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EXHIBIT 99.5
REGISTRATION RIGHTS AGREEMENT
Brooke Group Ltd.
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") dated as of January
30, 1998 among Brooke Group Ltd., a Delaware corporation ("BROOKE"), and the
holders of record of the Shares described below who have either executed a
Consent (as defined in Section 6.9) or who have opted into this Agreement in
accordance with Section 6.9 below (the "APPLICABLE HOLDERS").
RECITALS
A. The Applicable Holders are owners of up to an aggregate of 482,970
shares (together with any additional shares issued as a result of rounding
requirements) of common stock of Brooke, $0.10 par value per share, (such shares
owned by the Applicable Holders are referred to herein as the "SHARES"), which
Shares were distributed to the holders (the "HOLDERS") of the Series B and
Series C Senior Secured Notes (the "NOTES") issued pursuant to the Indenture
dated as of February 14, 1992, as supplemented and amended by the First
Supplemental Indenture, dated as of January 26, 1994, and the Second
Supplemental Indenture and Amendment to Series B and Series C Senior Secured
Notes, dated as of January 30, 1998 (the "SECOND SUPPLEMENTAL INDENTURE AND
AMENDMENT TO NOTES"), among Xxxxxxx Group Inc., Eve Holdings Inc. and Bankers
Trust Company (as supplemented and amended and in effect from time to time, the
"INDENTURE").
B. On the terms and subject to the conditions set forth herein, Brooke
and the Applicable Holders desire that Brooke use its reasonable best efforts to
file, by February 12, 1998, with the SEC a Registration Statement to register
the resale of the Shares by the Applicable Holders.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements set forth herein, and intending to be
legally bound, the parties hereto hereby agree as follows:
II.
DEFINITIONS AND USAGE
II. A. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Effectiveness Period" has the meaning set forth in Section 2.2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Indenture" has the meaning set forth in the Preamble.
"Losses" has the meaning set forth in Section 4.1.
"Majority Holders" means holders of at least 60% of the Registrable
Securities as of the time of determination.
"Notes" has the meaning set forth in the Preamble.
"Person" or "person" means an individual, trustee, corporation, limited
liability company, partnership, joint stock company, trust,
unincorporated association, union, business association, firm or other
entity.
"Preliminary Prospectus" means any preliminary prospectus that may be
included in any Registration Statement.
"Prospectus" means the prospectus included in or related to any
Registration Statement (including 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 Securities 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.
"Registrable Securities" means collectively the Shares plus any
additional shares of common stock of Brooke paid in respect of
Liquidated Damages under Section 2.5 hereof. However, a Share or any
such additional share, as applicable, will cease to be a Registrable
Security when it (i) is sold in an open market transaction or in an
underwritten public offering, (ii) is sold to any person other than an
"affiliate" of Brooke (as defined under the Regulations) pursuant to a
Registration Statement, (iii) is eligible for resale without
restriction pursuant to Rule 144(k) of the Regulations or any similar
rule or regulation hereafter adopted by the SEC or (iv) ceases to be
outstanding.
"Registration Statement" means any registration statement of Brooke
under the Securities Act that covers any of the Registrable Securities,
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
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and all material deemed part of such registration statement by Rule
430A of the Regulations.
"Regulations" means the regulations of the SEC under the Securities
Act.
"Rule 415" means Rule 415 of the Regulations or any similar rule or
regulation hereafter adopted by the SEC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Majority Holders" means holders of at least 60% of the
Registrable Securities then being offered pursuant to a Registration
Statement.
"Shares" has the meaning set forth in the Preamble.
"Shelf Registration" has the meaning set forth in Section 2.2.
"Underwritten registration" or "underwritten offering" means a
registration in which securities of Brooke are sold to one or more
underwriters or group or a syndicate of underwriters for offering to
the public.
