Exhibit 4
REGISTRATION RIGHTS AGREEMENT
among
PARAGON TRADE BRANDS, INC.
PTB ACQUISITION COMPANY,
CO-INVESTMENT PARTNERS, L.P.
ONTARIO TEACHERS PENSION PLAN BOARD
and
CERTAIN OTHER SHAREHOLDERS
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Dated as of January 28, 2000
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TABLE OF CONTENTS
Page
1. Definitions............................................1
2. Securities Subject to this Agreement...................3
(a) Registrable Securities...........................3
(b) Holders of Registrable Securities................3
3. Demand Registration....................................4
(a) Wellspring Request for Demand Registration.......4
(b) CIP and Ontario Requests for Demand Registration.5
(c) Piggy-Back Rights of Other Holders; Demand
Registrations....................................5
(d) Effective Demand Registration....................6
(e) Expenses.........................................6
(f) Underwriting Procedures..........................6
(g) Selection of Underwriters........................7
4. Piggy-Back Registration................................7
(a) Piggy-Back Rights................................7
(b) Piggy-Back Rights of Other Holders for Company
Registrations....................................8
(c) Registration Procedure for Piggy-Back
Registrations....................................9
(d) Expenses.........................................9
5. Holdback Agreements....................................9
(a) Restrictions on Public Sale by Holders...........9
(b) Restrictions on Public Sale by the Company.......9
6. Registration Procedures...............................10
(a) Obligations of the Company......................10
(b) Seller Information..............................13
(c) Notice to Discontinue...........................13
7. Registration Expenses.................................14
8. Indemnification; Contribution.........................14
(a) Indemnification by the Company..................14
(b) Indemnification by Holders......................15
(c) Conduct of Indemnification Proceedings..........15
(d) Contribution....................................16
9. Rule 144; Other Exemptions............................17
10. Miscellaneous.........................................17
(a) Recapitalizations, Exchanges, etc...............17
(b) No Inconsistent Agreements; Other Registration
Rights..........................................17
(c) Remedies........................................18
(d) Amendments and Waivers..........................18
(e) Notices.........................................18
(f) Successors and Assigns..........................20
(g) Counterparts....................................20
(h) Headings........................................20
i
(i) Governing Law...................................20
(j) Jurisdiction....................................20
(k) Severability....................................21
(l) Rules of Construction...........................21
(m) Entire Agreement................................21
(n) Further Assurances..............................21
(o) Other Shareholders..............................21
ii
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of January 28, 2000, among
Paragon Trade Brands, Inc., a Delaware corporation (the "Company"), PTB
Acquisition Company, LLC, a Delaware limited liability company affiliated with
Wellspring Capital Management LLC ("Wellspring"), Co-Investment Partners, L.P.,
a Delaware limited partnership ("CIP"), Ontario Teachers Pension Plan Board, a
non- share capital corporation continued under the Teachers' Pension Act.
R.S.O., 1990 Chapter T.1 ("Ontario") and each other Person that hereafter
becomes a signatory hereto as contemplated by Section 10(o) hereof (each, an
"Other Shareholder;" each of the Other Shareholders, Wellspring, CIP and
Ontario, are referred to as the "Parties"; and the Parties other than Wellspring
are referred to as the "Non-Wellspring Parties").
This Agreement is made in connection with (i) the Stock Purchase
Agreement, dated as of November 16, 1999, by and between the Company and
Wellspring (the "Purchase Agreement") and (ii) the Shareholders' Agreement, of
even date herewith, among the Company, Wellspring, CIP and Ontario (the
"Shareholders' Agreement"). In order to induce the Parties to acquire the Common
Stock pursuant to the Purchase Agreement, the Company has agreed to provide
registration rights with respect to the Registrable Securities (as hereinafter
defined) as set forth in this Agreement.
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated hereunder.
"Approved Underwriter" has the meaning assigned such term in
Section 3(g).
"Approved Underwriter Amount" has the meaning assigned such term
in Section 3(f).
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"Coinvestor Demand Registration" has the meaning assigned to
such term in Section 3(b).
"Common Stock" means the common stock of the Company.
"Company Underwriter" has the meaning assigned such term in
Section 4(a).
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"Demand Registration" means a Wellspring Demand Registration
or a Coinvestor Demand Registration.
"Demand Registration Offeree Party" has the meaning assigned to
such term in Section 3(c).
"Demanding Holder" means the Holder who has exercised its right
to a Demand Registration under Section 3(a) hereof or Section 3(b) hereof, as
the case may be.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Holder" has the meaning assigned such term in Section 2(b).
"Holders' Counsel" has the meaning assigned such term in Section
7.
"Indemnified Party" has the meaning assigned such term in
Section 8(c).
"Indemnifying Party" has the meaning assigned such term in
Section 8(c).
"Inspector" has the meaning assigned such term in Section
6(a)(viii).
"Liquidity Date" shall mean the earlier of (i) the closing date
of the initial sale by Wellspring of any of its Registrable Securities pursuant
to an offering registered under the Act, and (ii) January 30, 2005.
