EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of September 29, 2003 (this
"Agreement"), is made by and among Midwest Express Holdings, Inc., a Wisconsin
corporation (the "Company"), with headquarters located at 0000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxx, XX 00000, and the investors named on the signature pages
hereto (each of whom is hereinafter referred to as an "Investor" and all of whom
collectively are hereinafter referred to as the "Investors").
RECITALS:
A. In connection with the Securities Purchase Agreement, dated September
29, 2003, by and among the Company, Midwest Airlines, Inc., a Wisconsin
corporation and wholly-owned subsidiary of the Company ("Midwest"), Skyway
Airlines, Inc., a Delaware corporation and wholly-owned subsidiary of Midwest
("Skyway"), YX Properties, LLC, a Nebraska limited liability company and an
indirect subsidiary of the Company ("YX") (Midwest, Skyway, and YX are referred
to herein as the "Co-Borrowers"), and the Investors (the "Purchase Agreement"),
the Company and the Co-Borrowers have agreed, upon the terms and subject to the
conditions of the Purchase Agreement, to issue and sell to the Investors
convertible senior secured notes (the "Notes"), which will be convertible into
shares (the "Conversion Shares," and together with any associated Rights (as
defined in the Purchase Agreement), the "Securities") of the Company's common
stock, par value $.01 per share (the "Common Stock").
B. To induce the Investors to execute and deliver the Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
securities laws with respect to the Securities.
AGREEMENT:
In consideration of the promises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and each of the Investors hereby agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms have the following meanings:
1.1. "Agreement" has the meaning set forth in the introduction to this
Agreement.
1.2. "Automatic Grace Period" has the meaning set forth in Section 3.6(b).
1.3. "Business Day" means any day other than a Saturday, Sunday or other
day on which the SEC is authorized or required by law to remain closed.
1.4. "Claims" has the meaning set forth in Section 6.1.
1.5. "Co-Borrowers" has the meaning set forth in Recital A.
1.6. "Common Stock" has the meaning set forth in Recital A.
1.7. "Company" has the meaning set forth in the introduction to this
Agreement.
1.8. "Company Indemnified Person" has the meaning set forth in Section 6.2.
1.9. "Company Representative" has the meaning set forth in Section 3.9.
1.10. "Continuing Late Effective Payment" has the meaning set forth in
Section 2.4(a).
1.11. "Conversion Shares" has the meaning set forth in Recital A.
1.12. "Event" has the meaning set forth in Section 3.6(a).
1.13. "Excess Suspension Payment" has the meaning set forth in Section
2.4(b).
1.14. "Exchange Act" has the meaning set forth in Section 1.21.
1.15. "First Closing Date" has the meaning set forth in the Purchase
Agreement.
1.16. "Force Majeure" has the meaning set forth in Section 2.5.
1.17. "Grace Period" means an Automatic Grace Period or an Optional Grace
Period.
1.18. "Indemnified Person" has the meaning set forth in Section 6.3.
1.19. "Inspectors" has the meaning set forth in Section 3.8.
1.20. "Inspector Representative" has the meaning set forth in Section
3.8(b).
1.21. "Investor" or "Investors" has the respective meaning set forth in the
introduction to this Agreement and includes any of their permitted transferees
or assignees who receive or acquire Registrable Securities and agree to become
bound by the provisions of this Agreement in accordance with Article IX, but
only for so long as such person holds Registrable Securities or Notes
convertible into Registrable Securities, except as otherwise provided in Article
VI; provided that no such person is registered as a broker or dealer under
Section 15(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or is a member of the National Association of Securities Dealers, Inc.
1.22. "Investor Delay" has the meaning set forth in Section 2.4(b).
1.23. "Investor Indemnified Person" has the meaning set forth in Section
6.1.
1.24. "Investor Representative" has the meaning set forth in Section
3.6(a).
1.25. "Legal Counsel" has the meaning set forth in Section 2.6.
1.26. "Midwest" has the meaning set forth in Recital A.
1.27. "Notes" has the meaning set forth in Recital A.
1.28. "NYSE" means the New York Stock Exchange.
1.29. "Optional Grace Period" has the meaning set forth in Section 3.6(c).
1.30. "Plan of Distribution" has the meaning set forth in Section 2.1.
2
1.31. "Purchase Agreement" has the meaning set forth in Recital A.
1.32. "Records" has the meaning set forth in Section 3.8.
1.33. The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act and, in particular, pursuant to Rule 415
under the Securities Act and the declaration or ordering of effectiveness of
such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
1.34. "Registrable Securities" means the Conversion Shares issued or
issuable upon conversion of the Notes, any shares of capital stock issued or
issuable from time to time (with any adjustments) as a dividend or distribution
on or in exchange for or replacement of or otherwise with respect to the
Conversion Shares and any associated Rights, except that any such securities
will cease to be Registrable Securities at such time as they have been sold
under a Registration Statement or pursuant to Rule 144 under the Securities Act
or otherwise or at such time as they are eligible to be sold pursuant to Rule
144(k).
1.35. "Registration Period" has the meaning set forth in Section 3.1.
1.36. "Registration Statement" means a Registration Statement of the
Company filed with the SEC under the Securities Act pursuant to Section 2.1,
including all amendments and supplements thereto and all documents incorporated
by reference therein.
1.37. "Required Effective Date" has the meaning set forth in Section 2.2
1.38. "Required Filing Date" has the meaning set forth in Section 2.1
1.39. "Rights" has the meaning set forth in Recital A.
1.40. "Rule 415" means Rule 415 under the Securities Act, or any successor
rule providing for offering securities on a continuous basis, and applicable
rules and regulations thereunder.
1.41. "Rule 144" means Rule 144 under the Securities Act, or any successor
rule, and any applicable rules and regulations thereunder.
1.42. "Securities" has the meaning set forth in Recital A.
1.43. "Securities Act" has the meaning set forth in Recital B.
1.44. "SEC" has the meaning set forth in Section 1.33.
1.45. "Shareholder Vote" means the vote of the Company's shareholders at
the next meeting of shareholders of the Company, which shall not be later than
November 30, 2003.
