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Exhibit 4.3
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
May 20, 1998
SOCIETE GENERALE SECURITIES CORPORATION
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Key Components, LLC (the "Company") and Key Components Finance
Corp. ("Finance Corp." and, together with the Company, the "Issuers") propose to
issue and sell to you (the "Initial Purchaser"), upon the terms set forth in a
purchase agreement dated May 20, 1998 (the "Purchase Agreement"), $80,000,000
principal amount of its 10-1/2% Senior Notes due 2008 (the "Securities").
Payment of principal and interest on the Securities will be unconditionally
guaranteed, jointly and severally, on an unsecured senior basis by the
Guarantors. Capitalized terms used but not specifically defined herein have the
respective meanings ascribed thereto in the Purchase Agreement. As an inducement
to the Initial Purchaser to enter into the Purchase Agreement and in
satisfaction of a condition to your obligations thereunder, the Issuers agree
with you, for the benefit of the holders (including the Initial Purchaser) of
the Securities (collectively, the "Holders"), as follows:
1. Registered Exchange Offer. The Issuers shall prepare and,
not later than 60 days following the Issue Date (as hereinafter defined), the
Issuers shall file with the Commission a registration statement (the "Exchange
Offer Registration Statement") on an appropriate form under the Securities Act
with respect to a proposed offer (the "Exchange Offer") to the Holders to issue
and deliver to such Holders, in exchange for the Securities, a like aggregate
principal amount of debt securities of the Issuers (the "Exchange Securities")
identical in all material respects to the Securities, except for the transfer
restrictions relating to the Securities, shall use their best efforts to cause
the Exchange Offer Registration Statement to become effective under the
Securities Act no later than 150 days after the Issue Date and the Exchange
Offer to be consummated no later than 165 days after the Issue Date, and shall
keep the Exchange Offer Registration Statement effective for not less than 20
business days (or longer, if required by applicable law) after the date notice
of the Exchange Offer is mailed to the Holders (such period being called the
"Exchange Offer Registration Period"). The Exchange Securities will be issued
under the Indenture or an indenture (the "Exchange Securities Indenture")
between the Issuers, the Guarantors and the Trustee or such other bank or trust
company reasonably satisfactory to you, as trustee (the "Exchange Securities
Trustee"), such indenture to be identical in all material respects to the
Indenture except for the transfer restrictions relating to the Securities (as
described above).
Upon the effectiveness of the Exchange Offer Registration
Statement, the Issuers shall promptly commence the Exchange Offer, it being the
objective of such Exchange Offer to
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enable each Holder electing to exchange Securities for Exchange Securities
(assuming that such Holder (a) is not (i) an affiliate of the Issuers within the
meaning of the Securities Act or (ii) an Exchanging Dealer (as defined below)
not complying with the requirements of the next sentence, (b) acquires the
Exchange Securities in the ordinary course of such Holder's business and (c) has
no arrangements or understandings with any person to participate in the
distribution of the Exchange Securities) and to trade such Exchange Securities
from and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of
the several states of the United States. The Issuers, the Initial Purchaser and
each Exchanging Dealer (as defined below) acknowledge that, pursuant to current
interpretations by the Commission's staff of Section 5 of the Securities Act,
(i) each Holder which is a broker-dealer electing to exchange Securities,
acquired for its own account as a result of market making activities or other
trading activities, for Exchange Securities (an "Exchanging Dealer"), is
required to deliver a prospectus containing the information set forth in Annex A
hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures"
section and the "Purpose of the Exchange Offer" section, and in Annex C hereto
in the "Plan of Distribution" section of such prospectus in connection with a
sale of any such Exchange Securities received by such Exchanging Dealer pursuant
to the Exchange Offer and (ii) if the Initial Purchaser elects to sell Exchange
Securities acquired in exchange for Securities constituting any portion of an
unsold allotment it is required to deliver a prospectus containing the
information required by Item 507 or 508 of Regulation S-K under the Securities
Act, as applicable, in connection with such a sale.