"NASD" has the meaning assigned such term in Section 6(a)(xv).
"Non-Wellspring Holder" means a Holder other than Wellspring.
"Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind, and shall include any successor (by merger or otherwise) of
any such entity.
"Registrable Securities" means, subject to Section 2(a), each of
the following: any shares of Common Stock of the Company held of record by any
of the Parties, including, without limitation, any shares of Common Stock of the
Company issued or issuable by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise.
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"Registration Expenses" has the meaning assigned such term in
Section 7.
"SEC" means the Securities and Exchange Commission.
"Total Securities" has the meaning assigned to such term in
Section 4(a).
"Wellspring Demand Registration" has the meaning assigned to
such term in Section 3(a).
2. Securities Subject to this Agreement.
(a) Registrable Securities. For the purposes of this Agreement,
Registrable Securities will cease to be Registrable Securities when (i) a
registration statement covering such Registrable Securities has been declared
effective under the Act by the SEC and such Registrable Securities have been
disposed of pursuant to such effective registration statement or (ii)
Registrable Securities proposed to be sold in a sale have been disposed of
pursuant to Rule 144 (or any successor provision then in effect) under the Act.
(b) Holders of Registrable Securities. A Person is deemed to be
a holder of Registrable Securities (a "Holder") whenever such Person (i) is a
party to this Agreement (or a permitted transferee thereof) and (ii) owns of
record Registrable Securities, or a security convertible into or exercisable or
exchangeable for, Registrable Securities, whether or not such conversion,
exercise or exchange has actually been effected and disregarding any legal
restrictions upon the exercise of such rights. If the Company receives
conflicting instructions, notices or elections from two or more persons with
respect to the same Registrable Securities, the Company may act upon the basis
of the instructions, notice or election received from the registered owner of
such Registrable Securities.
3. Demand Registration.
(a) Wellspring Request for Demand Registration. Subject to the
provisions of Section 3(c) hereof, at any time after the date hereof, Wellspring
may request the registration of Registrable Securities under the Act, and under
the securities or blue sky laws of any jurisdiction designated by it (each such
registration under this Section 3(a) is referred to herein as a "Wellspring
Demand Registration"). Notwithstanding the foregoing, (i) the Company will not
be required to effect a Wellspring Demand Registration within the period
beginning on the effective date of a registration statement filed by the Company
on its behalf and ending on the expiration of any lock-up period (not to exceed
180 days) reasonably required by the underwriters, if any, in connection
therewith, and (ii) the Company will not be required to effect more than two
Wellspring Demand Registrations under this Section 3(a) on Form S-1 (or an
equivalent form) but Wellspring may request registration of all or any portion
of its Registrable Securities on Form S-3 or any similar short-form registration
(if the Company then qualifies for use thereof) without limitation. For purposes
of
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clause (ii) of the preceding sentence, any Wellspring Demand Registration
request withdrawn by Wellspring shall not be counted as one Wellspring Demand
Registration. Each such request for a Wellspring Demand Registration shall
specify the amount of the Registrable Securities proposed to be sold, the
intended method of disposition thereof and the jurisdictions in which
registration is desired. Upon a request for a Wellspring Demand Registration,
the Company shall promptly take such steps as are necessary or appropriate to
prepare for the registration of the Registrable Securities to be registered. The
Company shall include in such registration all Registrable Securities requested
to be included by Wellspring, and by each other Holder, as applicable, to the
extent the Company has received a written request for inclusion therein during
the Demand Registration Notice Period (as defined herein). Each such request
will also specify the number of Registrable Securities to be registered, the
intended method of disposition thereof and the jurisdictions in which
registration is desired. Subject to Section 3(f) hereof, the Company shall be
entitled to include in any registration statement and offering made pursuant to
a Wellspring Demand Registration, authorized but unissued shares of Common Stock
or shares of Common Stock held by stockholders other than the Holders; provided,
that such inclusion shall be permitted only to the extent that it is pursuant to
and subject to the terms of the underwriting agreement or arrangements, if any,
entered into by Wellspring in exercising the Wellspring Demand Registration
rights.
(b) CIP and Ontario Requests for Demand Registration. Subject to
the provisions of Section 3(c) hereof, at any time following the Liquidity Date,
each of CIP and Ontario may request the registration of Registrable Securities
under the Act, and under the securities or blue sky laws of any jurisdiction
designated by it (each such registration under this Section 3(b) is referred to
herein as a "Coinvestor Demand Registration"). Notwithstanding the foregoing,
(i) the Company will not be required to effect a Coinvestor Demand Registration
within the period beginning on the effective date of a registration statement
filed by the Company on its behalf and ending on the expiration of any lock-up
period (not to exceed 180 days) reasonably required by the underwriters, if any,
in connection therewith, (ii) the Company will not be required to effect more
than one such Coinvestor Demand Registration under this Section 3(b) where CIP
is the Demanding Holder, and (iii) the Company will not be required to effect
more than one Coinvestor Demand Registration under this Section 3(b) where
Ontario is the Demanding Holder. For purposes of the preceding sentence, any
Coinvestor Demand Registration request withdrawn by the Demanding Holder thereof
shall not be counted as such Demanding Holder's Coinvestor Demand Registration.
