EXECUTION COPY
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REGISTRATION RIGHTS AGREEMENT
Dated as of July 29, 1998
by and among
ENTEX INFORMATION SERVICES, INC.,
THE GUARANTORS NAMED HEREIN
and
CIBC XXXXXXXXXXX CORP. and
LAZARD FRERES & CO. LLC
as Initial Purchasers
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TABLE OF CONTENTS
Page
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1. Definitions...........................................................1
2. Exchange Offer........................................................4
3. Shelf Registration....................................................7
4. Additional Interest...................................................9
5. Registration Procedures..............................................10
6. Registration Expenses................................................18
7. Indemnification......................................................19
8. Rules 144 and 144A...................................................22
9. Underwritten Registrations...........................................22
10. Miscellaneous.......................................................22
(a) Remedies........................................................22
(b) Enforcement.....................................................23
(c) No Inconsistent Agreements......................................23
(d) Adjustments Affecting Registrable Notes.........................23
(e) Amendments and Waivers..........................................23
(f) Notices.........................................................23
(g) Successors and Assigns..........................................24
(h) Counterparts....................................................24
(i) Headings........................................................24
(j) Governing Law...................................................24
(k) Severability....................................................24
(l) Entire Agreement................................................24
(m) Notes Held by the Company or its Affiliates.....................25
-i-
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of July 29, 1998,
by and among ENTEX INFORMATION SERVICES, INC., a Delaware corporation (the
"Company"), THE GUARANTORS NAMED HEREIN (the "Guarantors"), and, together with
the Company, the "Issuers"), CIBC XXXXXXXXXXX CORP. and LAZARD FRERES & CO. LLC,
as initial purchasers (the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase Agreement,
dated as of July 24, 1998, among the Company, the Guarantors and the Initial
Purchasers (the "Purchase Agreement") relating to the sale by the Company to the
Initial Purchasers of $100,000,000 aggregate principal amount of the Company's
12.5% Senior Subordinated Notes due 2006 (the "Notes") to be guaranteed on a
senior subordinated basis by the Guarantors. In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Company and the Guarantors
have agreed to provide the registration rights set forth in this Agreement for
the benefit of the Initial Purchasers. The execution and delivery of this
Agreement is a condition to the Initial Purchasers' obligation to purchase the
Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4(a).
Advice: See Section 5.
Agreement: See the first introductory paragraph of this Agreement.
Applicable Period: See Section 2(b).
Closing Date: See the Purchase Agreement.
Company: See the first introductory paragraph to this Agreement.
Effectiveness Date: The 180th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 120th day after the Issue Date.
Guarantors: ENTEX Information Services of Michigan, Inc.; ENTEX Information
Services of Colorado, Inc.; ENTEX Services, Inc.; Erlanger Land Co., Inc.; and
FCP Technologies, Inc.
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of July 29, 1998, between the Issuers
and Marine Midland Bank, as trustee, pursuant to which the Notes are being
issued, as amended or supplemented from time to time in accordance with the
terms thereof.
Initial Purchasers: See the first introductory paragraph to this Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the original Notes are sold to the Initial
Purchasers pursuant to the Purchase Agreement.
Lien: See the Indenture.
NASD: See Section 5(t).
Notes: See the second introductory paragraph to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: An individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
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Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph to this
Agreement.
Records: See Section 5(o).
Registrable Notes: The Notes upon original issuance of the Notes and at all
times subsequent thereto and, if issued, the Private Exchange Notes, until in
the case of any such Notes or any such Private Exchange Notes, as the case may
be, (i) a Registration Statement covering such Notes or such Private Exchange
Notes has been declared effective by the SEC and such Notes or such Private
Exchange Notes, as the case may be, have been exchanged and/or disposed of in
accordance with such effective Registration Statement, (ii) such Notes or such
Private Exchange Notes, as the case may be, are sold in compliance with Rule 144
or could be sold in compliance with paragraph (k) of such Rule 144, (iii) in the
case of any Note, such Note has been exchanged for an Exchange Note or Exchange
Notes pursuant to an Exchange Offer or (iv) such Notes or such Private Exchange
Notes, as the case may be, cease to be outstanding.
Registration Default: See Section 4(a).
Registration Statement: Any registration statement of the Issuers,
including, but not limited to, the Exchange Registration Statement, which covers
any of the Registrable Notes pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144) or
regulation
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hereafter adopted by the SEC providing for offers and sales of securities made
in compliance therewith resulting in offers and sales by subsequent holders that
are not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities Act.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
Underwritten registration or underwritten offering: A registration in which
securities of the Company are sold to an underwriter(s) for reoffering to the
public.