II. B. Usage.
a. References to Articles, Sections and Exhibits are to articles and
sections hereof and exhibits hereto, references to a Person are also references
to its successors and assigns, references to a document are to it as amended,
waived and otherwise modified from time to time, and references to a statute or
another governmental rule are to it as amended and otherwise modified from time
to time. The definitions set forth in Section 1.1 are equally applicable both to
the singular and plural forms and the feminine, masculine and neuter forms of
the terms defined. "Including" and correlative terms shall be deemed to be
followed by "without limitation," if not followed by such words or words of like
import. The headings of Articles and Sections and the table of contents relating
hereto have been included solely for convenience of references and shall not
have any effect on the construction hereof.
b. This Agreement contemplates the filing of registration statements
under the Securities Act involving various offers and sales of securities. In
connection with such registration statements, there may be identified therein
one or more underwriters through which securities are to be offered pursuant to
either a "firm commitment" or "best-efforts" arrangement, and, in the case where
there is more than one underwriter, one or more of the underwriters may be
designated as the "manager" or "representative" or the "co-managers" or
"representatives" of the several underwriters. Accordingly, all references
herein to an "underwriter" or the
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"underwriters" are intended to refer to a "principal underwriter" (as defined in
Rule 405 of the Regulations) and to provide for those transactions in which
securities may be offered by or through one or more underwriters, and not to
imply that any of the transactions contemplated hereby is conditioned in any
manner whatsoever on the participation therein by one or more underwriters on
behalf of any party.
III.
REGISTRATION OF REGISTRABLE SECURITIES UNDER SECURITIES ACT
III. A. Required Registration of Registrable Securities. Brooke shall
use its reasonable best efforts to register the Registrable Securities upon the
terms, and subject to the limitations and conditions, hereinafter set forth.
III. B. Shelf Registration. On or before February 12, 1998, Brooke
shall prepare and file with the SEC a Registration Statement on Form S-3 (or if
Form S-3 is unavailable, shall file a Registration Statement on Form S-1 as soon
as practicable after the date hereof) for an offering to be made by the
Applicable Holders on a continuous basis under Rule 415 covering all the
Registrable Securities (the "Shelf Registration"). Brooke shall use its
reasonable best efforts to cause the Shelf Registration to be declared effective
under the Securities Act by May 31, 1998 and to keep the Shelf Registration
continuously effective and the Prospectus current under the Securities Act
during the period (the "Effectiveness Period") ending on the earliest date on
which (x) the Registration Statement has been effective for an aggregate of two
(2) years, (y) all Registrable Securities have been sold other than to an
Applicable Holder, or (z) in the opinion of Milbank, Tweed, Xxxxxx & XxXxxx or
other nationally recognized counsel to Brooke reasonably acceptable to the
Majority Holders, which opinion shall be reasonably satisfactory in form, scope
and substance to the Majority Holders, registration of the Registrable
Securities is no longer required under the Securities Act for the Applicable
Holders to sell all remaining Registrable Securities in the open market without
limitations as to volume or manner of sale and without being required to file
any forms or reports with the SEC under the Securities Act or the Regulations
other than a notice of sale under Rule 144 under the Regulations. No holder of
Registrable Securities may include any of its Registrable Securities in any
Shelf Registration pursuant to this Agreement unless and until such holder
furnishes to Brooke in writing such information as Brooke may reasonably
request. Notwithstanding the foregoing, Brooke shall not be required to file the
Shelf Registration or have it declared or remain effective during any period in
which Brooke is not permitted by the Regulations to use a Form S-3 or Form S-1
Registration Statement for the registration of the resale of Registrable
Securities.
Subject to Section 2.3.1(q), Brooke shall promptly supplement and amend
the Registration Statement and the Prospectus (i) if required by the Regulations
or the instructions applicable to the registration form used for the Shelf
Registration, (ii) if required by the Securities Act or the Regulations, (iii)
if required to prevent the Registration Statement or the Prospectus from
containing any material misstatement or omitting to state a material fact
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required to be stated therein or necessary to make the statements therein not
misleading, or (iv) if reasonably requested by the Majority Holders.
III. C. Registration Procedures.
III. C. 1. Shelf Registration. In connection with a Shelf
Registration, Brooke shall use its reasonable best efforts to effect such
registration to permit the sale of Registrable Securities in accordance with the
method or methods of disposition reasonably intended by the Selling Majority
Holders, and pursuant thereto Brooke shall:
a. FILING OF REGISTRATION STATEMENT. Before filing any Registration
Statement or Prospectus or any amendments or supplements thereto, furnish
to and afford the Applicable Holders of the Registrable Securities covered
by such Registration Statement, and the managing underwriters, if any, a
reasonable opportunity to review and, if they desire, comment on all such
documents (including any documents to be incorporated by reference therein
and all exhibits thereto) proposed to be filed.