1.46. "Skyway" has the meaning set forth in Recital A.
1.47. "Violations" has the meaning set forth in Section 6.1.
1.48. "YX" has the meaning set forth in Recital A.
3
ARTICLE II
REGISTRATION
2.1. Mandatory Registration. The Company will use its reasonable best
efforts to prepare and file, as soon as practicable but in no event later than
the fifth (5th)Business Day after the Shareholder Vote (the "Required Filing
Date"), with the SEC a Registration Statement on Form S-3, if available,
registering all of the Registrable Securities for resale in accordance with the
"Plan of Distribution" attached hereto as Exhibit A. This Registration Statement
shall register only the Registrable Securities. If Form S-3 is not available at
that time, then the Company will use its reasonable best efforts to file a
Registration Statement by the Required Filing Date on such form as is then
available to effect a registration of the Registrable Securities.
2.2. Effectiveness of the Registration Statement. The Company will use its
reasonable best efforts to cause the Registration Statement contemplated by the
previous Section to be declared effective by the SEC within ninety (90) calendar
days after the First Closing Date and in any event no later than one hundred
twenty (120) calendar days after the First Closing Date (the "Required Effective
Date"). The Company's reasonable best efforts will include, but are not to be
limited to, promptly responding to all comments received from the staff of the
SEC.
2.3. Ineligibility for Form S-3. The Company does not currently meet the
requirements for the use of Form S-3 for registration of the resale by the
Investors of the Registrable Securities. The Company represents, warrants and
covenants that it has filed and will use its reasonable best efforts to file all
reports required to be filed by the Company with the SEC in a timely manner so
as to obtain and then maintain eligibility for the use of Form S-3. In the event
that Form S-3 is not available for the registration of the resale of Registrable
Securities hereunder, the Company shall (i) register the resale of the
Registrable Securities on Form S-1 or on another appropriate form reasonably
acceptable to the holders of at least two-thirds of the Registrable Securities
and (ii) undertake to convert such Registration Statement on Form S-1 (or such
other appropriate form) to a Registration Statement on Form S-3 as soon as the
Company is eligible to register the resale of the Registrable Securities on Form
S-3.
2.4. Effect of Failure to File and Obtain and Maintain Effectiveness of
Registration Statement.
(a) If a Registration Statement has not been declared effective by the
Required Effective Date, then the Company will make one or more payments to
each Investor under this subsection (a) (each, a "Continuing Late Effective
Payment"). The Continuing Late Effective Payment for each Investor for each
calendar month after the Required Effective Date that a Registration
Statement has not been declared effective will be an amount equal to (i)
1.00% of the aggregate Principal of the Notes held by the Investor on the
respective last calendar day of the period to which the Continuing Late
Effective Payment in question relates, which Principal is convertible into
Conversion Shares that the Company is obligated to include in such
Registration Statement, plus (ii) 1.00% of the aggregate Conversion Price
paid for Conversion Shares that are Registrable Securities, were issued to
the Investor upon conversion of the Investor's Notes and are held by such
Investor on the respective last calendar day of the period to which the
Continuing Late Effectiveness Payment in question relates. The Continuing
Late Effective Payment will be prorated on a daily basis for periods less
than a calendar month. Subject to subsection (c), the Company will make the
Continuing Late Effective Payment to each Investor by check (or by wire
transfer if the payment exceeds $100,000 in amount and the Company has wire
transfer instructions from the Investor) within ten (10) Business Days
following the end of each calendar month as to which payment hereunder is
due.
4
(b) Except in connection with any delays that are attributable to
changes to the Plan of Distribution pursuant to Section 3.12 and any delays
that are attributable to amendments to the Registration Statement to
include an Investor's Registrable Securities pursuant to Section 4.1 (each,
an "Investor Delay"), if at any time during the Registration Period, on any
day after such Registration Statement has been declared effective by the
SEC, sales of all the Registrable Securities required to be included in
such Registration Statement cannot be made for a period of more than thirty
(30) Business Days in the aggregate during any 12-month period (other than
during a Grace Period) pursuant to such Registration Statement (including,
without limitation, because of a failure to keep such Registration
Statement effective, to disclose such information as is necessary for sales
to be made pursuant to such Registration Statement or to register
sufficient shares of Common Stock), then the Company will make a payment to
each Investor (each, an "Excess Suspension Payment"). The Excess Suspension
Payment for each Investor for each thirty (30) Business Day period during
which sales cannot be made in excess of such thirty (30) Business Day
period will be an amount equal to (i) 1.00% of the aggregate Principal of
the Notes held by the Investor on the respective last Business Day of the
thirty (30) Business Day period in question, which Principal is convertible
into Conversion Shares that the Company is obligated to include in such
Registration Statement, plus (ii) 1.00% of the aggregate Conversion Price
paid for Conversion Shares that are Registrable Securities, were issued to
the Investor upon conversion of the Investor's Notes and are held by such
Investor on the respective last Business Day of the thirty (30) Business
Day period in question. The Excess Suspension Payment will be prorated on a
daily basis for periods less than thirty (30) Business Days. Subject to
subsection (c), the Company will make the Excess Suspension Payment to each
Investor by check (or by wire transfer if the payment exceeds $100,000 in
amount and the Company has wire transfer instructions from the Investor)
within ten (10) Business Days following the end of each thirty (30)
Business Day period as to which payment hereunder is due.
(c) Upon the reasonable request of the Company in writing, an Investor
shall promptly deliver to the Company in writing information regarding the
Investor's Notes and Conversion Shares (together with reasonable supporting
documentation) to enable the Company to calculate the amount of any payment
due under this Section 2.4. Until the Investor has responded to such a
reasonable request, the Company may withhold any payment due under this
Section 2.4 until the fourth Business Day after the Investor delivers such
information.
(d) The Investors may make a claim for additional damages as a remedy
for the Company's failure to comply with the timelines relating to the
Registration Statement set forth in this Agreement, but acknowledgement of
such right in this Agreement shall not constitute an admission by the
Company that any such damages exist or may exist. Notwithstanding the
foregoing, if the Company has used its reasonable best efforts to avoid
circumstances as a result of which the Registration Statement has not been
declared effective by the Required Effective Date or sales cannot be made
under the Registration Statement during the Registration Period (other than
during a Grace Period or any Investor Delay), then the damages described
above shall be the Investors' sole and exclusive remedy for damages arising
out of such circumstances. Nothing contained in the preceding sentence
shall be read to limit the ability of the Investors to seek specific
performance of this Agreement.