2. Exchange Offer
(a) The Issuers agree to file with the SEC as soon as practicable after the
Closing Date, but in no event later than the Filing Date, an offer to exchange
(the "Exchange Offer") any and all of the Registrable Notes for a like aggregate
principal amount of debt securities of the Company, including the guarantees
thereof on an unsecured senior subordinated basis by each of the Guarantors,
which are identical in all material respects to the Notes (the "Exchange Notes")
(and which are entitled to the benefits of the Indenture or a trust indenture
which is substantially identical to the Indenture (other than such changes to
the Indenture or any such identical trust indenture as are necessary to comply
with any requirements of the SEC to effect or maintain the qualification thereof
under the TIA) and which, in either case, has been qualified under the TIA),
except that the Exchange Notes shall have been registered pursuant to an
effective Registration Statement under the Securities Act. The Exchange Offer
will be registered under the Securities Act on the appropriate form (the
"Exchange Registration Statement") and will comply with all applicable tender
offer rules and regulations under the Exchange Act. The Issuers agree to use
their best efforts to (x) cause the Exchange Registration Statement to become
effective under the Securities Act on or before the Effectiveness Date; (y) keep
the Exchange Offer open for at least 30 days (or
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longer if required by applicable law) after the date that notice of the Exchange
Offer is mailed to Holders; and (z) consummate the Exchange Offer on or prior to
the 45th day following the date on which the Exchange Registration Statement is
declared effective. If after such Exchange Registration Statement is initially
declared effective by the SEC, the Exchange Offer or the issuance of the
Exchange Notes thereunder is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or court,
such Exchange Registration Statement shall be deemed not to have become
effective for purposes of this agreement. Each Holder who participates in the
Exchange Offer will be required to represent that any Exchange Notes received by
it will be acquired in the ordinary course of its business, that at the time of
the consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any person to participate in the distribution of the Exchange
Notes, and that such Holder is not an affiliate of the Issuers within the
meaning of Rule 405 promulgated under the Securities Act or if it is such an
affiliate, that it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable. Upon consummation
of the Exchange Offer in accordance with this Section 2, the provisions of this
Agreement shall continue to apply, mutatis mutandis, solely with respect to
Registrable Notes that are Private Exchange Notes and Exchange Notes held by
Participating Broker-Dealers (as defined below), and the Issuers shall have no
further obligation to register Registrable Notes (other than Private Exchange
Notes) pursuant to Section 3 of this Agreement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act)
of Exchange Notes received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"), whether such positions or policies have been
publicly disseminated by the staff of the SEC or such positions or policies, in
the reasonable judgment of the Initial Purchasers, represent the prevailing
views of the staff of the SEC. Such "Plan of Distribution" section shall also
allow the use of the Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Notes.
The Issuers shall use their best efforts to keep the Exchange Registration
Statement effective and to amend and supplement the Prospectus contained
therein, in order to permit such Prospectus to be lawfully delivered by all
Persons subject to the prospectus delivery requirements of the Securities Act
for such period of time as such persons must comply with such requirements in
order to resell the Exchange Notes, provided that such period shall not exceed
180 days (or such longer period if extended pursuant to the last paragraph of
Section 5) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, either Initial Purchasers
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holds any Notes acquired by them and having, or which are reasonably likely to
be determined to have, the status as an unsold allotment in the initial
distribution, the Company upon the request of such Initial Purchaser shall,
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
issue and deliver to such Initial Purchaser, in exchange (the "Private
Exchange") for the Notes held by such Initial Purchaser, a like principal amount
of debt securities of the Company, guaranteed on an unsecured senior
subordinated basis by each of the Guarantors, that are identical in all material
respects to the Exchange Notes (the "Private Exchange Notes") (and which are
issued pursuant to the same indenture as the Exchange Notes) except for the
placement of a restrictive legend on the Private Exchange Notes. If possible,
the Private Exchange Notes shall bear the same CUSIP number as the Exchange
Notes. Interest on the Exchange Notes and Private Exchange Notes will accrue
from the last interest payment date on which interest was paid on the Notes
surrendered in exchange therefor or, if no interest has been paid on the Notes,
from the Issue Date.
In connection with the Exchange Offer, the Issuers shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York; and
(iii) permit Holders to withdraw tendered Notes 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.
As soon as practicable after the close of the Exchange Offer or the Private
Exchange, as the case may be, the Issuers shall:
(ii) accept for exchange all Notes tendered and not validly withdrawn
pursuant to the Exchange Offer or the Private Exchange;
(iii) deliver to the Trustee for cancellation all Notes so accepted
for exchange; and
(iv) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may
be, equal in principal amount to the Notes of such Holder so accepted for
exchange.
The Exchange Notes and the Private Exchange Notes may be issued under (i)
the Indenture or (ii) an indenture substantially identical to the Indenture,
which in either event will provide that the Exchange Notes will not be subject
to the transfer restrictions set forth in the Indenture and that the Exchange
Notes, the Private Exchange Notes and the Notes will
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vote and consent together on all matters as one class and that neither the
Exchange Notes, the Private Exchange Notes nor the Notes will have the right to
vote or consent as a separate class on any matter.
(c) If (1) prior to the consummation of the Exchange Offer, the Issuers or
Holders of at least a majority in aggregate principal amount of the Registrable
Notes reasonably determine in good faith that (i) the Exchange Notes would not,
upon receipt, be freely tradeable by such Holders which are not affiliates
(within the meaning of the Securities Act) of the Issuers without restriction
under the Securities Act and without restrictions under applicable state
securities laws, or (ii) after conferring with counsel, the SEC is unlikely to
permit the consummation of the Exchange Offer prior to the Effectiveness Date,
(2) subsequent to the consummation of the Private Exchange, any holder of the
Private Exchange Notes so requests or (3) the Exchange Offer is not consummated
within 45 days of the Effectiveness Date, then the Company shall promptly
deliver to the Holders and the Trustee written notice thereof (the "Shelf
Notice") and shall file an Initial Shelf Registration pursuant to Section 3.