b. COMPLIANCE WITH LAW. Comply with the provisions of the Securities
Act, the Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to it with respect to the disposition of all
Registrable Securities covered by such Registration Statement as amended or
by such Prospectus as supplemented.
c. NOTICE. Notify the Applicable Holders owning Registrable Securities
covered by the Registration Statement, and the managing underwriters, if
any, promptly, and confirm such notice in writing (i) when a Registration
Statement and an amendment thereto or a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to
a Registration Statement or any post-effective amendment, when the same has
become effective (including in such notice a written statement that any
such Applicable Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-effective amendment
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, the initiation of any proceedings for that purpose
or any other communication between the SEC and Brooke or their
representatives related to a Shelf Registration, (iii) if at any time when
a prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Securities, the representations
and warranties of Brooke contained in any agreement (including any
underwriting agreement) contemplated by Section 2.3.1(m) cease to be true
and correct, (iv) of the receipt by Brooke of any notification with respect
to the suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Securities 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
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becoming known that requires the making of any changes in 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, in the case of the
Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
and (vi) of Brooke's determination that a post-effective amendment to a
Registration Statement would be necessary or advisable under applicable
law.
d. PREVENT SUSPENSION OF EFFECTIVENESS. Use its reasonable 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 Securities for offers or sales in
any jurisdiction, and, if any such order is issued, use its reasonable best
efforts to obtain the withdrawal of any such order at the earliest possible
moment.
e. UNDERWRITTEN OFFERING. If the Registrable Securities are to be sold
in an underwritten offering, (i) as promptly as is reasonably practicable
incorporate in a prospectus supplement or post-effective amendment to the
Registration Statement such information as is required by the Securities
Act, Regulation S-K of the Regulations, the Regulations and instructions
applicable to the registration form used for such Registration Statement to
be disclosed concerning, among other things, the terms of the underwritten
offering, the underwriters, and the plan of distribution and (ii) make all
required filings of such prospectus supplement or such post-effective
amendment as soon as practicable.
f. COPIES OF FILINGS. Furnish to the Applicable Holders owning
Registrable Securities that so request, and each managing underwriter, if
any, without charge, one conformed copy of the Registration Statement and
each post-effective amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein
by reference and all exhibits.
g. DELIVERY OF PROSPECTUS. Deliver to the Applicable Holders owning
Registrable Securities, and the 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 or deemed to be incorporated by reference therein as
such Persons may reasonably request; and Brooke hereby consents to the use
of each such Prospectus and Preliminary Prospectus and each amendment or
supplement thereto by each of the selling Applicable Holders and the
underwriters or agents, if any, and dealers, if any, in connection with the
offering and sale of the Registrable Securities covered by such Prospectus
and any amendment or supplement thereto in the manner set forth in the
relevant Registration Statement.
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h. BLUE SKY LAWS. Use its reasonable best efforts to register or
qualify, and to cooperate with the selling Applicable Holders
with respect to the Registrable Securities, the underwriters, if any, and
their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Securities for offer and sale under the securities or Blue
Sky laws of such jurisdictions within the United States as the Selling
Majority Holders or the managing underwriters, if any, reasonably request
in writing; keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period; and do any and all
other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the applicable Registration Statement in the manner set forth in such
Registration Statement; PROVIDED, HOWEVER, that Brooke shall not be
required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) subject itself to
general service of process in any such jurisdiction where it is not then so
subject or (C) subject itself to taxation in a material amount in any such
jurisdiction.
i. CERTIFICATES. Cooperate with the selling Applicable Holders with
respect to Registrable Securities and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities 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 Securities to be in
such denominations and registered in such names as the managing
underwriters, if any, or such Applicable Holders may reasonably request.
j. GOVERNMENTAL AGENCIES. Use its reasonable best efforts to cause the
Registrable Securities 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 selling Applicable Holders
thereof or the underwriters, if any, to consummate the disposition of such
Registrable Securities in the manner set forth in such Registration
Statement, except as may be required solely as a consequence of the nature
of such Applicable Holders' business, in which case Brooke will cooperate
in all reasonable respects with the filing of such Registration Statements
and the granting of such approvals.