Each such request for a Coinvestor Demand Registration shall specify the amount
of the Registrable Securities proposed to be sold, the intended method of
disposition thereof and the jurisdictions in which registration is desired. Upon
a request for a Coinvestor Demand Registration, the Company shall promptly take
such steps as are necessary or appropriate to prepare for the registration of
the Registrable Securities to be registered. The Company shall include in such
registration all Registrable Securities requested to be included by the
Demanding Holder, and by each other Holder, as applicable, to the extent the
Company has received a written request for inclusion therein during the Demand
Registration Notice Period (as defined herein). Each such request will also
specify the number of Registrable Securities to be registered, the intended
method of disposition thereof and
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the jurisdictions in which registration is desired. Subject to Section 3(f)
hereof, the Company shall be entitled to include in any registration statement
and offering made pursuant to a Coinvestor Demand Registration, authorized but
unissued shares of Common Stock or shares of Common Stock held by stockholders
other than the Holders; provided, that such inclusion shall be permitted only to
the extent that it is pursuant to and subject to the terms of the underwriting
agreement or arrangements, if any, entered into by the Demanding Holder in
exercising its Coinvestor Demand Registration rights.
(c) Piggy-Back Rights of Other Holders; Demand Registrations. In
the event that a Demanding Holder desires to request a Demand Registration
pursuant to Sections 3(a) or 3(b) hereof, such Demanding Holder shall first
give, seven (7) Business Days prior to such request, an offer (a "Demand
Registration Piggy-Back Offer") to each other Holder (each a "Demand
Registration Offeree Party") to participate in such registration by including a
portion of such Demand Registration Offeree Party's Registrable Securities in
the request for the Demand Registration. Upon the giving of the Demand
Registration Piggy-Back Offer, the offer made therein to the Demand Registration
Offeree Party shall be irrevocable unless and until the rights provided for
therein shall be waived or the Demand Registration request shall be withdrawn or
the relevant registration statement terminated. The right of each Demand
Registration Offeree Party to participate in the Demand Registration under this
Section 3(c) shall be exercisable by delivering written notice thereof, within
ten (10) Business Days after receipt of such Demand Registration Piggy-Back
Offer (the "Demand Registration Notice Period"), to the Demanding Holder, with a
copy to the Company, indicating the number of Shares the Demand Registration
Offeree Party desires to include in such Demand Registration. The failure of
such Demand Registration Offeree Party to respond within the Demand Registration
Notice Period shall be regarded as a rejection of the offer to participate in
such registration as contemplated by the Demand Registration Piggy-Back Offer
and shall be deemed to be a waiver of its rights under this Section 3 with
respect to such Demand Registration.
(d) Effective Demand Registration. The Company shall use its
best efforts to cause any such Demand Registration to become effective not later
than ninety (90) days after it receives a request under Section 3(a) or Section
3(b), as the case may be.
(e) Expenses. In any registration initiated as a Demand
Registration, the Company shall pay all Registration Expenses in connection
therewith, whether or not such requested Demand Registration becomes effective.
(f) Underwriting Procedures. If the Demanding Holder so elects,
the offering of such Registrable Securities pursuant to such requested Demand
Registration shall be in the form of a firm commitment underwritten offering and
the managing underwriter or underwriters selected for such offering shall be the
Approved Underwriter selected in accordance with Section 3(g). In such event, if
the Approved Underwriter advises the Company in writing that, in its opinion,
the aggregate amount of such Registrable Securities requested to be included in
such offering is sufficiently large to have a material adverse effect on the
success of such offering (including an
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adverse effect on the price thereof), then the Company shall include in such
registration only the aggregate amount of Registrable Securities that in the
opinion of the Approved Underwriter may be sold without any such effect on the
success of such offering (the "Approved Underwriter Amount"), and (i) in the
case of a Wellspring Demand Registration, (a) each Holder shall be entitled to
have included in such registration Registrable Securities equal to its pro rata
portion of the Approved Underwriter Amount, as based on the amounts of
Registrable Securities sought to be registered by the Holders in their requests
for participation in the requested Wellspring Demand Registration and (b) to the
extent that the number of Registrable Securities to be included by the Holders
is less than the Approved Underwriter Amount, the Company or stockholders other
than the Holders shall be entitled to have included securities that are proposed
to be registered in accordance with the last sentence of Section 3(a), and (ii)
in the case of a Coinvestor Demand Registration, (a) the Demanding Holder shall
be entitled to have included in such registration the number of Registrable
Securities which it seeks to include therein, up to the Approved Underwriter
Amount, (b) to the extent that the number of Registrable Securities to be
included by the Demanding Holder is less than the Approved Underwriter Amount,
each other Holder shall be entitled to have included in such registration
Registrable Securities equal to its pro rata portion of the excess of the
Approved Underwriter Amount over the amount sought to be included therein by the
Demanding Holder, as based on the amounts of Registrable Securities sought to be
registered by such other Holders in their requests for participation in the
requested Demand Registration and (c) to the extent that the number of
Registrable Securities to be included by the Demanding Holder and the other
Holders is less than the Approved Underwriter Amount, the Company or
stockholders other than the Holders shall be entitled to have included
securities that are proposed to be registered in accordance with the last
sentence of Section 3(b).