2.5. Force Majeure. The Company shall not be deemed in breach of its
commitments under Article II and no payments by the Company as set forth in
Article II shall be required to the extent that the Company is unable to fulfill
its obligations hereunder in a timely fashion because the SEC and/or the NYSE
are closed or operating on a limited basis as a result of the occurrence of a
Force Majeure. As
5
used herein, "Force Majeure" means (i) war or armed hostilities or other
national or international calamity, or one or more acts of terrorism, or (ii) a
natural disaster or storm.
2.6. Legal Counsel. Subject to Article V, legal counsel for each Investor,
as named on the signature page of such Investor, if any, shall have the right to
review and oversee any registration pursuant to this Article II (each, a "Legal
Counsel"). The Company and each Legal Counsel shall reasonably cooperate with
each other in performing the Company's obligations under this Agreement.
ARTICLE III
ADDITIONAL OBLIGATIONS OF THE COMPANY
At such time as the Company is obligated to file a Registration Statement
with the SEC pursuant to Section 2.1, the Company will use its best efforts to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:
3.1. Acceleration of Effectiveness. The Company shall submit to the SEC,
within three (3) Business Days after the Company learns that no review of the
Registration Statement will be made by the staff of the SEC or that the staff
has no further comments on a particular Registration Statement, as the case may
be, a request for acceleration of effectiveness of such Registration Statement
to a time and date not later than 48 hours after the submission of such request.
The Company shall keep each Registration Statement effective pursuant to Rule
415 at all times until the earlier of (i) the date as of which the Investors may
sell all of the Registrable Securities covered by such Registration Statement
without restriction pursuant to Rule 144(k) (or successor thereto) promulgated
under the Securities Act or (ii) the date on which the Investors shall have sold
all the Registrable Securities covered by such Registration Statement (the
"Registration Period"). The Company shall ensure that each Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading.
3.2. Compliance with Securities Act. The Company will comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement until such time as
all of such Registrable Securities shall have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof as set
forth in such Registration Statement or such securities shall cease to be
Registrable Securities.
3.3. Pre-filing Review of Registration Statement. The Company shall (a)
permit each Legal Counsel to review and comment upon (i) a Registration
Statement by delivering a draft thereof at least five (5) Business Days prior to
its filing with the SEC and (ii) all amendments and supplements to all
Registration Statements (except for Annual Reports on Form 10-K, Quarterly
Reports on Form l0-Q and Current Reports on Form 8-K and any similar or
successor reports) by delivering drafts thereof within a reasonable number of
days prior to their filing with the SEC, and (b) not file any Registration
Statement or amendment or supplement thereto in a form to which any Legal
Counsel reasonably objects. Except as may be required under Section 3.1, the
Company shall not submit a request for acceleration of the effectiveness of a
Registration Statement or any amendment or supplement thereto without the prior
approval of each Legal Counsel, which consent shall not be unreasonably
withheld. The Company shall furnish to each Legal Counsel, without charge, (x)
copies of any correspondence from the SEC or the staff of the SEC to the Company
or its representatives relating to any Registration Statement, (y) as promptly
as possible after the same is prepared and filed with the SEC, one copy of any
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, if
requested by an Investor, and all exhibits and (z) upon the
6
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto. The
Company shall reasonably cooperate with each Legal Counsel in performing the
Company's obligations pursuant to this Article III.
3.4. Copies of Registration Statement and Prospectus. The Company shall
furnish to each Investor whose Registrable Securities are included in any
Registration Statement, without charge, (i) promptly after the same is prepared
and filed with the SEC, at least one copy of such Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor, all
exhibits and each preliminary prospectus, (ii) upon the effectiveness of any
Registration Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) and (iii) such other
documents, including copies of any preliminary or final prospectus, as such
Investor may reasonably request from time to time to facilitate the disposition
of the Registrable Securities owned by such Investor.
3.5. Blue Sky Laws. The Company shall use its best efforts to (i) register
and qualify, unless an exemption from registration and qualification applies,
the resale by Investors of the Registrable Securities covered by a Registration
Statement under such other securities or "blue sky" laws of all applicable
jurisdictions in the United States, (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3.5, (y) subject itself to general taxation in any such
jurisdiction or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify each Legal Counsel and each
Investor who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threatening of any proceeding for such purpose.
3.6. Suspension of Sale and Resale Rights.
(a) During the Registration Period, the Company will notify by
facsimile each Legal Counsel and each Investor who holds Registrable
Securities being sold pursuant to a Registration Statement of the happening
of any event (except as provided in Section 3.6(c)), as promptly as
practicable after becoming aware of such event, as a result of which the
prospectus included in a Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading (each an "Event"). Such notice shall not contain any
material, nonpublic information, and in no event will the Company disclose
to any Investor any of the facts or circumstances regarding any Event. Each
Investor will hold in confidence and will not make any disclosure of any
Event and any related information disclosed by the Company unless (i) the
release of such information is ordered pursuant to a final, non-appealable
subpoena or other final, non-appealable order from a court or government
body of competent jurisdiction, (ii) the information has been made
generally available to the public other than by disclosure in violation of
this or any other agreement (to the knowledge of the relevant Investor),
(iii) the information was developed independently by an Investor without
breach of this Agreement, (iv) the information was known to the Investor
before receipt of such
7
information from the Company or (v) the information was disclosed to the
Investor by a third party not under an obligation of confidentiality.
However, an Investor may make disclosure of an Event and/or any related
information disclosed by the Company to any attorney, adviser or other
third party retained by it that needs to know the information, as
determined in good faith by the Investor ("Investor Representative"), if
the Investor advises the Investor Representative of the confidentiality
provisions of this Section 3.6(a), but the Investor will be liable for any
act or omission of any of its Investor Representatives relative to such
information as if the act or omission was that of the Investor. Unless
legally prohibited from so doing, each Investor will, upon learning that
disclosure of such confidential information is sought in or by a court or
governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such confidential information.
