any Prospectus
required by this Agreement, during the Effectiveness Period the Company shall:
(i) use all reasonable efforts to keep the Shelf Registration
Statement continuously effective for the Effectiveness Period; upon the
occurrence of any event that would cause the Shelf Registration Statement
or the Prospectus contained therein (A) to
8
contain a material misstatement or omission or (B) to not be effective or
to not be usable for resales of Transfer Restricted Securities during the
Effectiveness Period, the Company shall in the case of clause (A) file
promptly an appropriate amendment to the Shelf Registration Statement or a
supplement to the Prospectus correcting any such misstatement or omission,
and, in the case of either clause (A) or (B), use all reasonable efforts to
cause such amendment, if applicable, to be declared effective or the Shelf
Registration Statement and the related Prospectus to become usable for their
intended purposes as soon as practicable thereafter;
(ii) furnish to each of the Initial Purchasers and to counsel for the
Initial Purchasers, before filing with the Commission, copies of the Shelf
Registration Statement and the Prospectus included therein, and any
pre-effective amendments thereof, which documents shall be subject to the
review of the Initial Purchasers and such counsel for a period of at least
five Business Days; and shall consider any requests for additions to or
modifications of the Shelf Registration Statement and the Prospectus,
included therein and any pre-effective amendments thereto reasonably made
by any Initial Purchaser or counsel for the Initial Purchasers;
(iii) use all reasonable efforts to prepare and file with the
Commission such amendments and post-effective amendments to the Shelf
Registration Statement as may be necessary to keep the Shelf Registration
Statement effective during the Effectiveness Period; use all reasonable
efforts to cause the Prospectus to be supplemented by any required
Prospectus supplement within the time period specified in Section 2(b)
hereof, and as so supplemented, cause the Prospectus to be filed pursuant
to Rule 424 under the Securities Act and to comply fully with the
applicable provisions of Rule 424 under the Securities Act in a timely
manner; and use all reasonable efforts to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
the Shelf Registration Statement during the Effectiveness Period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in the Shelf Registration Statement or supplement
to the Prospectus;
(iv) use all reasonable efforts to notify the selling Holders promptly
and, if requested by such Persons, to confirm such advice in writing, (A)
when the Prospectus, any Prospectus supplement or any post-effective
amendment to the Shelf Registration Statement applicable to such Holder has
been filed, and, with respect to the Shelf Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B)
of any request by the Commission for amendments to the Shelf Registration
Statement or amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission of any
stop order
9
suspending the effectiveness of the Shelf Registration Statement under
the Securities Act or of the suspension by any state securities commission
of the qualification of the Transfer Restricted Securities for offering or
sale in any jurisdiction or of the initiation of any proceeding for any of
the preceding purposes or (D) of the existence of any fact or of the
happening of any event (but not the substance or details of any such fact
or event) that makes untrue any statement of a material fact made in the
Shelf Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein, or that requires
the making of any additions to or changes in the Shelf Registration
Statement or the Prospectus in order to make the statements therein not
misleading;
(v) if at any time the Commission shall issue any stop order
suspending the effectiveness of the Shelf Registration Statement, or any
state securities commission shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, use all reasonable
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(vi) if requested by any selling Holder, within the time period
specified in Section 2(b) hereof, use all reasonable efforts to incorporate
in the Shelf Registration Statement or Prospectus, pursuant to a supplement
or post-effective amendment, if necessary, such Requisite Information as
such selling Holders request to have included therein, and use all
reasonable efforts to make all required filings of any such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; PROVIDED, HOWEVER, that the Company
shall not be required to take any action pursuant to this Section 4(b)(vi)
that would, in the opinion of Company Counsel, violate applicable law or to
include information to which the Company reasonably objects;
(vii) deliver to each selling Holder, without charge, as many
copies of the Shelf Registration Statement and the Prospectus (including
each preliminary prospectus intended for public distribution) (including
documents incorporated by reference therein and exhibits thereto) and any
amendment or supplement thereto as such selling Holder reasonably may
request; subject to Section 4(c) below, the Company hereby consents to the
use of the Prospectus and any amendment or supplement thereto by each of
the selling Holders in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment
or supplement thereto in conformity with the Plan of Distribution set forth
in the Prospectus and in compliance with all applicable laws and this