(g) Selection of Underwriters. If any requested Demand
Registration is in the form of an underwritten offering, the Demanding Holder
shall select and obtain an investment banking firm of national reputation to act
as the managing underwriter of the offering (the "Approved Underwriter").
4. Piggy-Back Registration.
(a) Piggy-Back Rights. If the Company proposes to file a
registration statement under the Act with respect to an offering by the Company
for its own account or for the account of any other stockholder (other than a
registration statement filed pursuant to Sections 3(a) or 3(b) hereof) of any
class of security (other than a registration statement solely on Form S-4 or S-8
(or any successor form thereto, but without including a red xxxxxxx prospectus)
under the Act), then the Company shall give written notice of such proposed
filing (a "Preliminary Notice") to Wellspring and, if such registration
statement is proposed to be filed on or after the Liquidity Date, to each of CIP
and Ontario, at least forty-five (45) days before the anticipated filing date,
and such Preliminary Notice shall (i) describe in detail the proposed
registration and distribution (including those jurisdictions where registration
under the securities or blue sky laws is intended) and (ii) offer Wellspring
and, if such registration statement is proposed to be filed on or after the
Liquidity Date, each of CIP and Ontario, the opportunity to include some or all
of its Registrable Securities in such registration (the
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offer contained in the Preliminary Notice is referred to as the "Preliminary
Piggy-Back Offer"). The Preliminary Notice shall also state that acceptance of
the offer must (i) be in writing, (ii) state the number of Registrable
Securities proposed to be registered by such Holder, and (iii) be received by
the Company within ten (10) Business Days after receipt of such Preliminary
Notice (such ten business day period being referred to as the "Preliminary
Acceptance Period"). The failure of any party entitled to receive a Preliminary
Notice pursuant to this Section 4(a) (each, a "Preliminary Offeree") to respond
to such notice prior to the expiration of the Preliminary Acceptance Period
shall be regarded as a rejection of the offer to participate in such
registration as contemplated by the Preliminary Piggy-Back Offer and shall be
deemed to be a waiver of its rights under this Section 4(a) with respect to such
Preliminary Piggy-Back Offer.
(b) Piggy-Back Rights of Other Holders for Company
Registrations. If any Preliminary Offeree notifies the Company during the
Preliminary Acceptance Period that it wishes to include some or all of its
Registrable Securities in such registration, the Company shall deliver to each
Holder who is not then a Preliminary Offeree (for the purposes of this
subclause, each a "Piggy-Back Registration Offeree Party"), within ten (10)
Business Days following the expiration of the Preliminary Acceptance Period, a
notice (a "Piggy-Back Registration Notice") which shall (i) describe in detail
the proposed registration and distribution (including those jurisdictions where
registration under the securities or blue sky laws is intended), (ii) identify
the number of Registrable Securities proposed to be included in such
registration by each Preliminary Offeree (including the percentage of such
Preliminary Offeree's Registrable Securities represented by such Registrable
Securities) and (iii) offer each Piggy-Back Registration Offeree Party the
opportunity to include in such registration up to the same percentage of such
Piggy-Back Registration Offeree Party's Registrable Securities as the percentage
proposed to be included by the Preliminary Offeree proposing to include in such
registration the highest percentage of its Registrable Securities (the offer
contained in the Piggy-Back Registration Notice is referred to as the
"Piggy-Back Offer"). The Piggy-Back Registration Notice shall also state that
acceptance of the Piggy-Back Offer must (i) be in writing, (ii) state the number
of Registrable Securities proposed to be registered by such Piggy-Back
Registration Offeree Party, and (iii) be received by the Company within ten (10)
Business Days after receipt of such Piggy-Back Registration Notice (the
"Piggy-Back Registration Notice Period"). The failure of any Piggy-Back
Registration Offeree Party to respond within the Piggy-Back Registration Notice
Period shall be regarded as a rejection of the offer to participate in the
Piggy-Back Offer and shall be deemed to be a waiver of its rights under this
Section 4(b) with respect to such Piggy-Back Offer. If no Preliminary Offeree
notifies the Company during the Preliminary Acceptance Period that it wishes to
include some or all of its Registrable Securities in such registration, the
Company shall not be required to give a Piggy-Back Registration Notice to the
other Holders and the other Holders shall not be entitled to participate in such
registration.