Following the delivery of a Shelf Notice to the Holders of Registrable Notes (in
the circumstances contemplated by clauses (1) and (3) of the preceding
sentence), the Issuers shall not have any further obligation to conduct the
Exchange Offer or the Private Exchange under this Section 2.
(d) As a condition to its participation in the Exchange Offer pursuant to
the terms of this Agreement, each Holder represents and warrants to the Issuers
that, (A) it is not an affiliate of the Issuers, (B) it is not engaged in, and
does not intend to engage in, and has no arrangement or understanding with any
Person to participate in, a distribution of the Exchange Notes to be issued in
the Exchange Offer, and (C) it is acquiring the Exchange Notes in its ordinary
course of business. Each Holder hereby acknowledges and agrees that any
Participating Broker-Dealer and any Holder using the Exchange Offer to
participate in a distribution of Exchange Notes (1) could not under Commission
policy as in effect on the date of this Agreement rely on the position of the
Commission enunciated in Xxxxxx Xxxxxxx and Co., Inc. (available June 5, 1991)
and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted
in the Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters, and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be covered
by an effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K if the
resales are of Notes obtained by such Holder in exchange for Notes acquired by
such Holder directly from the Issuers or an affiliate thereof.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Initial Shelf Registration. The Issuers shall prepare and file with the
SEC a Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415
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covering all of the Registrable Notes (the "Initial Shelf Registration"). If the
Issuers shall have not yet filed an Exchange Registration Statement, the Issuers
shall use their best efforts to file with the SEC the Initial Shelf Registration
on or prior to the Filing Date. In any other instance, the Issuers shall use
their best efforts to file with the SEC the Initial Shelf Registration as
promptly as practicable following delivery of the Shelf Notice but in no event
later than 45 days after the delivery of the Shelf Notice. The Initial Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Notes for resale by such Holders in the manner
or manners designated by them (including, without limitation, one or more
underwritten offerings). The Issuers shall not permit any securities other than
the Registrable Notes to be included in the Initial Shelf Registration or any
Subsequent Shelf Registration. The Issuers shall use their best efforts to cause
the Initial Shelf Registration to be declared effective under the Securities
Act, if an Exchange Registration Statement has not yet been declared effective,
on or prior to the Effectiveness Date, or, in any other instance, as soon as
practicable after the filing thereof and in no event later than 90 days
following delivery of the Shelf Notice, and to keep the Initial Shelf
Registration continuously effective under the Securities Act until the date
which is 24 months from the date on which such Initial Shelf Registration is
declared effective (subject to extension pursuant to the last paragraph of
Section 5 hereof) or such shorter period ending when all Registrable Notes
covered by the Initial Shelf Registration have been sold in the manner set forth
and as contemplated in the Initial Shelf Registration, or no Registrable Notes
remain outstanding (the "Effectiveness Period"), or until a subsequent Shelf
Registration covering all of the Registrable Notes has been declared effective
under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration or
any Subsequent Shelf Registration ceases to be effective for any reason at any
time during the Effectiveness Period (other than because of the sale of all of
the securities registered thereunder), the Issuers shall use their best efforts
to obtain the prompt withdrawal of any order suspending the effectiveness
thereof, and in any event shall within 45 days of such cessation of
effectiveness amend the Shelf Registration in a manner to obtain the withdrawal
of the order suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the Registrable
Notes (a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration is
filed, the Issuers shall use their best efforts to cause the Subsequent Shelf
Registration to be declared effective as soon as practicable after such filing
and to keep such Registration Statement continuously effective during the
Effectiveness Period. As used herein the term "Shelf Registration" means the
Initial Shelf Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly supplement and
amend the Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement or by any underwriter(s) of such
Registrable Notes.