In connection with the Exchange Offer, the Issuers shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(b) keep the Exchange Offer open for not less than 30 days
after the date notice of the Exchange Offer is mailed to the Holders (or longer
if required by applicable law);
(c) utilize the services of a Depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business day on which
the Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws applicable
to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer,
the Issuers shall:
(a) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Exchange Offer;
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
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(c) cause the Trustee or the Exchange Securities Trustee, as
the case may be, promptly to authenticate and deliver to each Holder of
Securities, Exchange Securities equal in principal amount to the Securities of
such Holder so accepted for exchange.
The Issuers and the Guarantors shall use their reasonable best
efforts to keep the Exchange Offer Registration Statement effective and to amend
and supplement the prospectus contained therein in order to permit such
prospectus to be used by all persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such persons must
comply with such requirements in order to resell the Exchange Securities;
provided that (i) in the case where such prospectus and any amendment or
supplement thereto must be delivered by an Exchanging Dealer, such period shall
be the lesser of 180 days and the date on which all Exchanging Dealers have sold
all Exchange Securities held by them and (ii) the Issuers shall make such
prospectus and any amendment or supplement thereto available to any
broker-dealer for use in connection with any resale of any Exchange Securities
for a period of not less than 90 days after the consummation of the Exchange
Offer.
The Indenture or the Exchange Securities Indenture, as the
case may be, shall provide that the Securities and the Exchange Securities shall
vote and consent together on all matters as one class and that none of the
Securities or the Exchange Securities will have the right to vote or consent as
a separate class on any matter.
Interest on each Exchange Security issued pursuant to the
Exchange Offer will accrue from the last interest payment date on which interest
was paid on the Securities surrendered in exchange therefor or, if no interest
has been paid on the Securities, from the date of original issue of the
Securities.
Each Holder participating in the Exchange Offer shall be
required to represent to the Issuers that at the time of the consummation of the
Exchange Offer (i) any Exchange Securities received by such Holder will be
acquired in the ordinary course of business, (ii) such Holder will have no
arrangements or understanding with any person to participate in the distribution
of the Securities or the Exchange Securities within the meaning of the
Securities Act and (iii) such Holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Issuers, or if it is an affiliate, it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Issuers will
ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not include, as of the consummation
of the Exchange Offer, an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
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2. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission the Issuers are not
permitted to effect the Exchange Offer as contemplated by Section 1 hereof, (ii)
the Exchange Offer is not consummated within 165 days after the Issue Date, or
(iii) any holder (A) is not eligible to participate in the Exchange Offer, (B)
participates in the Exchange Offer and does not receive freely transferable
Exchange Securities in exchange for tendered Securities or (C) is a
broker-dealer that holds Securities acquired directly from the Issuers or one of
their affiliates, then the following provisions shall apply:
(a) The Issuers and the Guarantors shall (i) promptly upon
becoming aware of any of the foregoing matters deliver to the Holders and the
Trustee written notice thereof and (ii) use their best efforts to as promptly as
practicable after the date such obligation arises (the "Shelf Filing Date"), but
in no event later than 30 days following such Shelf Filing Date, file with the
Commission and thereafter shall use their best efforts to cause to be declared
effective a shelf registration statement on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer Restricted
Securities (as defined below) by the Holders from time to time in accordance
with the methods of distribution set forth in such registration statement
(hereafter, a "Shelf Registration Statement" and, together with any Exchange
Offer Registration Statement, a "Registration Statement").