k. AMENDMENTS AND SUPPLEMENTS. Subject to Sections 2.3.1(a) and
2.3.1(q), upon the occurrence of any event contemplated by Section
2.3.1(c)(v) or 2.3.1(c)(vi), as promptly as practicable prepare and file
with the SEC a 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 Registrable
Securities being sold thereunder, the Registration Statement and such
Prospectus will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated
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therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
l. LISTING ON SECURITIES EXCHANGES. Use its reasonable best efforts to
cause all Registrable Securities covered by a Registration Statement to be
(i) listed on each national securities exchange, if any, on which
Registrable Securities are then listed, or (ii) authorized to be quoted on
the NASDAQ Stock Market or the NASDAQ National Market if similar securities
of Brooke are so authorized.
m. UNDERWRITING AGREEMENT. In connection with an underwritten offering
of Registrable Securities, enter into and perform its obligations under an
underwriting agreement in customary form for underwritten offerings made by
selling security holders on the registration form utilized for the relevant
Registration Statement and take such other actions as are reasonably
requested by the managing underwriters in order to expedite or facilitate
the registration and the disposition of such Registrable Securities, and in
such connection, (i) make such representations and warranties to the
underwriters with respect to the business of Brooke 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 comparable issuers to underwriters in
underwritten offerings made by selling security holders, and confirm the
same if and when requested; (ii) obtain opinions of counsel to Brooke and
updates thereof (which counsel and opinions shall be reasonably
satisfactory to the managing underwriters and the Selling Majority
Holders), addressed to the underwriters covering the matters customarily
covered in opinions requested in underwritten offerings by selling security
holders; (iii) obtain "cold comfort" letters and updates thereof (which
letters and updates shall be reasonably satisfactory to the managing
underwriters and the Selling Majority Holders) from the independent
certified public accountants of Brooke (and, if necessary, any other
independent certified public accountants of any subsidiary of Brooke or of
any business acquired by Brooke for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters and the holders of
Registrable Securities included in such underwritten offering (to the
extent such accountants are permitted under applicable law and accounting
literature so to address "cold comfort" letters), such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings by selling
security holders; and (iv) if an underwriting agreement is entered into,
undertake such indemnification and contribution provisions and procedures
as are customarily undertaken in such agreements. The above shall be done
in connection with each closing under such underwriting agreement, or as
and to the extent required thereunder.
n. FINANCIAL RECORDS, ETC. Make available for inspection by any
selling Applicable Holder, any underwriter participating in any such
disposition of Registrable Securities, and any attorney, accountant or
other agent retained by any such selling
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Applicable Holder or underwriter (collectively, the "INSPECTORS"), at the
offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and properties
of Brooke and its subsidiaries (collectively, the "RECORDS") as shall be
necessary or advisable to enable them to exercise their due diligence
responsibilities, and cause the officers, directors and employees of Brooke
and its subsidiaries to supply all information reasonably requested by any
such Inspectors in connection with such Registration Statement. Records
which Brooke determines, in good faith, to be confidential and as to 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 misstatement or 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. Except as
contemplated hereby, and subject to applicable law, each selling Applicable
Holder agrees 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 Brooke or its
affiliates unless and until such information is made generally available to
the public. Each Applicable Holder shall not be prohibited from engaging in
market transactions if such information is not material, to the extent
permitted by applicable law. Each Applicable Holder further agrees that it
will, upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to Brooke and allow Brooke at its
expense to undertake appropriate action to prevent disclosure of the
Records deemed confidential.
o. EARNINGS STATEMENTS. Comply with all applicable rules and
regulations of the SEC relating to the Shelf Registration and make
generally available 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 Securities 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 Brooke after the effective date of a Registration
Statement which statements shall cover such 12-month periods.
p. NASD. Cooperate with each holder of Registrable Securities covered
by any Registration Statement and each underwriter, if any, 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").
q. POSTPONEMENT OR SUSPENSION OF SHELF REGISTRATION. Notwithstanding
anything contained in this Section 2, Brooke may postpone, for a period of
not in excess of 60 days in the aggregate in any twelve month period,
taking any action with respect to
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or suspend the Shelf Registration if, in the good faith opinion of Brooke's
board of directors, effecting or continuing the Shelf Registration would
adversely affect a material financing, acquisition, disposition of assets
or stock, merger or other comparable transaction or would require Brooke to
make public disclosure of information the public disclosure of which would
have a material adverse effect upon Brooke.