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4. Additional Interest
(a) The Issuers and the Initial Purchasers agree that the Holders of
Registrable Notes will suffer damages if the Issuers fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers agree, jointly and severally to pay additional interest on the Notes
("Additional Interest") under the circumstances and to the extent set forth
below:
(i) if neither the Exchange Registration Statement nor the Initial
Shelf Registration has been filed on or prior to the Filing Date;
(ii) if neither the Exchange Registration Statement nor the Initial
Shelf Registration has been declared effective on or prior to the
Effectiveness Date; or
(iii) if either (A) the Issuers have not exchanged the Exchange Notes
for all Notes validly tendered in accordance with the terms of the Exchange
Offer on or prior to 45 days after the date on which the Exchange
Registration Statement was declared effective or (B) the Exchange
Registration Statement ceases to be effective at any time prior to the time
that the Exchange Offer is consummated or (C) if applicable, the Shelf
Registration has been declared effective and such Shelf Registration ceases
to be effective at any time during the Effectiveness Period;
(each such events referred to in clauses (i) through (iii) above is a
"Registration Default"), then the sole remedy available to holders of the Notes
will be the immediate accrual of Additional Interest as follows: the per annum
interest rate on the Notes will increase by 50 basis points during the first
90-day period following the occurrence of a Registration Default until it is
waived or cured; and the per annum interest rate will increase by an additional
25 basis points for each subsequent 90-day period during which the Registration
Default remains uncured, up to a maximum additional interest rate of 200 basis
points per annum; provided, however, that (1) upon the filing of the Exchange
Registration Statement or the Initial Shelf Registration (in the case of (i)
above), (2) upon the effectiveness of the Exchange Registration Statement or a
Shelf Registration (in the case of (ii) above) or (3) upon the exchange of
Exchange Notes for all Notes tendered, or the effectiveness of a Shelf
Registration, (in the case of (iii)(A) above), or upon the effectiveness of the
Exchange Registration Statement which had ceased to remain effective, or the
effectiveness of a Shelf Registration, (in the case of (iii)(B) above), or upon
the effectiveness of the Shelf Registration which had ceased to remain effective
(in the case of (iii)(C) above), Additional Interest on the Notes as a result of
such clause (i), (ii) or (iii) (or the relevant subclause thereof), as the case
may be, shall cease to accrue and the interest rate on the Notes will revert to
the interest rate originally borne by the Notes.
Notwithstanding the foregoing, no Additional Interest will be payable with
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respect to a Registration Default described in clause (iii)(C) above if, pending
a material corporate transaction, the Company issues a notice that the
Registration Statement, or the Prospectus contained therein, is unusable, or
such notice is required under applicable securities laws to be issued by the
Company, and the aggregate number of days in any consecutive twelve month period
for which the Registration Statement, or the Prospectus contained therein, is
unusable pursuant to all such notices has not exceeded 60 days in the aggregate;
provided, however, the aggregate number of days in any consecutive two month
period for which the Registration Statement, or the Prospectus contained
therein, is unusable pursuant to all such notices has not exceeded 30 days in
the aggregate.
(b) The Issuers shall notify the Trustee within one business day after each
and every date on which an event occurs in respect of which Additional Interest
is required to be paid (an "Event Date"). Any amounts of Additional Interest due
pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable in
cash semi-annually on each February 1 and August 1 (to Holders of record on the
January 15 and July 15 immediately preceding such dates) commencing with the
first such date occurring after any such Additional Interest commences to accrue
by depositing with the Trustee, in trust for the benefit of the Holders,
immediately available funds in sums sufficient to pay such Additional Interest.
The amount of Additional Interest will be determined by multiplying the
applicable Additional Interest rate by the principal amount of the Registrable
Notes, 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.
5. Registration Procedures
In connection with the registration of any Registrable Notes or Private
Exchange Notes pursuant to Section 2 or 3 hereof, the Issuers shall effect such
registrations to permit the sale of such Registrable Notes or Private Exchange
Notes in accordance with the intended method or methods of disposition thereof,
and pursuant thereto the Issuers shall:
(a) Prepare and file with the SEC, prior to the Filing Date, a Registration
Statement or Registration Statements as prescribed by Section 2 or 3, and to use
their best efforts to cause each such Registration Statement to become effective
and remain effective as provided herein, provided that, if (1) such filing is
pursuant to Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Issuers shall, if
requested, furnish to and afford the Holders of the Registrable Notes and each
such Participating Broker-Dealer, as the case may be, covered by such
Registration Statement, their counsel and the managing underwriter(s), if any, a
reasonable opportunity to review copies of all such documents (including copies
of any documents to be incorporated by reference therein and all exhibits
thereto) proposed to be filed (at least 5 business days prior to such filing).