(c) Registration Procedure for Piggy-Back Registrations. Subject
to the terms of this Section 4, the Company shall use its best efforts (within
thirty (30) days of the notice provided for in the preceding sentence) to cause
the managing underwriter or underwriters of an underwritten offering (the
"Company
8
Underwriter") to permit the Holders to include the Registrable Securities of the
Holders in such offering on the same terms and conditions as the securities of
the Company included therein. Notwithstanding the foregoing, if the Company
Underwriter delivers a written opinion to the Holders seeking to participate in
such registration that the total amount of securities which they and the Company
intend to include in such offering (the "Total Securities") is sufficiently
large so as to have a material adverse effect on the distribution of the Total
Securities, then the Company shall include in such registration, to the extent
of the number of Registrable Securities which the Company is so advised can be
sold in (or during the time of) such offering, first, all Common Stock or
securities convertible into, or exchangeable or exercisable for, Common Stock
that the Company proposed to register for its own account, and second, all
securities proposed to be registered by the Holders and each other stockholder
for whose account such registration statement was to be filed which shall be
reduced on a pro-rata basis (based upon the number of shares proposed to be
registered).
(d) Expenses. The Company shall bear all Registration Expenses
in connection with any registration pursuant to this Section 4.
5. Holdback Agreements.
(a) Restrictions on Public Sale by Holders. To the extent not
inconsistent with applicable law, the Holders agree not to effect any public
sale or distribution of any Registrable Securities being registered or of any
securities convertible into or exchangeable or exercisable for such Registrable
Securities, including a sale pursuant to Rule 144 under the Act, during the
ninety (90) day period (or such longer period as Wellspring agrees to be bound
by) beginning on the effective date of such Demand Registration or Piggy-Back
Registration or other underwritten offering (except as part of such
registration), if and to the extent requested by the Company Underwriter, in the
case of an underwritten public offering.
(b) Restrictions on Public Sale by the Company. The Company
agrees not to effect any public sale or distribution of any of its securities
for its own account (except pursuant to registrations on Form S-4 or S-8 (or any
successor form thereto) under the Act) during the ninety (90) day period
beginning on the later of (i) the effective date of any registration statement
in which the Holders are participating and (ii) the commencement of a public
distribution of Registrable Securities pursuant to such registration statement.
6. Registration Procedures.
(a) Obligations of the Company. Whenever registration of
Registrable Securities has been requested pursuant to Section 3 or 4 of this
Agreement, the Company shall use its best efforts to effect the registration and
sale of such Registrable Securities in accordance with the intended method of
distribution thereof as quickly as practicable, and in connection with any such
request, the Company shall, as expeditiously as possible:
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(i) prepare and file with the SEC (in any event not
later than forty-five (45) Business Days after receipt of a request to file a
registration statement with respect to Registrable Securities) a registration
statement on any form on which registration is requested for which the Company
then qualifies, which counsel for the Company and Holders' Counsel shall deem
appropriate and which shall be available for the sale of such Registrable
Securities in accordance with the intended method of distribution thereof, and
use its best efforts to cause such registration statement to become effective;
provided, however, that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company shall (A) provide Holders'
Counsel with an adequate and appropriate opportunity to participate in the
preparation of such registration statement and each prospectus included therein
(and each amendment or supplement thereto) to be filed with the SEC, which
documents shall be subject to the review of Holders' Counsel, and (B) notify
Holders' Counsel and each seller of Registrable Securities pursuant to such
registration statement of any stop order issued or threatened by the SEC and
take all reasonable action required to prevent the entry of such stop order or
to remove it if entered;
(ii) prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for a period of not less than twenty-four (24) months, such longer
period as is requested by Wellspring, to the extent permitted under Rule 415
under the Act, or such other period which will terminate when all Registrable
Securities covered by such registration statement have been sold (but not before
the expiration of the ninety (90) day period referred to in Section 4(3) of the
Act and Rule 174 thereunder, if applicable), and comply with the provisions of
the Act with respect to the disposition of all Registrable Securities covered by
such registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
(iii) as soon as reasonably possible, furnish to each
seller of Registrable Securities, prior to filing a registration statement,
copies of such registration statement as it is proposed to be filed, and
thereafter such number of copies of such registration statement, each amendment
and supplement thereto (in each case including all exhibits thereto), the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as any such seller may reasonably request
in order to facilitate the disposition of the Registrable Securities owned by
such seller;
(iv) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller of Registrable Securities may request, and to
continue such qualification in effect in each such jurisdiction for as long as
is permissible pursuant to the laws of such jurisdiction, or for as long as any
such seller requests or until all of such Registrable Securities are sold,
whichever is shortest, and do any and all other acts and things which may be
reasonably necessary or advisable to enable any such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller; provided, however, that the Company shall not be required to (A) qualify
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generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 6(a)(iv), (B) subject itself to
taxation in any such jurisdiction or (C) consent to general service of process
in any such jurisdiction;
(v) use its best efforts to obtain all other approvals,
covenants, exemptions or authorizations from such governmental agencies or
authorities as may be necessary to enable the sellers of such Registrable
Securities to consummate the disposition of such Registrable Securities;
(vi) notify each seller of Registrable Securities at any
time when a prospectus relating thereto is required to be delivered under the