(b) The Issuers and the Guarantors shall use their best
efforts to keep the Shelf Registration Statement continuously effective in order
to permit the prospectus forming part thereof to be usable by Holders for a
period of two years from the Issue Date or such shorter period that will
terminate when all the Securities and Exchange Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or are saleable pursuant to Rule 144(k) (in any such case, such period
being called the "Shelf Registration Period"). The Issuers and the Guarantors
shall be deemed not to have used their best efforts to keep the Shelf
Registration Statement effective during the requisite period if they voluntarily
take any action that would result in Holders of Securities or Exchange
Securities covered thereby not being able to offer and sell such Securities or
Exchange Securities during that period, unless such action is required by
applicable law.
(c) Notwithstanding any other provisions hereof, the Issuers
and the Guarantors will ensure that (i) any Shelf Registration Statement and any
amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the applicable requirements of
the Securities Act and the rules and regulations thereunder, (ii) any Shelf
Registration Statement and any amendment thereto (in either case, other than
with respect to information included therein in reliance upon or in conformity
with written information furnished to the Issuers by or on behalf of any Holder
specifically for use therein (the "Holders' Information")) does not, when it
becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any prospectus forming part of any
Shelf Registration Statement, and any supplement to such prospectus (in either
case, other than with respect to Holders' Information), does not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
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3. Liquidated Damages.
(a) (a) The parties hereto agree that the Holders of
Securities will suffer damages if the Issuers and the Guarantors fail to fulfill
their obligations under Section 1 or Section 2, as applicable, and that it would
not be feasible to ascertain the extent of such damages. Accordingly, if (to the
extent applicable) (i) the applicable Registration Statement is not filed with
the Commission on or prior to the date specified for such filing above, (ii) the
Exchange Offer Registration Statement is not declared effective within 150 days
after the Issue Date or the Shelf Registration Statement is not declared
effective on or prior to the 60th day after the Shelf Filing Date (or in the
case of a Shelf Registration Statement required to be filed in response to a
change in law or the applicable interpretations of the Commission's Staff, if
later, within 60 days after publication of the change in law or interpretation),
(iii) the Exchange Offer is not consummated on or prior to 165 days after the
Issue Date, or (iv) the Shelf Registration Statement is filed and declared
effective on or prior to the date specified for such effectiveness, but shall
thereafter cease to be effective (at any time that the Issuers are obligated to
maintain the effectiveness thereof) (each such event referred to in clauses (i)
through (iv), a "Registration Default"), then, as liquidated damages for such
Registration Default, the Issuers will generally be obligated to pay additional
interest ("Additional Interest") to each holder of Transfer Restricted
Securities (as defined below), which Additional Interest shall accrue on the
Securities over and above the interest set forth in the title of the Securities
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all such Registration Defaults have been
cured, at a rate of 0.50% per annum (increasing at the rate of 0.50% per annum
at the end of each 90-day period thereafter); provided, however, that Additional
Interest on the Securities may not exceed, in the aggregate, 1.0% per annum.
Following the cure of all Registration Defaults, the accrual of liquidated
damages will cease. "Transfer Restricted Securities" means each Security or
Exchange Security until (i) the date on which such Security or Exchange Security
has been exchanged for a freely transferable Exchange Security in the Exchange
Offer, (ii) the date on which such Security or Exchange Security has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iii) the date on which such Security
or Exchange Security is distributed to the public pursuant to Rule 144 under the
Securities Act or is salable pursuant to Rule 144(k) under the Securities Act.
All obligations of the Issuers and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security 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
Transfer Restricted Security shall have been satisfied in full.
(b) A Registration Default referred to in Section 3(a) hereof
shall be deemed not to have occurred and be continuing in relation to a Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to a Registration Statement to incorporate annual audited financial
information with respect to the Issuers where such post-effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related prospectus or (y) other material events with respect to the Company
that would need to be described in a Registration Statement or the related
prospectus and (ii) in the case of clause (y), the Issuers are proceeding
promptly and in good faith to amend or supplement such Registration Statement
and related
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prospectus to describe such events. Notwithstanding the foregoing, the Issuers
may publish a notice that the Shelf Registration Statement is no longer
effective or that the prospectus included therein is unusable pending the
announcement of a material corporate transaction and, in the event that the
aggregate number of days in a 12-month period for which all such notices does
not exceed 30 days, Additional Interest will not accrue and be payable, as
described in 3(a) above, as the result of such suspension.