The Issuers shall
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not file any Registration Statement or Prospectus or any amendments or
supplements thereto in respect of which the Holders must be afforded an
opportunity to review prior to the filing of such document, if the Holders of a
majority in aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or such Participating Broker-Dealer, as the case may be,
their counsel, or the managing underwriter(s), if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement, as the
case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period, as
the case may be; cause the related Prospectus to be supplemented by any
prospectus supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to them with respect to the disposition of all securities covered by
such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities being
sold by a Participating Broker-Dealer covered by any such Prospectus; the
Issuers shall be deemed not to have used their best efforts to keep a
Registration Statement effective during the Applicable Period if they
voluntarily take any action that would result in selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers seeking to
sell Exchange Notes not being able to sell such Registrable Notes or such
Exchange Notes during that period unless such action is required by applicable
law or unless the Issuers comply with this Agreement, including without
limitation, the provisions of clause 5(c)(v) and (vi) below.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, notify the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, their counsel and the managing
underwriter(s), if any, promptly (but in any event within two business days),
and confirm such notice in writing, (i) when a Prospectus or any prospectus
supplement or post-effective amendment thereto has been filed, and, with respect
to a Registration Statement or any post-effective amendment thereto, when the
same has become effective (including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment thereto including financial
statements and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary Prospectus or the initiation
of any proceedings for that purpose, (iii) if at any time when a Prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Notes the representations and warranties of the Issuers contained in
any agreement (including any underwriting agreement) contemplated by
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Section 5(n) below cease to be true and correct, (iv) of the receipt by the
Issuers of any notification with respect to the suspension of the qualification
or exemption from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event or any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in, or amendments or supplements to,
such Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and (vi) of any Issuers reasonable determination that
a post-effective amendment to a Registration Statement would be necessary or
appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use their best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Notes or the
Exchange Notes to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use their best efforts to
obtain the withdrawal of any such order at the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if requested
by the managing underwriter(s), if any, or the Holders of a majority in
aggregate principal amount of the Registrable Notes being sold in connection
with an underwritten offering, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment thereto such information as the managing
underwriter(s), if any, or such Holders reasonably request to be included
therein and (ii) make all required filings of such Prospectus supplement or such
post-effective amendment thereto as soon as practicable after the Company has
received notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, furnish to each selling Holder of Registrable Notes and each
such Participating Broker-Dealer who so requests and to counsel and the managing
underwriter(s), if any, who so request, without charge, one conformed copy of
the
12
Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, deliver to each selling Holder of Registrable Notes, or each
such Participating Broker-Dealer, as the case may be, their counsel, and the
managing underwriter or underwriters, if any, without charge, as many copies of
the Prospectus or Prospectuses (including each form of preliminary Prospectus)
and each amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject to the
last paragraph of this Section 5, the Issuers hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders of Registrable Notes or each such Participating Broker-Dealer, as the
case may be, and the managing underwriter or underwriters or agents, if any, and
dealers, if any, in connection with the offering and sale of the Registrable
Notes covered by or the sale by Participating Broker-Dealers of the Exchange
Notes pursuant to such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any delivery of a
Prospectus contained in the Exchange Registration Statement by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, to
use their best efforts to register or qualify (to the extent required by
applicable law), and to cooperate with the selling Holders of Registrable Notes
or each such Participating Broker-Dealer, as the case may be, the managing
underwriter or underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes for offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters, if any, reasonably request in writing, provided that where
Exchange Notes held by Participating Broker-Dealers or Registrable Notes are
offered other than through an underwritten offering, the Issuers agree to cause
their counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes held by Participating
Broker-Dealers or the Registrable Notes covered by the applicable Registration
Statement; provided that no Issuer shall be required to (A) qualify generally to
do business in any jurisdiction where it is not then so qualified, (B) take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to taxation
in excess of a nominal dollar amount in any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3, cooperate with
the
13
selling Holders of Registrable Notes and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Notes to be sold, which certificates shall
not bear any restrictive legends and shall be in a form eligible for deposit
with The Depository Trust Company; and enable such Registrable Notes to be in
such denominations and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use their best efforts to cause the Registrable Notes covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof or the managing underwriter or underwriters, if any, to
consummate the disposition of such Registrable Notes, except as may be required
solely as a consequence of the nature of such selling Holder's business, in
which case the Issuers will cooperate in all reasonable respects with the filing
of such Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(c)(v) or 5(c)(vi) above, as promptly as practicable prepare and (subject to
Section 5(a) above) file with the SEC, at the expense of the Issuers, a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes being
sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not 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, in the light of the circumstances under which they were
made, not misleading.
(l) Use their reasonable best efforts to cause the Registrable Notes
covered by a Registration Statement or the Exchange Notes, as the case may be,
to be rated with the appropriate rating agencies, if so requested by the Holders
of a majority in aggregate principal amount of Registrable Notes covered by such
Registration Statement or the Exchange Notes, as the case may be, or the
managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with printed
certificates for the Registrable Notes or the Exchange Notes, as the case may
be, in a form eligible for deposit with The Depository Trust Company and (ii)
provide a CUSIP number for the Registrable Notes or the Exchange Note, as the
case may be.