(b) If a Registration Statement ceases to be effective or the
prospectus related thereto ceases to be usable at any time during the
Registration Period, including as a result of the occurrence of an Event
under Section 3.6(a), as a result of a request to change the Plan of
Distribution pursuant to Section 3.12 or as a result of a request to amend
the Registration Statement to include an Investor's Registrable Securities
pursuant to Section 4.1, then the Company will promptly prepare and file
with the SEC a supplement or amendment to such Registration Statement to
correct such untrue statement or omission or to otherwise update and modify
the Registration Statement and the prospectus as required by applicable law
or this Agreement and use its reasonable best efforts to cause any
post-effective amendment to the Registration Statement to be declared
effective by the SEC as soon as reasonably practicable following the filing
thereof. In any event, the Company shall file any such post-effective
amendment within seven (7) Business Days and any such supplement within
four (4) Business Days, in each case after the Company becomes aware of the
related circumstances. Sales and resales of Registrable Securities pursuant
to the Registration Statement shall be suspended until the Company has
filed such post-effective amendment or supplement to the Registration
Statement or prospectus that cures such failure to be effective or useable
and that is itself, in the case of a post-effective amendment, declared
effective, and the Company will promptly notify each Legal Counsel and each
Investor of such suspension in writing. As used herein, "Automatic Grace
Period" shall mean any of the following: (i) the seven (7) Business Day
period referred to above for the filing of an amendment or the four (4)
Business Day period referred to above for the filing of a supplement (but
not including any such period related to the filing of any amendment or
supplement in connection with a request pursuant to Section 3.12 or Section
4.1); and (ii) the time from and including the filing of any such
post-effective amendment referred to in subsection (i) and such
post-effective amendment being declared effective, provided that in no
event shall the period under this clause (ii) exceed ten (10) Business Days
if such post-effective amendment receives no review by the SEC or twenty
(20) business days if such post-effective amendment is reviewed by the SEC.
The Company will also promptly notify each Legal Counsel and each Investor
in writing (A) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when a Registration Statement
or any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to each Legal Counsel and each Investor by
facsimile on the same day of such effectiveness and by overnight mail), (B)
of any request by the SEC for amendments or supplements to a Registration
Statement or related prospectus or related information, and (C) of the
Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
8
(c) Notwithstanding anything to the contrary herein, at any time after
the Registration Statement has been declared effective by the SEC, the
Company may delay the disclosure of material non-public information
concerning the Company the disclosure of which at the time is not, in the
good faith opinion of the Company following consultation with legal
counsel, in the best interest of the Company and otherwise required (an
"Optional Grace Period"), provided that the Company shall promptly (i)
notify the Investors in writing of the existence of material non-public
information giving rise to an Optional Grace Period (such notice shall not
contain any material, nonpublic information, and in no event will the
Company disclose to any Investor any of the related facts or circumstances)
and the date on which the Optional Grace Period will begin and (ii) notify
the Investors in writing of the date on which the Optional Grace Period
ends; and, provided further, that no Optional Grace Period shall exceed
thirty (30) consecutive calendar days and during any three hundred
sixty-five (365) day period such Optional Grace Periods shall not exceed an
aggregate of sixty (60) calendar days and the first day of any Optional
Grace Period must be at least five (5) Business Days after the last day of
any prior Optional Grace Period. For purposes of determining the length of
an Optional Grace Period, the Optional Grace Period shall begin on and
include the date the Investors receive the notice referred to in clause (i)
and shall end on and include the later of the date the Investors receive
the notice referred to in clause (ii) and the date referred to in such
notice. Section 3.6(a) shall not be applicable during the period of any
Optional Grace Period. Upon expiration of an Optional Grace Period, the
Company shall again be bound by Section 3.6(a) with respect to any Event
giving rise to material non-public information concerning the Company
unless disclosing any such Event is no longer applicable. Notwithstanding
anything to the contrary in this Agreement, the Company shall cause its
transfer agent to deliver unlegended shares of Common Stock to a transferee
of an Investor in accordance with the terms of the Securities Purchase
Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale, and
delivered a copy of the prospectus included as part of the applicable
Registration Statement, prior to the Investor's receipt of the notice of an
Optional Grace Period and for which the Investor has not yet settled.
3.7. Stop Orders and Suspensions of Effectiveness. Subject to the Company's
rights under Section 3.6, the Company shall use its reasonable best efforts to
prevent the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify each Legal Counsel and each Investor
of the issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such purpose.
3.8. Inspection of Records; Confidentiality.
(a) During the Registration Period, the Company shall make available
for inspection during normal business hours and upon two (2) Business Days
prior notice by (i) any Investor, (ii) any Legal Counsel and (iii) one (1)
firm of accountants or other agents reasonably acceptable to the Company
and retained by the Investors (collectively, the "Inspectors") all
pertinent financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the "Records") as shall be
reasonably deemed necessary by each Inspector to enable each Inspector to
exercise its due diligence responsibility in connection with or related to
the contemplated offering. The Company will cause the Company's officers,
directors and employees to supply all information that any Inspector may
reasonably request for purposes of performing such due diligence.
9
(b) Each Inspector will hold in strict confidence, use only in
connection with the contemplated offering and not make any disclosure
(except to an Investor) of any Records or other information that the
Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement or is otherwise required under the Securities
Act, (ii) the release of such Records is ordered pursuant to a final,
non-appealable subpoena or other final, non-appealable order from a court
or government body of competent jurisdiction, (iii) the information in such
Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement (to the knowledge of
the relevant Inspector), (iv) the Records or other information was
developed independently by an Inspector without breach of this Agreement,
(v) the information was known to the Inspector before receipt of such
information from the Company, or (vi) the information was disclosed to the
Inspector by a third party not under an obligation of confidentiality.