(c) Any amounts of Additional Interest due pursuant to Section
3(a) above will be payable in cash on the regular interest payment dates with
respect to the Notes. The amount of Additional Interest will be determined by
multiplying the applicable Additional Interest rate by the principal amount of
the Securities, multiplied by a fraction, the numerator of which is the number
of days such Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360.
(d) The parties hereto agree that the liquidated damages
provided for in this Section 3 constitute a reasonable estimate of and are
intended to constitute the sole damages that will be suffered by holders of
Transfer Restricted Securities by reason of the failure of (i) the Shelf
Registration Statement or the Exchange Offer Registration Statement, as the case
may be, to be filed, (ii) the Exchange Offer Registration Statement to be
declared effective and the Exchange Offer to be consummated, (iii) the Shelf
Registration Statement to be declared effective, or (iv) the Shelf Registration
Statement to again become effective, in each case to the extent required by this
Agreement.
4. Registration Procedures. In connection with any
Registration Statement, the following provisions shall apply:
(a) The Issuers shall (i) furnish to the Initial Purchaser,
prior to the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and shall use their best efforts to reflect in each
such document, when so filed with the Commission, such comments as you
reasonably may propose; (ii) include the information set forth in Annex A hereto
on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and
the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan
of Distribution" section of the prospectus forming a part of the Exchange Offer
Registration Statement, and include the information set forth in Annex D hereto
in the Letter of Transmittal delivered pursuant to the Exchange Offer; and (iii)
if requested by the Initial Purchaser, include the information required by Items
507 or 508 of Regulation S-K under the Securities Act, as applicable, in the
prospectus forming a part of the Exchange Offer Registration Statement.
(b) The Issuers shall advise you, each Exchanging Dealer and
the Holders (if applicable) and, if requested by such person, confirm such
advice in writing (which advice pursuant to clauses (ii) through (iv) below
shall be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto
has been filed with the Commission and when such Registration Statement
or any post-effective amendment thereto has become effective;
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(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceeding for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities or the
Exchange Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in any Registration Statement or the prospectus so that, as
of such date, the statements therein are not misleading and do not omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(c) The Issuers will make every reasonable effort to obtain
the withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement.
(d) The Issuers will furnish to each Holder of Transfer
Restricted Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing, all
exhibits (including those incorporated by reference).
(e) The Issuers will, during the Shelf Registration Period,
promptly deliver to each Holder of Transfer Restricted Securities included
within the coverage of any Shelf Registration Statement, without charge, as many
copies of the prospectus (including each preliminary prospectus) included in
such Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Issuers consent to the use of the
prospectus or any amendment or supplement thereto by each of the selling Holders
of Transfer Restricted Securities in connection with the offering and sale of
the Transfer Restricted Securities covered by the prospectus or any amendment or
supplement thereto.
(f) The Issuers will furnish to each Exchanging Dealer and
each Initial Purchaser and to any other Holder who so requests, without charge,
at least one copy of the Exchange Offer Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Exchanging Dealer, Initial Purchaser or any such Holder so requests
in writing, all exhibits (including those incorporated by reference).
(g) The Issuers will, during the Exchange Offer Registration
Period, promptly deliver to each Exchanging Dealer or the Initial Purchaser, as
applicable, without charge, as many copies of the prospectus included within the
coverage of Exchange Offer Registration Statement and any amendment or
supplement thereto as such Exchanging Dealer or the Initial Purchaser, as
applicable, may reasonably request for delivery by (i) such Exchanging Dealer in
connection with a sale of Exchange Securities received by it pursuant to the
Exchange Offer or (ii) the Initial Purchaser in connection with a sale of
Exchange Securities received by it in exchange for Securities constituting any
portion of an unsold allotment; and the Issuers consent to the use of
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the prospectus or any amendment or supplement thereto by any such Exchanging
Dealer or the Initial Purchaser, as applicable, as aforesaid.