r. DELIVERY OF OPINION. Upon the filing of any Registration Statement,
deliver to the selling Applicable Holders an opinion or opinions of outside
counsel to Brooke (which counsel shall be reasonably satisfactory to the
Selling Majority Holders), to the effect that nothing has come to the
attention of such counsel that causes such counsel to believe that such
Registration Statement contains, as of its effective date, any untrue
statement of a material fact necessary to make the statements therein not
misleading, it being understood that any such opinion may contain customary
limitations thereof.
s. FURTHER ASSURANCES. Use its reasonable best efforts to take all
other steps necessary or advisable, requested by the Majority Holders, to
effect the registration and distribution of the Registrable Securities
covered by the Registration Statement contemplated hereby.
III. C. 2. Applicable Holder Covenants. Each Applicable Holder
agrees by acceptance of the Registrable Securities that:
(a) upon receipt of any notice from Brooke of the happening of any
event of the kind described in clause (ii), (iv), (v) or (vi) of Section
2.3.1(c), such Applicable Holder shall forthwith discontinue disposition of
such Registrable Securities covered by such Registration Statement or
Prospectus until such Applicable Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 2.3.1(k), or
until it is advised in writing by Brooke that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto;
(b) such Applicable Holder shall promptly furnish to Brooke in writing,
upon Brooke's reasonable request, any and all information as to such
Applicable Holder and its plan of distribution as may be necessary to
comply with the provisions of the Securities Act, the Regulations, the
Exchange Act and with the rules and regulations of the SEC thereunder in
connection with the preparation and filing of any Registration Statement
pursuant hereto, or any amendment or supplement thereto, or any Preliminary
Prospectus or Prospectus included therein; and
(c) all information to be furnished to Brooke by or on behalf of such
Applicable Holder expressly for use in connection with the preparation of
any Preliminary Prospectus, the Prospectus, the Registration Statement, or
any amendment or supplement
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thereto, will not include any untrue statement of a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
III. D. Qualifications to Registration Obligations. Notwithstanding
anything in this Agreement to the contrary, if a Registration Statement does not
become effective after Brooke has filed it solely by reason of a written request
not to proceed made by the Majority Holders, Brooke's obligations to file such
Registration Statement and attempt to cause it to become effective shall be
deemed completely satisfied and discharged to the extent of such request.
III. E. Liquidated Damages. Brooke agrees that the Applicable Holders
holding Registrable Securities will suffer damages if Brooke fails to fulfill
its obligations under Sections 2.1 and 2.2 and that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, (i) if Brooke
does not cause the Shelf Registration to be made effective by May 31, 1998, then
liquidated damages ("Liquidated Damages") shall accrue on and attach to each
Registrable Security at the Daily Rate for each day until the Shelf Registration
is effective or (ii) if Brooke fails to maintain the effectiveness of the Shelf
Registration on any day during the Effectiveness Period, Liquidated Damages
shall accrue on and attach to the Registrable Securities at the Daily Rate for
each day until the Shelf Registration or a substitute thereof is effective;
provided, however, that the number of days on which Liquidated Damages shall
accrue on any Registrable Securities shall not exceed 300 days in the aggregate;
provided, further, however, Liquidated Damages shall not accrue on the
Registrable Securities on any day in which Brooke is not required to maintain an
effective Registration Statement with respect to the Registrable Security
pursuant to the provisions of this Article II. For purposes hereof, "Daily Rate"
shall be equal to $0.0499476 per day per share of Registrable Security. The
Daily Rate shall be equitably adjusted in the event the Registrable Shares are
combined or subdivided or similar corporate action is taken by Brooke.
Liquidated Damages on each Registrable Security shall be payable, at
the option of Brooke, either (i) in cash; (ii) in shares of common stock of
Brooke, par value $0.10 per share, which shares shall be valued based on the
closing sales price of such common stock on the last trading day of the month
immediately prior to the month in which any such shares are issued pursuant to
this paragraph, as reported on the New York Stock Exchange, Inc. Composite Tape
and published in the Wall Street Journal, or (iii) in a combination of (i) and
(ii). All Liquidated Damages accruing during any calendar month shall be paid on
the first day of the month immediately following the calendar month in which
such Liquidated Damages accrued (or if such date is a Saturday, Sunday or a day
in which banks in New York are authorized to close, the next subsequent day
which is not a Saturday, Sunday or day in which banks in New York are authorized
to close) to holders of record of the Registrable Securities as they appear on
the stock transfer books of Brooke on the 15th day of the calendar month in
which such Liquidated Damages accrued.