(n) In connection with an underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten
14
offerings of debt securities similar to the Notes and take all such other
actions as are reasonably requested by the managing underwriter(s), if any, in
order to expedite or facilitate the registration or the disposition of such
Registrable Notes, and in such connection, (i) make such representations and
warranties to the managing underwriter or underwriters on behalf of any
underwriters, with respect to the business of the Company and its subsidiaries
and the Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, as are
customarily made by issuers to underwriters in underwritten offerings of debt
securities, and confirm the same if and when requested; (ii) obtain opinions of
counsel to the Issuers and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
managing underwriter or underwriters, covering the matters customarily covered
in opinions requested in underwritten offerings of debt securities and such
other matters as may be reasonably requested by the managing underwriters;
provided, that no such opinion of outside counsel to the Company or any
Guarantor which shall have rendered an opinion in connection with the sale of
the Notes to the Initial Purchasers (the "Original Opinion") need cover any
matter other than matters covered in the Original Opinion and such other matters
concerning the Registration Statement and the application of the Securities Act
to the offer and sale of the Registerable Notes as may be reasonably requested
by the managing underwriter or underwriters; (iii) obtain "cold comfort" letters
and updates thereof in form and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified public
accountants of the Issuers (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by any of the Issuers for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed to the
managing underwriter or underwriters on behalf of any underwriters, such letters
to be in customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings of debt
securities and such other matters as reasonably requested by the managing
underwriter or underwriters; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 7 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each closing
under such underwriting agreement, or as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, make available for inspection by any selling Holder of such
Registrable Notes being sold, or each such Participating Broker-Dealer, as the
case may be, the managing underwriter or underwriters participating in any such
disposition of Registrable Notes, if any, and any attorney, accountant or other
agent retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be (collectively, the "Inspectors"), at the
offices where normally kept, during reasonable business hours, all
15
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the Company
and its subsidiaries to supply all information in each case reasonably requested
by any such Inspector in connection with such Registration Statement. Records
which the Company determines, in good faith, to be confidential and any Records
which it notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid or
correct a material misstatement or material omission in such Registration
Statement, (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction or (iii) the information in
such Records has been made generally available to the public other than by the
actions of the Inspectors. Each selling Holder of such Registrable Notes and
each such Participating Broker-Dealer or underwriter will be required to agree
that information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Issuers unless and until such is made
generally available to the public. Each selling Holder of such Registrable Notes
and each such Participating Broker-Dealer will be required to further agree that
it will, upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and allow the Company to
undertake appropriate action to prevent disclosure of the Records deemed
confidential at its expense.
(p) Provide an indenture trustee for the Registrable Notes or the Exchange
Notes, as the case may be, and cause the Indenture or the trust indenture
provided for in Section 2(a), as the case may be, to be qualified under the TIA
not later than the effective date of the Exchange Offer or the first
Registration Statement relating to the Registrable Notes; and in connection
therewith, cooperate with the trustee under any such indenture and the Holders
of the Registrable Notes, to effect such changes to such indenture as may be
required for such indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use their best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable such indenture
to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the SEC and make
generally available to its securityholders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Notes are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to underwriters in
such an offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.
(r) Upon consummation of an Exchange Offer or a Private Exchange, obtain
16
one or more opinions of counsel to the Company and the Guarantors, respectively,
addressed to the Trustee for the benefit of all Holders of Registrable Notes
participating in the Exchange Offer or the Private Exchange, as the case may be,
substantially to the effect that (i) the Company has duly authorized, executed
and delivered the Exchange Notes and Private Exchange Notes and the related
indenture, (ii) the Guarantors have duly authorized, executed and delivered the
guarantees to be endorsed on the Exchange Notes and the Private Exchange Notes
and the related indenture, (iii) such Indenture constitutes a legal, valid and
binding obligation of the Issuers, enforceable against the Issuers in accordance
with its terms (with customary exceptions), (iv) the Exchange Notes or the
Private Exchange Notes, as the case may be, constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms (with customary exceptions) and (v) the guarantees to be
endorsed on the Exchange Notes and the Private Exchange Notes, as the case may
be, constitute legal, valid and binding obligations of the Guarantors,
enforceable against the Guarantors in accordance with their respective terms
(with customary exceptions).
(s) If an Exchange Offer or a Private Exchange is to be consummated, upon
delivery of the Registrable Notes by Holders to the Company (or to such other
Person as directed by the Company) in exchange for the Exchange Notes or the
Private Exchange Notes, as the case may be, the Company shall xxxx, or cause to
be marked, on such Registrable Notes that such Registrable Notes are being
cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; and, in no event shall such Registrable Notes be marked as paid
or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and the managing underwriter(s), if any, participating in
the disposition of such Registrable Notes and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD").
(u) Use their reasonable best efforts to take all other steps necessary to
effect the registration of the Registrable Notes covered by a Registration
Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes or Participating
Broker-Dealer as to which any registration is being effected to furnish to the
Company such information regarding such seller or Participating Broker-Dealer
and the distribution of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, as the Company may, from
time to time, reasonably request. The Company may exclude from such registration
the Registrable Notes of any seller or Participating Broker-Dealer who
unreasonably fails to furnish such information within a reasonable time after
receiving such request. Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such seller not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees
17
by acquisition of such Registrable Notes or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Issuers of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Notes covered by such Registration
Statement or Prospectus or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
5(k), or until it is advised in writing (the "Advice") by the Company that the
use of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto. In the event the Issuers shall give any such
notice, each of the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and including the date
of the giving of such notice to and including the date when each seller of
Registrable Notes covered by such Registration Statement or Exchange Notes to be
sold by such Holder or Participating Broker-Dealer, as the case may be, shall
have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) or (y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or compliance with
this Agreement by the Issuers shall be borne by the Issuers whether or not the
Exchange Offer or a Shelf Registration is filed or becomes effective, including,
without limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
in connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel (which may be counsel
to the Issuers) in connection with Blue Sky qualifications of the Registrable
Notes or Exchange Notes and, if requested, determination of the eligibility of
the Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions within the United States (x) where the Holders of Registrable
Notes are located, in the case of the Exchange Notes, or (y) as provided in
Section 5(h), in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing Prospectuses if the printing of
Prospectuses is reasonably requested by the managing underwriter or
underwriters, if any, or, in respect of Registrable Notes or Exchange Notes to
be sold by any Participating Broker-Dealer during the Applicable Period if
reasonably requested by the Holders of a majority in aggregate principal amount
of the Registrable Notes included in any Registration Statement or of such
Exchange Notes, as the case may be), (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Issuers and fees and
disbursements of special counsel for the sellers of Registrable Notes (subject
to the provisions of Section 6(b)), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii)
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) rating
agency fees, (vii) Securities Act liability insurance, if the Issuers desire
such
18
insurance, (viii) fees and expenses of the Trustee, (ix) fees and expenses of
all other Persons retained by the Issuers, (x) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties), (xi) the
expense of any annual audit, (xii) the fees and expenses incurred in connection
with any listing of the securities to be registered on any securities exchange,
(xiii) the fees and disbursements of underwriters, if any, customarily paid by
issuers or sellers of securities (but not including any underwriting discounts
or commissions or transfer taxes, if any, attributable to the sale of the
Registrable Notes which discounts, commissions or taxes shall be paid by Holders
of such Registrable Notes), and (xiv) the expenses relating to printing, word
processing and distributing all Registration Statements in an amount not to
exceed $50,000. The Holders shall be responsible for all other out-of-pocket
expenses of the Holders of Registrable Notes incurred in connection with the
registration of the Registrable Notes. The company and the Guarantors shall not
have any obligation to pay any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities.