(h) Prior to any public offering of Securities or Exchange
Securities pursuant to any Registration Statement, the Issuers will use their
reasonable best efforts to register or qualify or cooperate with the Holders of
Securities included therein and its counsel in connection with the registration
or qualification of such securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Securities or Exchange
Securities covered by such Registration Statement; provided, however, that the
Issuers will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject.
(i) The Issuers will cooperate with the Holders of Securities
or Exchange Securities to facilitate the timely preparation and delivery of
certificates representing Securities or Exchange Securities to be sold pursuant
to any Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request in writing
prior to sales of Securities or Exchange Securities pursuant to such
Registration Statement.
(j) If any event contemplated by paragraphs (b)(ii) through
(v) above occurs during the period in which the Issuers are required to maintain
an effective Registration Statement, the Issuers will promptly prepare a
post-effective amendment to the Registration Statement or a supplement to the
related prospectus or file any other required document so that, as thereafter
delivered to purchasers of the Securities or purchasers of Exchange Securities
from a Holder, the prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(k) Not later than the effective date of the applicable
Registration Statement, the Issuers will obtain a CUSIP number for the Exchange
Securities and provide the applicable trustee with printed certificates for the
Securities or Exchange Securities, as the case may be, in a form eligible for
deposit with The Depository Trust Company.
(l) The Issuers and the Guarantors will comply with all
applicable rules and regulations of the Commission and will make generally
available to the Issuers' security holders as soon as practicable after the
effective date of the applicable Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act; provided that
in no event shall such earnings statement be delivered later than 45 days after
the end of a 12-month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the applicable Registration Statement, which
statements shall cover such 12-month period.
(m) The Issuers will cause the Indenture or the Exchange
Securities Indenture, as the case may be, to be qualified under the Trust
Indenture Act as required by applicable law in a timely manner.
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(n) The Issuers may require each Holder of Transfer Restricted
Securities to be sold pursuant to any Shelf Registration Statement to furnish to
the Issuers such information regarding the Holder and the distribution of such
Transfer Restricted Securities as the Issuers may from time to time reasonably
require for inclusion in such Registration Statement, and the Issuers may
exclude from such registration the Transfer Restricted Securities of any Holder
that unreasonably fails to furnish such information within a reasonable time
after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder
of Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 4(b)(ii) through (iv) hereof, such
Holder will discontinue disposition of such Transfer Restricted Securities until
such Holder's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(i) hereof, or until advised in writing (the "Advice")
by the Issuers that the use of the applicable prospectus may be resumed. If the
Issuers shall give any notice under Section 4(b)(ii) through (v) during the
period that the Issuers are required to maintain an effective Registration
Statement (the "Effectiveness Period"), such Effectiveness Period shall be
extended by the number of days during such period from and including the date of
the giving of such notice to and including the date when each seller of Transfer
Restricted Securities covered by such Registration Statement shall have received
(x) the copies of the supplemental or amended prospectus contemplated by Section
4(j) (if an amended or supplemental prospectus is required) or (y) the Advice
(if no amended or supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Issuers
shall enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and take all such other action, if
any, as Holders of a majority in aggregate principal amount of the Securities
and Exchange Securities being sold or the managing underwriters (if any) shall
reasonably request in order to facilitate any disposition of Securities or
Exchange Securities pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Issuers
shall (i) make reasonably available for inspection by a representative of, and
Special Counsel (as defined below) acting for, Holders of a majority in
aggregate principal amount of the Securities and Exchange Securities being sold
and any underwriter participating in any disposition of Securities or Exchange
Securities pursuant to such Shelf Registration Statement, all relevant financial
and other records, pertinent corporate documents and properties of the Company
and its subsidiaries and (ii) use its reasonable best efforts to have its
officers, directors, employees, accountants and counsel supply all relevant
information reasonably requested by such representative, Special Counsel or any
such underwriter (an "Inspector") in connection with such Shelf Registration
Statement.