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and the Company shall
promptly prepare a supplement or amendment to such prospectus and furnish to
each such seller a reasonable number of copies of a supplement to or amendment
of such prospectus as may be necessary so that, after delivery to the purchasers
of such Registrable Securities, such prospectus shall not contain an 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 in
light of the circumstances under which they were made;
(vii) enter into and perform customary agreements
(including an underwriting agreement in customary form with the Approved
Underwriter or Company Underwriter, if any, selected as provided in Section 3 or
4) and take such other actions as are reasonably required in order to expedite
or facilitate the disposition of such Registrable Securities;
(viii) make available for inspection by any seller of
Registrable Securities, any managing underwriter participating in any
disposition pursu ant to such registration statement, Wellspring's Counsel and
any attorney, accountant or other agent retained by any such seller or any
managing underwriter (each, an "Inspector" and, collectively, the "Inspectors"),
all financial and other records, per tinent corporate documents and properties
of the Company and any subsidiaries thereof as may be in existence at such time
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's and any
subsidiaries' officers, directors and employees, and the independent public
accountants of the Company, to supply all information reasonably requested by
any such Inspector in connection with such registration statement;
(ix) obtain a "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by "cold comfort" letters, as Holders'
Counsel or the managing underwriter reasonably request;
(x) furnish, at the request of any seller of
Registrable Securities on the date such securities are delivered to the
underwriters for
11
sale pursuant to such registration or, if such securities are not being sold
through underwriters, on the date the registration statement with respect to
such securities becomes effective, an opinion, dated such date, of counsel
representing the Company for the purposes of such registration, addressed to the
underwriters, if any, and to the seller making such request, covering such legal
matters with respect to the registration in respect of which such opinion is
being given as such seller may reasonably request and as are customarily
included in such opinions;
(xi) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable but no later than fifteen (15) months
after the effective date of the registration statement, an earnings statement
covering a period of twelve (12) months beginning after the effective date of
the registration statement, in a manner which satisfies the provisions of
Section 11(a) of the Act;
(xii) cause all such Registrable Securities to be listed
on each securities exchange on which similar securities issued by the Company
are then listed, subject to the satisfaction of the applicable listing
requirements of each such exchange;
(xiii) keep each seller of Registrable Securities advised
as to the initiation and progress of any registration under Section 3 or 4
hereunder;
(xiv) provide officers' certificates and other customary
closing documents;
(xv) cooperate with each seller of Registrable
Securities and each underwriter participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc. (the "NASD") or any stock exchange or other governmental or
non-governmental regulatory agency; and
(xvi) use its best efforts to take all other steps
necessary to effect the registration of the Registrable Securities contemplated
hereby.
(b) Seller Information. The Company may require each seller of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding the distribution of such securities as
the Company may from time to time reasonably request in writing.
(c) Notice to Discontinue. Each Holder agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in Section 6(a)(vi), the Company's obligations pursuant to this
Agreement shall be suspended for a period not to exceed 60 days and such Holder
shall forthwith discontinue disposition of Registrable Securities pursuant to
the registration statement covering such Registrable Securities until such
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 6(a)(vi) and, if so directed by the Company, such Holder
shall deliver to the Company (at the Company's
12
expense) all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities which is
current at the time of receipt of such notice. If the Company shall give any
such notice, the Company shall extend the period during which such registration
statement shall be maintained effective pursuant to this Agreement (including,
without limitation, the period referred to in Section 6(a)(ii)) by the number of
days during the period from and including the date of the giving of such notice
pursuant to Section 6(a)(vi) to and including the date when the Holder shall
have received the copies of the supplemented or amended prospectus contemplated
by and meeting the requirements of Section 6(a)(vi).
7. Registration Expenses. The Company shall pay all expenses (other
than underwriting discounts and commissions) arising from or incident to the
performance of, or compliance with, this Agreement, including, without
limitation, (a) SEC, stock exchange and NASD registration and filing fees, (b)
all fees and expenses incurred in complying with securities or blue sky laws
(including, without limitation, reasonable fees, charges and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), (c) all printing, messenger and delivery expenses, (d) the fees,
charges and disbursements of counsel to the Company and of its independent
public accountants and any other accounting and legal fees, charges and expenses
incurred by the Company (including, without limitation, any expenses arising
from any special audits incident to or required by any registration or
qualification) and (e) any liability insurance or other premiums for insurance
obtained (which insurance the Company agrees to use its best efforts to obtain
upon the reasonable request of any seller of Registrable Securities) and the
reasonable fees, charges and expenses of any special experts (provided that a
seller of Registrable Securities shall give notice to the Company, as soon as
practicable, of the retention of any such special experts) retained in
connection with any requested Demand Registration or Piggy-Back registration
pursuant to the terms of this Agreement, regardless of whether the registration
statement filed in connection with such registration is declared effective. In
connection with each registration hereunder, the Company shall reimburse the
Holders for the reasonable fees, charges and disburse ments of a single law firm
("Holders' Counsel") designated by the Holders holding in the aggregate a
majority of the Registrable Securities included in any such registration to
represent each of the Holders with respect to such registration. All of the
expenses described in this Section 7 are referred to in this Agreement as
"Registration Expenses."
8. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Holder, its directors, officers, partners,
employees, advisors and agents, and each Person who controls (within the meaning
of the Act or the Exchange Act) such Holder, to the extent permitted by law,
from and against any and all losses, claims, damages, expenses (including,
without limitation, reasonable costs of investigation and fees, disbursements
and other charges of counsel) or other liabilities resulting from or arising out
of or based upon any untrue, or alleged untrue, statement of a material fact
contained in any registration statement, prospectus or preliminary prospectus or
notification or offering circular (as amended or
13
supplemented if the Company shall have furnished any amendments or supplements
thereto) or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as the same are caused by
or contained in any information furnished in writing to the Company by such
Holder expressly for use therein. The Company shall also indemnify any
underwriters of the Registrable Securities, their officers, directors and
employees, and each Person who controls any such underwriter (within the meaning
of the Act and the Exchange Act) to the same extent as provided above with
respect to the indemnification of the Holders of Registrable Securities.
(b) Indemnification by Holders. In connection with any
registration in which a Holder is participating pursuant to Section 3 or 4
hereof, each such Holder, as applicable, shall furnish to the Company in writing
such information with respect to such Holder, as applicable, as the Company may
reasonably request or as may be required by law for use in connection with any
registration statement or prospectus to be used in connection with such
registration and each Holder agrees to indemnify and hold harmless the Company,
any underwriter retained by the Company and their respective directors,
officers, employees and each Person who controls (within the meaning of the Act
and the Exchange Act) the Company or such underwriter to the same extent as the
foregoing indemnity from the Company to the Holders (subject to the proviso to
this sentence and applicable law), but only with respect to any such information
furnished in writing by such Holder expressly for use therein; provided,
however, that the liability of any Holder under this Section 8(b) and 8(d) shall
be limited to the amount of the net proceeds received by such Holder in the
offering giving rise to such liability.
(c) Conduct of Indemnification Proceedings. Any Person entitled
to indemnification hereunder (the "Indemnified Party") agrees to give prompt
written notice to the indemnifying party (the "Indemnifying Party") after the
receipt by the Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or contribution
pursuant to this Agreement; provided, that, the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability
that it may have to the Indemnified Party hereunder unless materially prejudiced
by such delay. If notice of commencement of any such action is given to the
Indemnifying Party as above provided, the Indemnifying Party shall be entitled
to participate in and, to the extent it may wish, jointly with any other
Indemnifying Party similarly notified, to assume the defense of such action at
its own expense, with counsel chosen by it and reasonably satisfactory to such
Indemnified Party. The Indemnified Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees
to pay the same, (ii) the Indemnifying Party fails to assume the defense of such
action within 10 days with counsel satisfactory to the Indemnified Party in its
reasonable judgment, (iii) the Indemnified Party reasonably determines after
consulting with counsel, that either (A) representation of such Indemnified
Party and the Indemnifying Party by the same counsel may be
14
inappropriate under applicable standards of professional conduct or (B) there
may be one or more legal defenses available to it which are different from or
additional to those available to the Indemnifying Party. In either of such cases
the Indemnifying Party shall not have the right to assume the defense of such
action on behalf of such Indemnified Party. Unless the provisions of clause (ii)
of the preceding sentence apply, no Indemnifying Party shall be liable for any
settlement entered into without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall settle any matter for which
indemnification is deemed hereunder unless such settlement includes solely the
payment of money and the Indemnified Party receives an unconditional release
from all liability in connection therewith. The rights accorded to any
Indemnified Party hereunder shall be in addition to any rights that such
Indemnified Party may have at common law, by separate agreement or otherwise.
(d) Contribution. If the indemnification provided for in Section
8(a) from the Indemnifying Party is unavailable to an Indemnified Party in
respect of any losses, claims, damages, expenses or other liabilities referred
to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, expenses or other
liabilities in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party and Indemnified Party in connection with the actions
which resulted in such losses, claims, damages, expenses or other liabilities,
as well as any other relevant equitable considerations. The relative faults of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, was made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the Indemnifying Party's and
Indemnified Party's relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by a
party as a result of the losses, claims, damages, expenses or other liabilities
referred to above shall be deemed to include, subject to the limitations set
forth in Sections 8(a), 8(b) and 8(c), any legal or other fees, charges or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable con siderations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution pursuant to this
Section 8(d).
9. Rule 144; Other Exemptions. The Company covenants that it
shall file any reports required to be filed by it under the Exchange Act and the
rules and regulations adopted by the SEC thereunder, and that it shall take such
further action as any of the Parties may reasonably request (including, but not
limited to, providing any information necessary to comply with Rules 144 and
144A under the Act), all to the extent required from time to time to enable the
Holders to sell Registrable Securities without registration under the Act within
the limitation of the
15
exemptions provided by (a) Rule 144 or Rule 144A under the Act, as such rules
may be amended from time to time, or (b) any other rules or regulations now
existing or hereafter adopted by the SEC. The Company shall, upon the request of
any Holder, deliver to such Holder a written statement as to whether the Company
has complied with such requirements. Nothing in this Section 9 shall be deemed
to grant to any Party any right to dispose of its Registrable Securities
(whether pursuant to Rule 144 or Rule 144A or otherwise) where such disposition
is prohibited under the terms of the Shareholders' Agreement.