However, an Inspector may make disclosure of such Records and other
information to any attorney, adviser or other third party retained by it
that needs to know the information, as determined in good faith by the
Inspector ("Inspector Representative"), if the Inspector advises the
Inspector Representative of the confidentiality provisions of this Section
3.8(b), but the Inspector will be liable for any act or omission of any of
its Inspector Representatives relative to such information as if the act or
omission was that of the Inspector. Unless legally prohibited from so
doing, each Investor will, upon learning that disclosure of Records
containing confidential information is sought in or by a court or
governmental body of competent jurisdiction or through other means, give
prompt written notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, the Records deemed confidential.
Nothing herein (or in any other confidentiality agreement between the
Company and any Investor) shall be deemed to limit the Investors' ability
to sell Registrable Securities in a manner that is otherwise consistent
with applicable laws and regulations.
3.9. Disclosure of Investors' Information. The Company will hold in
confidence, and will not make any disclosure of, information concerning an
Investor provided to the Company under this Agreement unless (i) the Company
reasonably determines disclosure of such information is necessary to comply with
federal or state securities laws, or any exchange listing or similar rules and
regulations, (ii) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a final, non-appealable
subpoena or other final, non-appealable order from a court or governmental body
of competent jurisdiction, (iv) such information has been made generally
available to the public other than by disclosure in violation of this Agreement
or any other agreement, (v) the information was disclosed to the Company by a
third party not under an obligation of confidentiality or (vi) such Investor
consents to the form and content of any such disclosure. However, the Company
may make disclosure of such information to any attorney, adviser or other third
party retained by it that needs to know the information, as determined in good
faith by the Company ("Company Representative"), if the Company advises the
Company Representative of the confidentiality provisions of this Section 3.9,
but the Company will be liable for any act or omission of any Company
Representatives relative to such information as if the act or omission was that
of the Company. If the Company learns that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, the Company will (unless legally
prohibited from so doing) give prompt written notice to such Investor prior to
making such disclosure and allow such Investor, at the Investor's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
3.10. Listing of Registrable Securities. During the Registration Period,
the Company shall use its reasonable best efforts to maintain the listing of all
of the Registrable Securities on the
10
principal securities exchange or market or trading system, if any, on which the
Common Stock is then listed or traded.
3.11. Delivery of Certificates. The Company shall cooperate with the
Investors and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such names as the
Investors may reasonably request.
3.12. Updates to Plan of Distribution. At the request of the Investors
holding a majority in interest of the Registrable Securities registered pursuant
to a Registration Statement under Section 2.1, the Company will promptly prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to the Registration Statement, and the prospectus used in connection
with the Registration Statement, as may be necessary to change the Plan of
Distribution set forth in such Registration Statement.
3.13. Other Governmental Approvals. The Company shall use reasonable
efforts to cause the Registrable Securities covered by a Registration Statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of such
Registrable Securities.
3.14. Best Efforts of Company. The Company shall use its best efforts to
comply with all applicable rules and regulations of the SEC in connection with
any registration hereunder.
3.15. Confirmation Upon Effectiveness. Within two (2) Business Days after a
Registration Statement that covers Registrable Securities is ordered effective
by the SEC, the Company shall deliver, and shall cause legal counsel for the
Company to deliver to the transfer agent for such Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such
Registration Statement) confirmation that such Registration Statement has been
declared effective by the SEC in the form attached hereto as Exhibit B.
ARTICLE IV
OBLIGATIONS OF THE INVESTORS
4.1. Investor Information. As a condition to the obligations of the Company
to complete any registration pursuant to this Agreement with respect to the
Registrable Securities of each Investor, such Investor will furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended methods of disposition of the Registrable Securities held by it
as is reasonably required by the Company to effect the registration of the
Registrable Securities. At least five (5) Business Days prior to the first
anticipated filing date of a Registration Statement for any registration under
this Agreement, the Company will notify each Investor of the information the
Company requires from that Investor whether or not such Investor has elected to
have any of its Registrable Securities included in the Registration Statement.
If the Company has not received the requested information from an Investor by
the Business Day prior to the anticipated filing date, then the Company may file
the Registration Statement without including Registrable Securities of that
Investor. In such event, the Company shall, upon written request of the
Investor, promptly file an amendment (including a post-effective amendment) to
include such Investor's Registrable Securities in the Registration Statement and
the Investor shall reimburse the Company for all of the filing fees and legal
expenses related to such amendment promptly following the Company's delivery of
a statement therefor.
4.2. Further Assurances. Each Investor will cooperate with the Company, as
reasonably requested by the Company, in connection with the preparation and
filing of any Registration
11
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's irrevocable election to exclude all of such Investor's
Registrable Securities from such Registration Statement.
4.3. Suspension of Sales. Upon receipt of any notice from the Company under
Section 3.6, each Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until (i) it receives copies of a supplemented or amended
prospectus contemplated by Section 3.6 or (ii) the Company advises the Investor
that a suspension of sales under Section 3.6 has terminated. If so directed by
the Company, each Investor will deliver to the Company (at the expense of the
Company) or destroy all copies in the Investor's possession (other than a
limited number of file copies) of the prospectus covering such Registrable
Securities that is current at the time of receipt of such notice.
ARTICLE V
EXPENSES OF REGISTRATION
During the Registration Period, in connection with registrations, filings
or qualifications pursuant to Article II and Article III, the Company will bear
(i) all reasonable expenses (other than underwriting discounts and commissions,
and transfer taxes, if any) incurred in connection with registrations, filings
or qualifications pursuant to Article II and Article III of this Agreement,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees; (ii) the fees and disbursements of legal
counsel for the Company; and (iii) the reasonable fees and disbursements of each
Legal Counsel (not to exceed in the aggregate for all such Legal Counsel
collectively $10,000), with the Company's reimbursement obligation to be paid
pro rata based on the Investor's Registrable Securities registered on the
Registration Statement.