(r) In the case of a Shelf Registration Statement, the Issuers
shall, if requested by Holders of a majority in aggregate principal amount of
the Securities and Exchange Securities being sold, their Special Counsel or the
managing underwriters (if any) in connection with such Shelf Registration
Statement, use its reasonable best efforts to cause (i) its counsel to deliver
an opinion relating to the Shelf Registration Statement and the Securities or
Exchange Securities, as applicable, in customary form, (ii) its officers to
execute and deliver all customary documents and certificates requested by
Holders of a majority in aggregate principal amount of the Securities and
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Exchange Securities being sold, their Special Counsel or the managing
underwriters (if any) and (iii) its independent public accountants to provide a
comfort letter in customary form, subject to receipt of appropriate
documentation as contemplated, and only if permitted, by Statement of Auditing
Standards No. 72.
5. Registration Expenses. The Issuers will bear all expenses
incurred in connection with the performance of their obligations under Sections
1, 2, 3 and 4 hereof and the Issuers will reimburse the Initial Purchaser and
the Holders for the reasonable fees and disbursements of one firm of attorneys
chosen by the Holders of a majority in aggregate principal amount of the
Securities and the Exchange Securities to be sold pursuant to each Registration
Statement (the "Special Counsel") acting for the Initial Purchaser or Holders in
connection therewith.
6. Indemnification.
(a) (a) Indemnification of Holders. In the event of a Shelf
Registration Statement or in connection with any prospectus delivery pursuant to
an Exchange Offer Registration Statement by an Exchanging Dealer or the Initial
Purchaser, as applicable, the Issuers and each Guarantor, jointly and severally,
shall indemnify and hold harmless each Holder (including, without limitation,
the Initial Purchaser or Exchanging Dealer) and each person, if any, who
controls such Holder within the meaning of the Securities Act (collectively
referred to for the purposes of this Section 6 as a Holder) from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, without limitation, any loss, claim, damage, liability or
action relating to purchases and sales of Securities or Exchange Securities), to
which that Holder may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of or is
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or in any preliminary
prospectus or (ii) the omission or alleged omission to state in any such
Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
each Holder for any legal or other expenses reasonably incurred by that Holder
in connection with investigating or preparing to defend or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the foregoing indemnification agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Holder from whom the person
asserting any such loss, claim, damage or liability purchased Securities or
Exchange Securities; and further provided, however, that the Issuers and the
Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon (i) an
untrue statement or alleged untrue statement in or omission or alleged omission
from any preliminary prospectus or Registration Statement or any such amendment
or supplement in reliance upon and in conformity with any Holders' Information.
The Issuers shall also indemnify underwriters, selling brokers, dealer-managers
and similar securities industry professionals participating in the distribution
(as described in such Registration Statement) their officers and directors and
each person who controls such persons within the meaning of the Securities Act
or the Exchange Act to the same extent as provided above with respect to the
indemnification of the Holders of the Securities if requested by such Holders.
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(b) Indemnification of Issuers, Guarantors, Directors and
Officers. In the event of a Shelf Registration Statement, each Holder, severally
and not jointly, agrees to indemnify and hold harmless the Issuers and each
Guarantor, their respective directors and each person, if any, who controls the
Issuers or Guarantors within the meaning of the Securities Act (collectively
referred to for the purposes of this Section 6 as the Issuers), against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Issuers or any Guarantor may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or any
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Holders' Information furnished to the Issuers by
or on behalf of that Holder specifically for use therein, and shall reimburse
the Issuers or such Guarantor for any legal or other expenses reasonably
incurred by the Issuers or such Guarantor in connection with investigating or
preparing to defend or defending against or appearing as third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided however, that no such Holder shall be liable for
any indemnity claims hereunder in excess of the amount of net proceeds received
by such Holder from the sale of Securities or Exchange Securities pursuant to
such Shelf Registration Statement.