10. Miscellaneous.
(a) Recapitalizations, Exchanges, etc. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to the
Company's Common Stock, to any and all shares of capital stock of the Company or
any successor or assign of the Company (whether by merger, consolidation, sale
of assets or otherwise) which may be issued in respect of, in exchange for or in
substitution of, the Common Stock and shall be appropriately adjusted for any
stock dividends, splits, reverse splits, combinations, recapitalizations and the
like occurring after the date hereof.
(b) No Inconsistent Agreements; Other Registration Rights. The
Company shall not enter into any agreement with respect to its securities that
is inconsistent with or adversely affects the rights granted to the Holders in
this Agreement. The Company shall not grant any other Person registration rights
without the written consent of Wellspring. If the Company shall at any time
hereafter provide to any holder of any securities of the Company rights with
respect to the registration of such securities and such rights are provided on
terms or conditions more favorable to such holder than the terms and conditions
applicable to the Holders herein, the Company shall provide (by way of amendment
to this Agreement or otherwise) such more favorable terms or conditions to the
Holders under this Agreement.
(c) Remedies. The Holders, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, shall be
entitled to specific performance of their 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 it of the provisions of this Agreement
and hereby agrees to waive in any action for specific performance the defense
that a remedy at law would be adequate.
(d) Amendments and Waivers. Except as otherwise provided herein,
any amendment, supplement or modification of or to any provision of this
Agreement, any waiver of any provision of this Agreement, and any consent to any
departure by any Party from the terms and provisions of this Agreement, shall be
effective upon the prior written consent of all of the Parties.
(e) Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:
16
(i) if to Wellspring:
c/o Wellspring Capital Management LLC
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx Drain, Esq.
(ii) if to CIP:
Co-Investment Partners, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx
with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
(iii) if to Ontario:
Ontario Teachers' Pension Plan Board
0000 Xxxxx Xxxxxx, 0xx xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: Xxxx Xxxxxxx
Telecopy: (000) 000-0000
17
with a copy to:
Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx, Esq.
(iv) if to the Company:
Paragon Trade Boards, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx Xxxxxxx
(v) if to an Other Shareholder, to the address set forth in
the Other Shareholder Acknowledgement executed by such
Other Shareholder.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the parties hereto;
provided, however, that the registration rights and the other obligations of the
Company contained in this Agreement shall, with respect to any Registrable
Security, be automatically transferred from a Holder to any subsequent holder of
such Registrable Security (including any pledgee). Notwithstanding any transfer
of such rights, all of the obligations of the Company hereunder shall survive
any such transfer and shall continue to inure to the benefit of all transferees.
(g) 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.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles of conflicts of law of such State.
18
(j) Jurisdiction. Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated hereby
may be brought in the Federal or State courts located in the State of New York,
City of New York, County of New York and hereby expressly submits to the
personal jurisdiction and venue of such courts for the purposes thereof and
expressly waives any claim of improper venue and any claim that such courts are
an inconvenient forum. Each party hereby irrevocably consents to the service of
process of any of the aforementioned courts in any such suit, action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth in Section 10(e), such service to
become effective 10 days after such mailing.
(k) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, it being intended that all
of the rights and privileges of the Holders shall be enforceable to the fullest
extent permitted by law.
(l) Rules of Construction. Unless the context otherwise
requires, "or" is not exclusive, and references to sections or subsections refer
to sections or subsections of this Agreement.
(m) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings in respect of the subject matter contained
herein, other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(n) Further Assurances. Each of the parties shall execute such
documents and perform such further acts as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.
(o) Other Shareholders. Subject to the consent of each of the
Company and Wellspring, any other stockholder of the Company may become a party
hereto, and shall have the rights and be subject to the obligations of an Other
Shareholder hereunder, by executing and delivering to the Company, with a copy
to each of Wellspring, CIP and Ontario, the Other Shareholder Acknowledgement
which follows the signature page hereof.
19
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized on
the date first above written.
PTB ACQUISITION COMPANY, LLC
By: /s/ Xxxx X. Xxxxxxx
-----------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
CO-INVESTMENT PARTNERS, L.P.
By: CIP Partners LLC, its general partner
By: /s/ Xxxxxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Member
ONTARIO TEACHERS PENSION PLAN
BOARD
By: /s/ Xxxx Xxxxxxx
--------------------
Name: Xxxx Xxxxxxx
Title: Portfolio Manager
PARAGON TRADE BRANDS, INC.
By: /s/ Xxxx X. Xxxxx
---------------------
Name: Xxxx X. Xxxxx
Title: Chief Financial Officer
20
OTHER SHAREHOLDER ACKNOWLEDGEMENT
THE UNDERSIGNED, has received a copy of and has reviewed the
foregoing Registration Rights Agreement and agrees to become a party thereto and
be bound thereby as an Other Shareholder (as defined therein) as of the date set
forth below:
Date:_________ __, 20__ ________________________________________
Name: ___________________________
Address: ________________________
________________________
________________________
Telecopier:_______________________