Agreement;
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(viii) take all such other actions in connection therewith as are
reasonable and customary in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to the Shelf Registration
Statement contemplated by this Agreement, all to such extent as may be
reasonably requested by any Initial Purchaser or by any Holder of Transfer
Restricted Securities in connection with any sale or resale pursuant to the
Shelf Registration Statement contemplated by this Agreement;
(ix) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, and their respective counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
domestic jurisdictions as the selling Holders may reasonably request; and
do any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the Shelf Registration Statement; PROVIDED, HOWEVER,
that in no event shall the Company be obligated to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it is
not now so qualified, (ii) file any general consent to service of process
in any jurisdiction where it is not as of the date hereof so subject or
(iii) subject itself to taxation in any jurisdiction if it is not so
subject;
(x) cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and enable
such Transfer Restricted Securities to be in such denominations and
registered in such names as the selling Holders may request, provided that
such request is made at least two Business Days prior to any sale of
Transfer Restricted Securities;
(xi) as soon as reasonably practicable after the occurrence of any
fact or event of the kind described in Section 4(b)(iv)(D) above, use all
reasonable efforts to prepare a supplement or post-effective amendment to
the Shelf Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of Transfer Restricted
Securities, the Prospectus shall not contain an untrue statement of a
material fact or omit to state any material fact necessary, to make the
statements made therein not misleading in the light of the circumstances in
which they were made; PROVIDED, HOWEVER, that notwithstanding anything to
the contrary herein, the Company shall not be required to prepare and file
such a supplement or post-effective amendment or document if the fact no
longer exists;
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(xii) provide a CUSIP number for all Notes (which shall be a
separate number for any Notes that are not Transfer Restricted Securities)
not later than the effective date of the Shelf Registration Statement and
provide the Trustee under the Indenture with printed certificates for the
Notes that are in a form eligible for deposit with The Depository Trust
Company;
(xiii) make generally available to its security holders, in a
regular filing on Form 10-Q or Form 10-K, a consolidated earnings statement
meeting the requirements of Rule 158 under the Securities Act (which need
not be audited) for the twelve-month period commencing after the effective
date of the Shelf Registration Statement;
(xiv) cause the Indenture to be qualified under the TIA not later
than the effective date of the Shelf Registration Statement and, in
connection therewith, cooperate with the Trustee and the Holders to effect
such changes to the Indenture as may be required for such Indenture to be
so qualified in accordance with the terms of the TIA, and execute, and use
all reasonable efforts to cause the Trustee to execute, all documents that
may be required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner;
(xv) cause the Common Stock covered by the Shelf Registration
Statement to be listed on the Nasdaq Stock Market or such other national
securities exchange or automated quotation system on which the Common Stock
is then listed or quoted; and
(xvi) provide promptly to each Holder upon request any document
filed with the Commission pursuant to the requirements of Section 13 and
Section 15 of the Exchange Act.
(c) Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company of the existence of any fact
or event of the kind described in Section 4(b)(iv)(D) hereof, such Holder shall:
(i) keep the fact of such notice confidential and (ii) stop selling or offering
for sale Transfer Restricted Securities pursuant to the Shelf Registration
Statement until such Holder's receipt of the copies of a supplemented or amended
Prospectus as contemplated by Section 4(b)(xi) hereof, or until it receives
advice in writing from the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus. If so directed by the Company,
each Holder shall deliver to the Company (at the expense of the Company) all
copies, other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Transfer Restricted Securities that was current at
the time of receipt of such notice.
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(d) Notwithstanding any provision of this Agreement to the contrary, it
shall not be a breach or violation of any obligation of the Company hereunder if
the Company fails to take any action otherwise required hereunder because, in
its reasonable determination, such action would require the Company to disclose
material, non-public information that the Company has a BONA FIDE business or
legal reason for not disclosing regardless of whether the Company caused such
material, non-public information to exist; PROVIDED, that any suspension of the
use of the Prospectus included in the Shelf Registration Statement as a result
of this Section 4(d) shall not effect the Company's obligation to pay Liquidated
Damages pursuant to Section 3.