(c) Actions; Notification. Promptly after receipt by an
indemnified party under this Section 6 of notice of any claim or the
commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this Section 6,
notify the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 6, except to the extent it has been materially adversely prejudiced by
such failure; and, provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 6. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
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the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties, which firm shall be designated in writing by the Holders of a majority
in aggregate principal amount of the Securities or Exchange Securities, as the
case may be, if the indemnified parties under this Section 6 consist of any
Holder or any of their respective officers, employees or controlling persons, or
by the Issuers, if the indemnified parties under this Section 6 consist of the
Issuers or a Guarantor or any of their respective directors, officers, employees
or controlling persons. Each indemnified party, as a condition of the indemnity
agreements contained in Sections 6(a) and 6(b), shall use all reasonable efforts
to cooperate with the indemnifying party in the defense of any such action or
claim. Subject to the provisions of Section 6(d) below, no indemnifying party
shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) Settlement without Consent if Failure to Reimburse. If at
any time an indemnified party shall have requested that an indemnifying party
reimburse the indemnified party for the reasonable fees and expenses of counsel,
such indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by this Section 6 effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the request for reimbursement, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) Contribution. If the indemnification provided for in this
Section 6 is unavailable or insufficient to hold harmless an indemnified party
under Section 6(a) or (b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Issuers and the Guarantors on the
one hand and a Holder with respect to the sale by such Holder of Securities or
Exchange Securities on the other or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Issuers and the Guarantors on the one
hand and such Holder on the other with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Issuers and the Guarantors on the one hand and a Holder
on the other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities or
Exchange Securities (before deducting expenses) received by the Issuers and the
Guarantors as set forth on the cover of the Offering Memorandum
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bear to the total proceeds received by such Holder with respect to its sale of
Securities or Exchange Securities. The relative fault 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 Issuers and the Guarantors on the one
hand or to any Holders' Information supplied by such Holder on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Issuers
and the Holders agree that it would not be just and equitable if contributions
pursuant to this Section 6(e) were to be determined by pro rata allocation (even
if the Holders were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 6(e) shall be deemed to include, for
purposes of this Section 6(e), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6(e), no Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities or Exchange Securities sold by such Holder
to any purchaser exceeds the amount of any damages which such Holder has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Any Holder's obligations to contribute as provided in this
Section 6(e) are several and not joint.
The obligations of the Issuers, the Guarantors and the Holders
in this Section 6 are in addition to any other liability which the Issuers, the
Guarantors or the Holders as the case may be, may otherwise have.
(f) Survival. The agreements contained in this Section 6 shall
survive the sale of the Securities pursuant to a Registration Statement and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
indemnified party.
7. Rules 144 and 144A. The Issuers shall use their best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Issuers are not
required to file such reports, it will, upon the written request of any Holder
of Transfer Restricted Securities, make publicly available other information so
long as necessary to permit sales of such Holder's securities pursuant to Rules
144 and 144A. The Issuers covenant that they will take such further action as
any Holder of Transfer Restricted Securities may reasonably request, all to the
extent required from time to time to enable such Holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including, without
limitation, the requirements of Rule 144A(d)(4)). Upon the written request of
any Holder of Transfer Restricted Securities, the Issuers shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Issuers to register any of its securities pursuant to the Exchange
Act.
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8. Underwritten Registrations. If any of the Transfer
Restricted Securities covered by any Shelf Registration Statement are to be sold
in an underwritten offering, the investment banker or investment bankers and
manager or managers that will administer the offering will be selected by the
Holders of a majority in aggregate principal amount of such Transfer Restricted
Securities included in such offering and such Holders shall be responsible for
all underwriting commissions and discounts in connection therewith.