ARTICLE VI
INDEMNIFICATION
In the event that any Registrable Securities are included in a Registration
Statement under this Agreement:
6.1. Indemnification of the Investors. To the extent permitted by law, the
Company will indemnify and hold harmless each Investor (including for purposes
of this Article VI any person who was an Investor), any underwriter (as defined
in the Securities Act) for the Investors, any directors or officers of such
Investor and any person who controls such Investor within the meaning of the
Securities Act or the Exchange Act or acts as such Investor's investment advisor
(each, an "Investor Indemnified Person") against any losses, claims, damages,
expenses or liabilities (joint or several) (collectively, and together with
actions, proceedings or inquiries by any regulatory or self-regulatory
organization, whether commenced or threatened in respect thereof, "Claims") to
which any of them become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Claims arise out of or are based upon any of the
following statements, omissions or violations in a Registration Statement filed
pursuant to this Agreement, any post-effective amendment thereof or any
prospectus included therein: (a) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or any final prospectus (as amended or
supplemented, if the Company files any amendment or supplement thereto with the
SEC) included therein or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or (b) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any other law related to the Registration
Statement, including without limitation any state securities law or any rule or
regulation thereunder (the matters in the foregoing clauses (a) and (b) being,
collectively, "Violations"). Subject to
12
the restrictions set forth in Section 6.3 with respect to the number of legal
counsel, the Company will reimburse the Investors and each such underwriter or
controlling person and each such other Investor Indemnified Person, promptly as
such expenses are incurred and are due and payable, for any reasonable legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6.1:
(i) does not apply to Claims arising out of or based upon a Violation that
occurs in reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of an Investor or Investor Indemnified Persons
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3.3;
(ii) does not apply to a Claim arising out of or based on any failure by an
Investor or Investor Indemnified Persons to comply with prospectus delivery
requirements (or the Securities Act, the Exchange Act or any other law or legal
requirement applicable to them) or any covenant or agreement respecting sales
under the Registration Statement contained in this Agreement, the Purchase
Agreement or the Note; (iii) does not apply to a Claim arising from an offer or
sale of Registrable Securities occurring during a period in which sales are
suspended in accordance with Section 4.3; and (iv) does not apply to amounts
paid in settlement of any Claim if such settlement is made without the prior
written consent of the Company, which consent will not be unreasonably withheld
or delayed. This indemnity obligation will remain in full force and effect
regardless of any investigation made by or on behalf of the Investor Indemnified
Persons and will survive the transfer of the Registrable Securities by the
Investors under Article IX.
6.2. Indemnification of the Company and Certain Shareholders. In connection
with any Registration Statement in which an Investor is participating, each such
Investor will indemnify and hold harmless, severally and not jointly, to the
same extent and in the same manner set forth in Section 6.1 above, the Company,
each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act, and any other shareholder selling
securities pursuant to the Registration Statement and any of its directors and
officers and any person who controls such shareholder within the meaning of the
Securities Act or the Exchange Act (each a "Company Indemnified Person") against
any Claim to which any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim arises out of or is based upon
any of the following: (a) any matter of the type referred to in clause (a) in
Section 6.1 above in each case to the extent (and only to the extent) that such
violation occurs in reliance upon and in conformity with written information
furnished to the Company by or on behalf of an Investor or Investor Indemnified
Persons expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3.3; (b)
any failure by such Investor or Investor Indemnified Person to comply with
prospectus delivery requirements (or the Securities Act, the Exchange Act or any
other law or legal requirement applicable to sales under the Registration
Statement) or any covenant or agreement respecting sales under the Registration
Statement contained in this Agreement, the Purchase Agreement or the Note; or
(c) any offer or sale of Registrable Securities occurring during a period in
which sales are suspended in accordance with Section 4.3. Subject to the
restrictions set forth in Section 6.3, such Investor will promptly reimburse any
legal or other expenses, promptly as such expenses are incurred and due and
payable, reasonably incurred by them in connection with investigating or
defending any such Claim. However, the indemnity agreement contained in this
Section 6.2 does not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor, which
consent will not be unreasonably withheld, and no Investor will be liable under
this Agreement (including this Section 6.2 and Article VII) for the amount of
any Claim that exceeds the net proceeds actually received by such Investor as a
result of the sale of such Investor's Registrable Securities. This indemnity
will remain in full force and effect regardless of any investigation made by or
on behalf of the Company Indemnified Persons and will survive the transfer of
the Registrable Securities by the Investors under Article IX.
13
6.3. Notification and Other Indemnification Procedures. Promptly after receipt
by an Investor Indemnified Person or a Company Indemnified Person, as the case
may be (an "Indemnified Person"), under this Article VI of notice of the
commencement of any action (including any governmental action), such Indemnified
Person will, if a Claim in respect thereof is to be made against any
indemnifying party under this Article VI, deliver to the indemnifying party a
written notice of the commencement thereof. The indemnifying party may
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly given notice, assume control of the
defense thereof with counsel mutually and reasonably satisfactory to the
indemnifying parties and the Indemnified Person. If the indemnifying party
assumes the defense by notice given to the Indemnified Person, then the
indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by the Indemnified Person in connection with the defense
thereof, except as expressly provided herein, and the indemnifying party will
diligently pursue such defense. If, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between the Indemnified Person and any
other party represented by such counsel in such proceeding or the actual or
potential defendants in, or targets of, any such action including the
Indemnified Person and such Indemnified Person reasonably determines that there
may be legal defenses available to such Indemnified Person that are different
from or in addition to those available to the indemnifying party, then the
Indemnified Person is entitled to assume such defense and may retain its own
counsel, with the reasonable fees and expenses to be paid by the indemnifying
party (subject to the restrictions on settlement under Section 6.1 or 6.2, as
applicable). However, the Company will pay for only one separate legal counsel
for the Investors collectively, and such legal counsel will be selected by the
Investors holding a majority in interest of Registrable Securities as of the
date of this Agreement. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action does not relieve an indemnifying party of any liability to an Indemnified
Person under this Article VI, except to the extent that the indemnifying party
is prejudiced in its ability to defend such action. The indemnification required
by this Article VI will be made by periodic payments of the amount thereof
during the course of the investigation or defense, as such expense, loss, damage
or liability is incurred and is due and payable.