(e) The Company shall have no obligation to keep a Prospectus usable or to
give notice that a Prospectus is not usable by a particular Holder to the extent
such Prospectus is not usable by such Holder because current Requisite
Information with respect to such Holder is not included therein because such
Holder has not provided such information to the Company in accordance with
Section 2(b).
5. REGISTRATION EXPENSES
The following expenses incident to the Company's performance of or
compliance with this Agreement shall be borne by the Company regardless of
whether the Shelf Registration Statement becomes effective: (i) all registration
and filing fees and expenses; (ii) all fees and expenses associated with
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing of copying (including printing of any certificates
evidencing the Notes and copying of Prospectuses), messenger and delivery
services and telephone; (iv) all fees and disbursements of Company Counsel; (v)
all application and filing fees in connection with listing any securities on a
national securities exchange or automated quotation system; and (vi) all fees
and disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Company shall, in any event, bear its own internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
6. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each Holder
and (ii) each person, if any, who controls (within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act) any Holder (any of the
persons referred to in this clause (ii) being hereinafter referred to as a
"CONTROLLING PERSON") and (iii) the respective officers, directors,
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partners, employees, representatives and agents of any Holder or any
controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "INDEMNIFIED HOLDER"), to the fullest extent
lawful, from and against any and all losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to reasonable
attorneys' fees and expenses whatsoever incurred in investigating, preparing
or defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation) (collectively, "LOSSES"), joint or several, to which they or any
of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Losses (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Shelf Registration Statement or Prospectus or
any amendment or supplement thereto or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent but only
to the extent that any such Losses arise out of or are based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by any Holder for use therein; and provided further,
however, that the foregoing indemnity shall not inure to the benefit of any
Indemnified Holder if the person asserting such Loss (A) purchased a Transfer
Restricted Security and the Indemnified Holder, or someone acting on the
Indemnified Holder's behalf, did not deliver to such person at or prior to
the written confirmation of the sale of such Transfer Restricted Security a
Prospectus (as then amended or supplemented, if the company furnishes any
amendments or supplements thereto) and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss,
liability, claim, damage or expense; or (B) received a Prospectus or an
amendment or supplement thereto in violation of Section 4(c) of this
Agreement if such violation caused such Loss. The Company shall notify the
Holders promptly of the institution, threat or assertion of any claim,
proceeding (including any governmental investigation) or litigation in
connection with the matters addressed by this Agreement that involves the
company or any Indemnified Holder.
(b) In case any action or proceeding (including, without limitation,
any governmental or regulatory investigation or proceeding) shall be brought or
asserted against any of the Indemnified Holders with respect to which indemnity
may be sought against the Company, such Indemnified Holder (or the Indemnified
Holder controlled by such controlling person) shall promptly notify the Company
in writing (PROVIDED that the failure to give such notice shall not relieve the
Company of its obligations pursuant to this Agreement except to the extent the
Company is prejudiced by such failure). In case any such action is brought
against an Indemnified Holder, and it notifies the Company of the commencement
thereof, the Company will be entitled to participate therein, and to the extent
it elects by written notice delivered to the Indemnified Holder
14
promptly after receiving the aforesaid notice from such Indemnified Holder,
to assume and control the defense thereof with counsel reasonably
satisfactory to such Indemnified Holder. Notwithstanding the foregoing, the
Indemnified Holder shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Holder, PROVIDED
that the fees and expenses of such counsel shall be at the expense of the
Company if (i) the Company has failed to assume the defense and employ
counsel reasonably satisfactory to the Holders or (ii) the named parties to
any such action (including any impleaded parties) include such Indemnified
Holder and the Company and such Indemnified Holder shall have reasonably
concluded that there may be one or more legal defenses available to it that
are different from or in addition to those available to the Company;
PROVIDED, FURTHER, that the Company shall not in such event be responsible
hereunder for the fees and expenses of more than one firm of separate
counsel, which firm shall be designated by the Holders and shall be subject
to the Company's approval, not to be unreasonably withheld, in connection
with any action or separate but related actions in the same jurisdiction, in
addition to any local counsel. The Company shall not be liable for any
settlement of any such action or proceeding effected without the Company's
prior written consent, which consent shall not be unreasonably withheld or
delayed, and the Company agrees to indemnify and hold harmless any
Indemnified Holder from and against any Loss by reason of any settlement of
any action effected with the Company's written consent. The Company shall
not, without the prior written consent of each Indemnified Holder, settle or
compromise or consent to the entry of a judgment in or otherwise seek to
terminate any pending or threatened litigation or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
any Indemnified Holder is a party thereto), unless such settlement,
compromise, consent or termination includes an unconditional release of each
Indemnified Holder from all liability arising out of such action, claim,
litigation or proceeding.