9. Miscellaneous. (a) (a) Amendments and Waivers. The
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Issuers have obtained the written consent of Holders of a majority in
aggregate principal amount of the Securities and the Exchange Securities, taken
as a single class. Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter that relates exclusively to
the rights of the Holders of Securities or Exchange Securities whose Securities
or Exchange Securities are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect the rights of other Holders may be
given by Holders of a majority in aggregate principal amount of the Securities
or Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Issuers in accordance with the provisions of this Section
9(b), which address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the Indenture,
with a copy in like manner to Societe Generale Securities Corporation;
(2) if to you, at your address set forth in the Purchase
Agreement; and
(3) if to the Issuers or the Guarantors, at the address of the
Company set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; one business
day after being delivered to a next-day air courier; five business days after
being deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if telecopied.
(c) Successors and Assigns. This Agreement shall be binding
upon the Issuers and the Guarantors and their respective successors and assigns.
(d) Counterparts. This Agreement may be executed in any number
of counterparts (which may be delivered in original form or by telecopies) 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.
(e) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
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(f) Governing Law; Submission to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(g) No Inconsistent Agreements. The Issuers have not and shall
not, on or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the holders of Transfer Restricted
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The Issuers have not previously entered into any agreement which remains in
effect granting any registration rights with respect to any of their debt
securities to any person. Without limiting the generality of the foregoing,
without the written consent of the holders of a majority in aggregate principal
amount of the then outstanding Transfer Restricted Securities, the Issuers shall
not grant to any person the right to request the Issuers to register any debt
securities of the Issuers under the Securities Act unless the rights so granted
are not in conflict or inconsistent with the provisions of the Agreement.
(h) No Piggyback on Registrations. Neither the Issuers, nor
any of their security holders (other than the holders of Transfer Restricted
Securities in such capacity) shall have the right to include any securities of
the Issuers in any Shelf Registration or Exchange Offer other than Transfer
Restricted Securities.
(i) Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(j) Remedies. In the event of a breach by the Issuers or any
Guarantor, or by any holder of Transfer Restricted Securities, of any of their
obligations under this Agreement, each holder of Transfer Restricted Securities
or the Issuers and the Guarantors, as the case may be, in addition to being
entitled to exercise all rights granted by law, including recovery of damages
(other than the recovery of damages for a breach by the Issuers of its
obligations under Sections 1 or 2 hereof for which liquidated damages have been
paid pursuant to Section 3 hereof), will be entitled to specific performance of
its rights under this Agreement. The Issuers, the Guarantors and each holder of
Transfer Restricted Securities agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agree that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
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Please confirm that the foregoing correctly sets forth the
agreement among the Issuers and you.
Very truly yours,
KEY COMPONENTS, LLC.
By:_______________________
Name:
Title:
KEY COMPONENTS FINANCE CORP.
By:_______________________
Name:
Title:
X.X. XXXXXXX MANUFACTURING CO. INC.
By:_______________________
Name:
Title:
XXXXXX LOCK, INC.
By:_______________________
Name:
Title:
ESP LOCK PRODUCTS, INC.
By:_______________________
Name:
Title:
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Accepted in New York, New York
SOCIETE GENERALE SECURITIES CORPORATION
By: _________________________
Name:
Title:
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ANNEX A
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Issuers have agreed
that, for a period of 90 days after the Expiration Date (as defined herein),
they will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
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ANNEX B
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities, where such Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
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ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Issuers have agreed
that, for a period of 90 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until _______________, 199_,
all dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.1
The Issuers will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Securities may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit on any such resale of Exchange Securities
and any commission or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Issuers
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Issuers have agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
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1 In addition, the legend required by Item 502(e) of Regulations S-K will appear
on the back cover page of the Exchange Offer prospectus.
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ANNEX D
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: _______________________________________
Address: _______________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
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