ARTICLE VII
CONTRIBUTION
To the extent that any indemnification provided for herein is prohibited or
limited by law, the indemnifying party will contribute the amount paid or
payable by the Indemnified Party as a result of such Claim in such proportion as
is appropriate to reflect not only the relative benefits received by the
Indemnified Party and the indemnifying party, but also the relative fault of the
Indemnified Party and the indemnifying party, as well as any other relevant
equitable considerations. However, (a) no contribution will be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Article VI, (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person of
Registrable Securities who was not guilty of such fraudulent misrepresentation
and (c) no Investor will be liable under this Agreement (including this Article
VII) for the amount of any Claim that exceeds the net proceeds actually received
by such Investor as a result of the sale of such Investor's Registrable
Securities.
14
ARTICLE VIII
EXCHANGE ACT REPORTING
To make available to the Investors the benefits of Rule 144 or any similar
rule or regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration, the Company will,
until the end of the Registration Period:
(a) Use its best efforts to file with the SEC in a timely manner, and make
and keep available, all reports and other documents required of the Company
under the Securities Act and the Exchange Act so long as the Company remains
subject to such requirements (it being understood that nothing herein limits the
Company's obligations under Section 4.3 of the Purchase Agreement) and the
filing and availability of such reports and other documents is required for the
applicable provisions of Rule 144; and
(b) Furnish to each Investor promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of the
Securities Act and the Exchange Act, (ii) if not available on the SEC's XXXXX
system, a copy of the most recent annual or quarterly report of the Company and
such other reports and documents filed by the Company with the SEC and (iii)
such other information as may be reasonably requested to permit the Investors to
sell such securities pursuant to Rule 144 without registration.
ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
assignable (in whole or in part) by each Investor to any permitted transferee or
assignee of the Registrable Securities if (a) the Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being transferred or assigned, (c) such transfer or
assignment was not made under the Registration Statement or Rule 144, (d) at or
before the time the Company received the written notice contemplated by clause
(b) of this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein and (e) such
transfer is made in accordance with the applicable requirements of the Purchase
Agreement. Any transferee or assignee of an Investor under Article IX shall be
deemed an "Investor" for all purposes of this Agreement and shall be entitled to
all rights of, and subject to all obligations (including indemnification
obligations) of, an Investor hereunder.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
This Agreement may be amended and the obligations hereunder may be waived
(either generally or in a particular instance, and either retroactively or
prospectively) only with the written consent of the Company and of the Investors
who then hold at least two-thirds in interest of the Registrable Securities (but
not including any Investor who is not affected by such amendment or waiver). For
purposes of such calculation, Common Stock issuable upon the conversion of any
Note shall be treated as issued and outstanding and held by the holder of such
Note. Any amendment or waiver effected in accordance with this Article X is
binding upon each Investor and the Company. Notwithstanding the foregoing, no
amendment or waiver will retroactively affect any Investor without its consent,
or will
15
prospectively adversely affect any Investor who no longer owns any Registrable
Securities without its consent.
ARTICLE XI
MISCELLANEOUS
11.1. Conflicting Instructions. A person or entity is deemed to be a holder
of Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company will act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
11.2. Notices. Except as set forth herein, any notices required or
permitted to be given under the terms of this Agreement will be given and deemed
received as set forth in the Purchase Agreement.
11.3. Waiver. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, does not operate as a waiver thereof.
11.4. Governing Law; Venue; Waiver of Jury Trial. This Agreement, including
the validity hereof and the rights and obligations of the Company and of the
Investors and all amendments and supplements hereto and all waivers and consents
hereunder, shall be construed in accordance with and governed by the internal
laws of New York (except as it relates to corporate law involving the Company,
in which case it shall be governed by the internal laws of the state of
incorporation of the Company) without giving effect to any choice of law or
conflicts of law provision or rule that would cause the application of the
internal laws of any other jurisdiction.
Notwithstanding anything to the contrary in this Agreement or any
other agreement between any of the parties hereto prior to the date hereof,
each of the parties hereto, to the extent it may do so under applicable
law, for purposes hereof, hereby (i) irrevocably submits itself to the
non-exclusive jurisdiction of the courts of the State of New York sitting
in the City of New York, Borough of Manhattan, and to the non-exclusive
jurisdiction of the U.S. District Court for the Southern District of New
York, for the purposes of any suit, action or other proceeding arising out
of this Agreement, the subject matter hereof or any of the transactions
contemplated hereby brought by any party or parties hereto, or their
successors or any permitted and registered assign; (ii) waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding, that the suit, action or proceeding is brought
in an inconvenient forum, that the venue of the suit, action or proceeding
is improper or that this Agreement or the subject matter hereof or any of
the transactions contemplated hereby may not be enforced in or by such
courts; provided that nothing in this paragraph shall be construed as a
waiver by any party of any right to seek to remove any such suit, action or
proceeding from a state court to a federal court or from a federal court to
a state court; and (iii) irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof; provided that nothing in
this paragraph shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY
LEGAL OR EQUITABLE ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY
16
TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE
FOREGOING.
11.5. Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.
11.6. Entire Agreement. This Agreement and the Purchase Agreement
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement supersedes all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof.
11.7. Successors and Assigns. Subject to the requirements of Article IX,
this Agreement inures to the benefit of and is binding upon the successors and
assigns of each of the parties hereto. Notwithstanding anything to the contrary
herein, including, without limitation, Article IX, the rights of an Investor
hereunder are assignable to and exercisable by a bona fide pledgee of the
Registrable Securities in connection with an Investor's margin or brokerage
accounts.
11.8. Use of Pronouns. All pronouns refer to the masculine, feminine or
neuter, singular or plural, as the context may require.
11.9. Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.
11.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which is deemed an original but all of which constitute
one and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission, and facsimile
signatures are binding on the parties hereto.
11.11. Further Assurances. Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
11.12. Consents. All consents and other determinations to be made by the
Investors pursuant to this Agreement will be made by the Investors or the
Investors holding a majority in interest of the Registrable Securities.