(b) In connection with any Shelf Registration hereunder, the Issuers shall
reimburse the Holders of the Registrable Notes being registered in such
registration for the reasonable fees and disbursements of not more than one
counsel (in addition to appropriate local counsel) chosen by the Holders of a
majority in aggregate principal amount of the Registrable Notes to be included
in such Registration Statement in an amount not to exceed $50,000. The Holders
shall be responsible for all other out-of-pocket expenses of the Holders of
Registrable Notes incurred in connection with the registration of the
Registrable Notes. The Company and the Guarantors shall not have any obligation
to pay any underwriting fees, discounts or commissions attributable to the sale
of Registrable Securities.
7. Indemnification
(a) The Issuers, jointly and severally, agree to indemnify and hold
harmless each Holder of Registrable Notes being registered under a Shelf
Registration and each Participating Broker-Dealer selling Exchange Notes during
the Applicable Period, the officers and directors of each such person, and each
person, if any, who controls any such person within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable and documented legal
fees and other expenses reasonably incurred in connection with any suit, action
or proceeding or any claim asserted) caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (as amended or supplemented if the Issuers
shall have furnished any amendments or supplements thereto) or any preliminary
Prospectus, or caused by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Participant furnished to the Issuers in
19
writing by or on behalf of such Participant expressly for use therein; provided
that the foregoing indemnity with respect to any preliminary Prospectus shall
not inure to the benefit of any Participant (or to the benefit of any officer or
director of or person controlling such Participant) from whom the person
asserting any such losses, claims, damages or liabilities purchased Registrable
Notes or Exchange Notes if such untrue statement or omission or alleged untrue
statement or omission made in such preliminary Prospectus is eliminated or
remedied in the related Prospectus (as amended or supplemented if the Issuers
shall have furnished any amendments or supplements thereto) and a copy of the
related Prospectus (as so amended or supplemented) shall have been furnished to
such Participant at or prior to the sale of such Registrable Notes or Exchange
Notes, as the case may be, to such person.
(b) Each Participant will be required to agree, severally and not jointly,
to indemnify and hold harmless the Issuers, their directors and officers and
each person who controls the Issuers within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Participant furnished to the Issuers
in writing by or on behalf of such Participant expressly for use in any
Registration Statement or Prospectus, any amendment or supplement thereto, or
any preliminary Prospectus. The liability of any Participant under this
paragraph (b) shall in no event exceed the proceeds received by such Participant
from sales of Registrable Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either
paragraph (a) or (b) of this Section 7, such person (the "Indemnified Person")
shall promptly notify the person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request of
the Indemnified Person, shall retain one counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses incurred by such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed in writing to the contrary,
(ii) the Indemnifying Person has failed within a reasonable time to retain
counsel reasonably satisfactory to the Indemnified Person or (iii) the named
parties in any such proceeding (including any impleaded parties) include both
the Indemnifying Person and the Indemnified Person and such Indemnified Person
shall have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to any
such Indemnifying Person. It is understood that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the reasonable and documented fees and expenses of
more than one separate law firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred. Any such separate firm for
20
the Participants and such control persons of Participants shall be designated in
writing by Participants who sold a majority in interest of Registrable Notes
sold by all such Participants and any such separate firm for the Issuers, their
directors, officers and such control persons of the Issuers shall be designated
in writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Person agrees to indemnify any Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. No Indemnifying
Person shall, without the prior written consent of the Indemnified Person (which
consent shall not be unreasonably withheld or delayed), effect any settlement of
any pending or threatened proceeding in respect of which any Indemnified Person
is or could have been a party and of which indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement includes an
unconditional release (or any other release reasonably acceptable to the
Indemnified Person) of such Indemnified Person from all liability on claims that
are the subject matter of such proceeding.