Notwithstanding the foregoing, Liquidated Damages will not be required
to be paid in respect of Registrable Securities if the applicable default under
the foregoing paragraphs of this Section 2.5 arises from the failure of Brooke
to either cause to become effective or to maintain the effectiveness of, as
applicable, a Shelf Registration primarily by reason of the failure of an
Applicable Holder to provide such information as (i) Brooke reasonably requests,
with reasonable prior written notice, for use in such Shelf Registration
pursuant to the provisions of Section 2.3.2. or (ii) the SEC or NASD may request
in connection with such Shelf Registration.
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IV.
REGISTRATION EXPENSES
All reasonable fees and expenses incident to the performance of or
compliance with this Agreement by Brooke shall be borne by Brooke, whether or
not a Shelf Registration is filed or becomes effective, including (i) all
registration and filing fees (including (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 reasonable fees and disbursements of counsel for Brooke or the
underwriters, or both, in connection with Blue Sky qualifications of the
Registrable Securities)), (ii) printing expenses (including expenses of printing
certificates for Registrable Securities, printing and distributing Prospectuses,
Preliminary Prospectuses and amendments or supplements thereto, the Registration
Statement and amendments thereto, and printing or preparing any underwriting
agreement, agreement among underwriters and related syndicate or selling group
agreements, pricing agreements and Blue Sky memoranda), (iii) fees and
disbursements of counsel for Brooke, (iv) fees and disbursements of all
independent certified public accountants for Brooke (including the expenses of
any "cold comfort" letters required by or incident to such performance), (v)
Securities Act liability insurance, if Brooke so desires such insurance, (vi)
internal expenses of Brooke (including all salaries and expenses of officers and
employees of Brooke performing legal or accounting duties), (vii) the fees and
expenses incurred in connection with the listing of the securities to be
registered and any national securities exchange or quoted on the NASDAQ Stock
Market or the NASDAQ National Market pursuant to section 2.3.1(1), and (viii)
the fees and expenses of any Person, including special experts, retained by
Brooke in its sole discretion.
Each Applicable Holder owning Registrable Securities shall pay (i) all
underwriting discounts and commissions or broker's commissions incurred in
connection with the sale or other disposition of Registrable Securities for or
on behalf of such Applicable Holder's account and (ii) all fees and
disbursements of legal counsel for such Applicable Holder or any underwriter.
V.
INDEMNIFICATION
V. A. Indemnification by Brooke. Brooke shall indemnify and hold
harmless, to the fullest extent permitted by law, each Applicable Holder and its
affiliates and any investment funds managed thereby and their respective
shareholders, partners, officers, directors, agents and employees, each Person
who controls such Applicable Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the shareholders,
partners, officers, directors, agents and employees of each such controlling
person, (individually, an "Indemnified Person") from and against any and all
losses, claims, damages, liabilities, costs (including costs of investigating,
preparing to defend, defending and appearing as a third-party witness and
attorneys' fees and disbursements reasonably incurred) and expenses including
any amounts paid in respect of any settlements (collectively, "Losses"), without
duplication, as incurred, arising out
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of or based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or form of prospectus, or in
any amendment or supplements thereto or in any Preliminary Prospectus, or
arising out of or based upon, in the case of the Registration Statement or any
amendments thereto, any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and, in the case of the Prospectus or form of prospectus, or in any amendments
or supplements thereto, or in any Preliminary Prospectus, any omission or
alleged omission of 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 (i), in either case, to the extent, but
only to the extent, that such untrue or alleged untrue statement or omission or
alleged omission has been made therein in reliance upon and in conformity with
information furnished in writing to Brooke by such Indemnified Person (or the
person controlling such Indemnified Person) expressly for use therein, (ii) to
the extent such Losses result from the failure of such Applicable Holder or any
underwriter in an underwritten offering to provide to any person purchasing
Registrable Securities from it any supplement to a Prospectus provided by Brooke
pursuant to Section 2.3.1(g), or (iii) to the extent such Losses result from the
sale of Registrable Securities by such Applicable Holder or underwriter in an
underwritten offering (a) under a Registration Statement or (b) using any
Prospectus, other than a Registration Statement or a Prospectus, as the case may
be, amended or supplemented by Brooke pursuant to Section 2.3.1(k) and provided
to such Applicable Holder or such underwriter pursuant to Section 2.3.1(g),
after Brooke shall have notified such Applicable Holder or such underwriter in
an underwritten offering in writing of any event contemplated by Section
2.3.1.(c)(v) or 2.3.1(c)(vi) pursuant to Section 2.3.1(c).