11.13. No Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
* * * *
17
IN WITNESS WHEREOF, the undersigned Investors and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
MIDWEST EXPRESS HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
[SIGNATURES CONTINUE ON THE FOLLOWING PAGES]
[INVESTORS' SIGNATURE PAGES OMITTED]
INVESTOR:
By:
----------------------------------------
Legal Counsel for Investor:
Print Name:
--------------------------------
Address:
--------------------------------
--------------------------------
Telephone:
--------------------------------
Facsimile:
--------------------------------
EXHIBIT A
PLAN OF DISTRIBUTION
We are registering the shares of common stock issuable upon conversion of
the convertible notes to permit the resale of these shares of common stock by
the holders of the convertible notes from time to time after the date of this
prospectus. We will not receive any of the proceeds from the sale by any selling
shareholder of the shares of common stock. We will bear all fees and expenses
incident to our obligation to register the shares of common stock, except that a
selling shareholder will pay all applicable underwriting discounts and selling
commissions, if any.
Any selling shareholder may sell all or a portion of the common stock
beneficially owned by it and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the common stock
is sold through underwriters or broker-dealers, then the selling shareholder
will be responsible for underwriting discounts or commissions or agent's
commissions. The common stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of the sale, at varying prices
determined at the time of sale, or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions,
(1) on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of sale,
(2) in the over-the-counter market,
(3) in transactions otherwise than on these exchanges or systems or in the
over-the-counter market,
(4) through the writing of options, whether the options are listed on an
options exchange or otherwise,
(5) through the settlement of short sales;
(6) through a combination of such methods of sale; or
(7) through any other method permitted pursuant to applicable law.
If a selling shareholder effects such transactions by selling shares of
common stock to or through underwriters, broker-dealers or agents, such
underwriters, broker-dealers or agents may receive commissions in the form of
discounts, concessions or commissions from the selling shareholder or
commissions from purchasers of the shares of common stock for whom they may act
as agent or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents may be in
excess of those customary in the types of transactions involved). In connection
with sales of the common stock or otherwise, a selling shareholder may enter
into hedging transactions with broker-dealers, which may in turn engage in short
sales of the common stock in the course of hedging in positions they assume. A
selling shareholder may also sell shares of common stock short and deliver
shares of common stock covered by this prospectus to close out short positions.
Each selling shareholder may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.
Each selling shareholder may pledge or grant a security interest in some or
all of the convertible notes, warrants or shares of common stock owned by it
and, if it defaults in the performance
of its secured obligations, the pledgees or secured parties may offer and sell
the shares of common stock from time to time pursuant to this prospectus or any
amendment to this prospectus under Rule 424(b) (3) or other applicable provision
of the Securities Act of 1933, as amended, amending, if necessary, the list of
selling shareholders to include the pledgee, transferee or other
successors-in-interest as selling shareholders under this prospectus. Each
selling shareholder also may transfer and donate the shares of common stock in
other circumstances in which case the transferees, donees, pledgees or other
successors-in-interest will be the selling beneficial owners for purposes of
this prospectus.
Each selling shareholder and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commission paid, or any
discounts or concessions allowed, to any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At the time a
particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed that will set forth the aggregate
amount of shares of common stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from each selling
shareholder and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.
Under the securities laws of some states, the shares of common stock may be
sold in such states only through registered or licensed brokers or dealers. In
addition, in some states the shares of common stock may not be sold unless the
shares have been registered or qualified for sale in the state or an exemption
from registration or qualification is available and is complied with.
There can be no assurance that any selling shareholder will sell any or all
of the shares of common stock registered pursuant to the shelf registration
statement of which this prospectus forms a part.
Each selling shareholder and any other person participating in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, including,
without limitation, Regulation M of the Exchange Act, which may limit the timing
of purchases and sales of any of the shares of common stock by the selling
shareholders and any other participating person. Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of common
stock to engage in market-making activities with respect to the shares of common
stock. All of the foregoing may affect the marketability of the shares of common
stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.
We will pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be $[ ] in total,
including, without limitation, Securities and Exchange Commission filing fees
and expenses of compliance with state securities or "blue sky" laws; provided,
however, that a selling shareholder will pay all applicable underwriting
discounts and selling commissions, if any. We will indemnify the selling
shareholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreement, or the
selling shareholders will be entitled to contribution. We may be indemnified by
a selling shareholder against civil liabilities, including liabilities under the
Securities Act, that may arise from any written information furnished to us by
the selling shareholder specifically for use in this prospectus, in accordance
with the registration rights agreement, or we may be entitled to contribution.
Once sold under the shelf registration statement, of which this prospectus
forms a part, the shares of common stock will be freely tradable in the hands of
persons other than our affiliates.
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn:
-------------------------
Re: Midwest Express Holdings, Inc.
Ladies and Gentlemen:
We are counsel to Midwest Express Holdings, Inc., a Wisconsin corporation
(the "Company"), and have represented the Company in connection with that
certain Securities Purchase Agreement, dated as of September 29, 2003 (the
"Purchase Agreement"), entered into by and among the Company, Midwest Airlines,
Inc., a Wisconsin corporation and wholly-owned subsidiary of the Company
("Midwest"), Skyway Airlines, Inc., a Delaware corporation and wholly-owned
subsidiary of Midwest ("Skyway"), YX Properties, LLC, a Nebraska limited
liability company and an indirect subsidiary of the Company ("YX") (Midwest,
Skyway, and YX are referred to herein as the "Co-Borrowers"), and the buyers
named therein (collectively, the "Investors"), pursuant to which the Company and
the Co-Borrowers issued to the Holders their convertible senior secured notes
(the "Notes"), convertible into shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock"). Pursuant to the Purchase Agreement, the
Company entered into a Registration Rights Agreement with the Investors, dated
as of September 29, 2003 (the "Registration Rights Agreement"), pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement) under the
Securities Act of 1933, as amended (the "Securities Act"). In connection with
the Company's obligations under the Registration Rights Agreement, on
___________, 2003, the Company filed a Registration Statement on Form S-1 (File
No. 333-_________) (the "Registration Statement") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities. The
Registration Statement names each of the Investors as a selling shareholder
thereunder.
In connection with the Registration Statement, we advise you that a member
of the SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the Securities Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS], and we have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the Securities Act
pursuant to the Registration Statement.
Very truly yours,
[COMPANY'S COUNSEL]
By:
----------------------------------------
CC: [LIST NAMES OF INVESTORS]