(c) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Company, its directors, its
officers, and any person controlling (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) the Company, and the
respective officers, directors, partners, employees, representatives and agents
of each such person, to the same extent as the foregoing indemnity from the
Company to each of the Indemnified Holders, but only with respect to claims and
actions based on information relating to such Holder furnished in writing by
such Holder for use in the Shelf Registration Statement or Prospectus. In case
any action or proceeding shall be brought against any of Company or its
directors or officers or any such controlling person in respect of which
indemnity may be sought against a Holder of Transfer Restricted Securities, such
Holder shall have the rights and duties given the Company, and each of the
Company or its directors or officers of 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 selling Holder hereunder be greater in amount than
15
the dollar amount of the proceeds received by such Holder upon the sale of the
securities registered pursuant to provisions hereof giving rise to such
indemnification obligation.
7. CONTRIBUTION.
If the indemnification provided for in Section 6 hereof is unavailable to a
party entitled to indemnification in respect of any Losses referred to therein,
then each 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 (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Holders on the
other hand from their sale of Transfer Restricted Securities or (ii) if such
allocation is not permitted by applicable law, the relative fault of the Company
on the one hand and of the Indemnified Holder on the other in connection with
the statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand 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 the Company, 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 indemnity and contribution
obligations of each indemnifying party set forth herein shall be in addition to
any liability or obligation such indemnifying party may otherwise have to any
indemnified party, including under this Agreement.
8. RULE 144A
The Company hereby agrees with each Holder, during the Effectiveness
Period, to make available to any Holder or beneficial owner of Transfer
Restricted Securities in connection with any sale thereof and any prospective
purchase of such Transfer Restricted Securities from such Holder or beneficial
owner, any information required to be supplied to a Holder by Rule 144A(d)(4)
under the Securities Act (so long as such information is required to permit such
transfer under Rule 144A) in order to permit and sales of such Transfer
Restricted Securities pursuant to Rule 144A.
9. MISCELLANEOUS
(a) REMEDIES. Each party agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by such party
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate;
PROVIDED; HOWEVER, that the parties hereto acknowledge and
16
agree that the sole remedy for a Registration Default shall be a right to
Liquidated Damages as provided in Section 3 hereto.
(b) NO INCONSISTENT AGREEMENTS. The Company shall not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder are not inconsistent with the rights granted to the holders of
the Company's securities under any agreement in effect on the date hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of Holders of a majority in aggregate principal amount of
Transfer Restricted Securities.
(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return-receipt requested), or courier guaranteeing
overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Note registrar under the Indenture or the stock register of the Company, as
the case may be, with a copy to the Note registrar under the Indenture or
the transfer agent, as applicable; and
(ii) if to the Company:
CellStar Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention:
with a copy to:
Xxxxxx and Xxxxx, LLP
0000 XxxxxxxXxxx Xxxxx
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx, III
All such notices and communications shall be deemed to have been duly
given; at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail,
17
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; PROVIDED that this Agreement shall
not inure to the benefit of or be binding upon a successor or assign of a Holder
unless and to the extent such successor or assign acquired Transfer Restricted
Securities from such Holder.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(i) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and the remaining provisions contained
herein shall not be affected or impaired thereby.
(j) ENTIRE AGREEMENT. This Agreement, together with the other Transaction
Agreements (as defined in the Purchase Agreement), is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
CELLSTAR CORPORATION
By: /s/ Xxxxxx Xxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxx Xxxxxxxxx
Title: Vice President and Secretary
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxxxxxx Parish
---------------------------------
Name: Xxxxxxx Parish
Title: Senior Managing Director
CHASE SECURITIES INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