V. B. Indemnification by Applicable Holder. In connection with any
Registration Statement in which an Applicable Holder is participating, such
Applicable Holder shall indemnify and hold harmless, to the fullest extent
permitted by law, Brooke and its shareholders, directors, officers, agents and
employees, each Person who controls Brooke (within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act), and the shareholders,
directors, officers, agents or employees of such controlling person, from and
against, any and all Losses, joint or several, without duplication, as incurred,
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or form of
prospectus, or in any amendment or supplement thereto or in any Preliminary
Prospectus, or arising out of or based upon, in the case of the Registration
Statement or any amendments thereon, any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and, in the case of the Prospectus or form of
prospectus, or in any amendments or supplements thereto, or in any Preliminary
Prospectus, any omission or alleged omission of a material fact necessary to
make the statements therein, in the light of the circumstances under the
statements therein, in the light of the circumstances under which they were
made, not misleading; in either case, to the extent, but only to the extent,
that such untrue or alleged untrue statement or omission or alleged omission has
been made therein in reliance upon and in conformity with information furnished
in
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writing to Brooke by such Applicable Holder expressly for use therein by notice
referring to this Section 4.2.
V. C. Conduct of Indemnification Proceedings. If any Person shall be
entitled to indemnity or contribution hereunder (an "indemnified party"), such
indemnified party shall give prompt notice to the party or parties from which
such indemnity or contribution is sought (the "indemnifying parties") of the
commencement of any action or proceeding (including any governmental
investigation) (collectively "Proceedings" and individually a "Proceeding") with
respect to which such indemnification or contribution is sought pursuant hereto;
provided, however, that the failure so to notify the indemnifying parties shall
not relieve the indemnifying parties from any obligation or liability except to
the extent that the indemnifying parties have been actually prejudiced by such
failure. The indemnifying parties shall have the right, exercisable by giving
written notice to an indemnified party promptly after the receipt of written
notice from such indemnified party of such Proceeding, to assume, at the
indemnifying parties' expense, the defense of any such Proceeding, with counsel
reasonably satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such Proceeding; provided,
however, that an indemnified party or parties (if more than one such indemnified
party is named in any Proceeding) shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless: (i) the indemnifying party or parties agree
to pay such fees and expenses; or (ii) the indemnifying parties fail promptly to
assume the defense of such Proceeding or fail to employ counsel reasonably
satisfactory to such indemnified party or parties; or (iii) counsel for the
indemnified party (which counsel shall be reasonably satisfactory to the
indemnifying party) determines that one counsel may not properly represent both
the indemnifying party and such indemnified party in which case, if such
indemnified party or parties notifies the indemnifying parties in writing that
it elects to employ separate counsel at the expense of the indemnifying parties,
the indemnifying parties shall not have the right to assume the defense thereof
and the fees and expenses of counsel retained by the indemnified party or
parties shall be at the expense of the indemnifying parties, it being
understood, however, that the indemnifying parties shall not, in connection with
any one such Proceeding, arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at any time
for such indemnified party or parties. Whether or not such defense is assumed by
the indemnifying parties, such indemnifying parties will not be subject to any
liability for any settlement made without its or their consent (but such consent
will not be unreasonably withheld). No indemnifying party shall be liable for
any settlement of any such action or proceeding effected without its written
consent, but if settled with its written consent each indemnifying party jointly
and severally agrees, subject to the exception and limitations set forth above,
to indemnify and hold harmless each indemnified party from and against any
Losses by reason of such settlement.