If the indemnification provided for in paragraphs (a) and (b) of this
Section 7 is unavailable to an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein (other then as a result of
the proviso set forth in Section 7(a)), then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Issuers on the one hand and the
Participants on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Issuers on the one
hand and the Participants 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 Issuers or by the Participants and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The parties shall agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
and documented legal or other expenses actually incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes exceeds the amount of any damages that such Participant has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged
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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.
The indemnity and contribution agreements contained in this Section 7 will
be in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above. 8. Rules 144 and 144A
The Company covenants that it will file the reports required to be filed by
it under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder in a timely manner and, if at any time the Company
is not required to file such reports, it will, upon the request of any Holder of
Registrable Notes, make publicly available other information of a like nature so
long as necessary to permit sales pursuant to Rule 144 or Rule 144A. The Issuers
further covenant that so long as any Registrable Notes remain outstanding to
make available to any Holder of Registrable Notes in connection with any sale
thereof, the information required by Rule 144A(d)(4) under the Securities Act in
order to permit resales of such Registrable Notes pursuant to such Rule 144A.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are to be
sold in an underwritten offering, the investment banker or investment bankers
and manager or managers that will manage the offering will be selected by the
Holders of a majority in aggregate principal amount of such Registrable Notes
included in such offering and shall be reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements. No underwritten offering shall include less
than $10,000,000 principal amount of the Notes covered by such Shelf
Registration.
10. Miscellaneous
(a) Remedies. In the event of a breach by the Issuers of any of their
obligations under this Agreement, other than the occurrence of an event which
requires payment of Additional Interest, each Holder of Registrable Notes, in
addition to being entitled to exercise all rights provided herein, in the
Indenture or, in the case of the Initial Purchasers, in the Purchase Agreement
or granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by
22
it of any of the provisions of this Agreement and hereby further agrees 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.
(b) Enforcement. The Trustee shall be authorized to enforce the provisions
of this Agreement for the ratable benefit of the Holders.
(c) No Inconsistent Agreements. The Issuers have not, as of the date
hereof, and shall not, after the date of this Agreement, enter into any
agreement with respect to any of their securities that is inconsistent with the
rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. The Issuers have not entered nor
will they enter into any agreement with respect to any of their securities which
will grant to any Person piggy-back rights with respect to a Registration
Statement required to be filed under the Agreement.
(d) Adjustments Affecting Registrable Notes. The Issuers shall not,
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(e) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Issuers have obtained the written consent of Holders of at least a
majority of the then outstanding aggregate principal amount of Registrable
Notes. 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 Holders of Registrable Notes whose securities are being sold pursuant
to a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders of Registrable Notes may
be given by Holders of at least a majority in aggregate principal amount of the
Registrable Notes being sold by such Holders pursuant to such Registration
Statement, provided that the provisions of this sentence may not be amended,
modified or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(f) Notices. All notices and other communications (including without
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Notes, at the most current address
given by the Trustee to the Issuers; and
(ii) if to the Issuers, Entex Information Services, Inc., Xxx
Xxxxxxxxxxxxx Xxxxx, Xxx Xxxxxx, Xxx Xxxx 00000, Attention: General
Counsel, with a copy to Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000
23
Attention: Xxxxxx Xxxxxxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered; (ii) five business
days after being deposited in the mail, postage prepaid, if mailed; (iii) one
business day after being timely delivered to a next-day air courier; and (iv)
when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(g) 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 Registrable Notes.
(h) 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.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Severability. 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 best 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.
(l) Entire Agreement. This Agreement, together with the Purchase Agreement
and the Indenture, is intended by the parties as a final expression of their
agreement, and is 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 and therein.
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(m) Notes Held by the Company or its Affiliates. Whenever the consent or
approval of Holders of a specified percentage of Registrable Notes is required
hereunder, Registrable Notes held by the Company or its affiliates (as such term
is defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ENTEX INFORMATION SERVICES, INC.
By: /s/ Xxxx X. XxXxxxx
-----------------------------------------
Name: Xxxx X. XxXxxxx
Title: President
ENTEX INFORMATION SERVICES OF MICHIGAN, INC.
By: /s/ Xxxx X. XxXxxxx
----------------------------------------
Name: Xxxx X. XxXxxxx
Title: President
ENTEX INFORMATION SERVICES OF COLORADO, INC.
By: /s/ Xxxx X. XxXxxxx
----------------------------------------
Name: Xxxx X. XxXxxxx
Title: President
ENTEX SERVICES, INC.
By: /s/ Xxxx X. XxXxxxx
----------------------------------------
Name: Xxxx X. XxXxxxx
Title: President
ERLANGER LAND CO., INC.
By: /s/ Xxxx X. XxXxxxx
----------------------------------------
Name: Xxxx X. XxXxxxx
Title: President
26
FCP TECHNOLOGIES, INC.
By: /s/ Xxxx X. XxXxxxx
----------------------------------------
Name: Xxxx X. XxXxxxx
Title: President
CIBC XXXXXXXXXXX CORP.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
LAZARD FRERES & CO. LLC
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxx X. Xxxx
Title: Managing Director
27