V. D. Contribution. If the indemnification provided for in this Article
4 is unavailable to an indemnified party or is insufficient to hold such
indemnified party harmless for any Losses
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in respect to which this Article 4 would otherwise apply by its terms, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall have an obligation to contribute to the amount paid or payable by such
indemnified party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party, on the one
hand, and such indemnified party, on the other hand, in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the other hand, 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, has been taken by, or relates to
information supplied by, such indemnifying party or indemnified party, and the
parties, relative intent, knowledge, access to information and opportunity to
correct or prevent any such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in connection
with any Proceeding, to the extent such party would have been indemnified for
such expenses if the applicable indemnification provided for in Section 4.1 or
4.2 were available to such party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 4.4 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. 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.
V. E. Remedies Cumulative. The indemnity, contribution and expense
reimbursement obligations under this Article 4 shall be in addition to any
liability that each indemnifying person may otherwise have and shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any indemnified party. Notwithstanding anything in this
Agreement to the contrary, an indemnified party shall not be entitled to receive
duplicate indemnification or contribution for the same Losses (except to the
extent they are incurred more than once).
VI.
UNDERWRITTEN REGISTRATION
If any of the Registrable Securities 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 Majority Holders with the consent of Brooke (not to be unreasonably
withheld or delayed).
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VII.
MISCELLANEOUS
VII. A. Remedies. No failure or delay on the part of a party in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
VII. B. 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 Brooke has obtained the written consent of the Majority
Holders. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of the Applicable Holders that are selling securities pursuant to a
Registration Statement and that does not directly or indirectly affect, impair,
limit or compromise the rights of the other Applicable Holder may be given by
the Selling Majority Holders; provided, however, that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence.
VII. C. Notices. All notices, consents and other communications
provided for hereunder shall be in writing (including facsimile, telegraphic or
cable communication) and telecopied, telegraphed, telexed, cabled or delivered
(x)(i) if to Brooke, to Brooke Group Ltd., 000 X.X. Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxx, Xxxxxxx 00000, attention: Xxxxxxx X. XxXxx, telecopy (000) 000-0000, with
a copy to Milbank, Tweed, Xxxxxx & XxXxxx, 0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, attention: Xxxx X. Xxxxxxxx, Esq., telecopy (000) 000-0000, and
(ii) if to a Applicable Holder, to the address and telecopier number set forth
in the records of Brooke, with a copy to the Company at the address set forth
above, or (y) at such other address as shall be designated by any such party in
a written notice to the other parties. All such notices, consents and
communications shall be effective when received.
VII. D. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
VII. E. Entire Agreement; No Third Party Beneficiaries; Obligations of
Brooke. This Agreement (including the documents and the instruments expressly
referred to herein or therein) (i) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, and (ii) except as
expressly set forth in Article 4 or in Section 6.8, is not intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
The obligations of Brooke pursuant hereto shall be limited to those obligations
of Brooke expressly set forth herein.
VII. F. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of law. The parties hereto hereby agree to submit to the
jurisdiction of the state and federal courts located in
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the Borough of Manhattan, New York City, New York, in any action or proceeding
arising out of or in relation to this Agreement.
VII. G. Severability. Wherever possible, each provision hereof shall be
interpreted in such a manner as to be valid, legal and enforceable under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
or rendering unenforceable the remainder of this Agreement, unless such a
construction would be unreasonable or materially impair the rights of any party
hereto.
VII. H. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except by an Applicable Holder as follows: in
connection with the transfer of its Registrable Securities in whole or in part
to another Person; provided that the transferee executes an appropriate document
agreeing to be bound hereby as an Applicable Holder. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns.
VII. I. Applicable Holders' Consents and Opting-In. For the purposes of
this Agreement, any Holder or former Holder who either (i) executes and delivers
a consent to the Second Supplemental Indenture and Amendment to Notes, in the
form of the consent letter dated January 30, 1998 by Xxxxxxx Group Inc. (a
"Consent") or (ii) informs Brooke in writing by May 1, 1998 in such form as is
reasonably acceptable to Brooke that such Holder chooses to opt into this
Agreement and be bound by all the terms hereof, shall be deemed, in either case
of (i) or (ii), to be a party to this Agreement and an Applicable Holder
hereunder as of the date of receipt of such Consent or opt-in notice, as
applicable. Brooke shall maintain a list of Applicable Holders and update such
list from time to time throughout the term of this Agreement. Each Applicable
Holder agrees to the addition of Applicable Holders pursuant to the foregoing.
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IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement as of the date first written above.
"Brooke"
Brooke Group Ltd.,
a Delaware corporation
By:
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Its:
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