EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
Dated as of
February 11, 0000
Xxxxxxx Xxxxx Securities, Inc.
000 X.X. 0xx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Ladies and Gentlemen:
Source Capital Corporation, a Washington corporation (the
"Company"), proposes to issue and sell to the Purchasers (as defined
herein) upon the terms set forth in a Subscription Agreement and
Investor Questionnaire between the Purchasers and the Company, its 7-
1/2% Convertible Subordinated Debentures due 2008 (the "Debentures").
As an inducement to Pacific Crest Securities, Inc. (the Placement
Agent to act as the placement agent for the Debentures), the Company
agrees with the Placement Agent (i) for the benefit of the Purchasers
and (ii) for the benefit of the holders from time to time of the
Common Stock, no par value per share (the "Common Stock"), of the
Company issuable upon conversion of the Debentures (collectively, the
"Conversion Shares"), including the Purchasers (each of the foregoing
a "Holder" and, together, the "Holders"), as follows:
SECTION 1. DEFINITIONS. (a) Capitalized terms used herein
without definition shall have their respective meanings set forth in
or pursuant to the Indenture or the Private Placement Memorandum,
dated February 11, 1998, in respect of the Debentures. As used in
this Agreement, the following capitalized defined terms shall have the
following meanings:
"Act" or "Securities Act" means the United States Securities Act
of 1933, as amended.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with such specified person. For purposes of this
definition, control of a person means the power, direct or indirect,
to direct or cause the direction of the management and policies of
such person whether by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
"Commission" means the United States Securities and Exchange
Commission.
"Conversion Shares " means the shares of Common Stock issuable
upon conversion of the Debentures;
"Debentures" means the Company's 7-1/2% Convertible Subordinated
Debentures due 2008.
"Effectiveness Period" has the meaning set forth in Section 2
hereof.
"Electing Holder" has the meaning assigned thereto in Section
3(a)(3) hereof.
"Exchange Act" means the United States Securities and Exchange
Act of 1934, as amended.
"Indenture" means the Indenture, dated as of February 11, 1998,
between the Company and Bankers Trust Company, as amended and
supplemented from time to time in accordance with is terms.
"Issue Date" means the date of original issuance of the
Debentures.
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers that shall administer an underwritten
offering, if any, as set forth in Section 6 hereof.
"Notice and Questionnaire" means a Notice of Registration
Statement and Selling Securityholder Questionnaire in the form to be
provided by the Company.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without limitation, a prospectus
that discloses information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule
430A under the Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion
of the Conversion Shares.
"Purchasers" means the initial purchasers of the Company's 7-1/2%
Convertible Subordinated Debentures due 2008.
"Restricted Security" means any Debenture or Conversion Share
except any such Debenture or Conversion Share which (i) has been
effectively registered under the Securities Act and sold in a manner
contemplated by the Shelf Registration Statement, (ii) has been
transferred in compliance with Rule 144 under the Securities Act (or
any successor provision thereto), (iii) has been sold in compliance
with Regulation S under the Securities Act (or any successor thereto)
and does not constitute the unsold allotment of a distributor within
the meaning of Regulation S under the Securities Act, or (iv) has
otherwise been transferred and a new Debenture or Conversion Share not
subject to transfer restrictions under the Securities Act has been
delivered by or on behalf of the Company in accordance with Section
2.06 of the Indenture. "Shelf Registration" means a registration
effected pursuant to Section 2 hereof.
"Shelf Registration Statement" means a shelf registration
statement of the Company pursuant to the provisions of Section 2
hereof filed with the Commission which covers some or all of the
Conversion Shares, as applicable, on an appropriate form under Rule
415 under the Act, or any similar rule that may be adopted by the
Commission, amendments and supplements to such registration statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Underwriter" means any underwriter of Conversion Shares in
connection with an offering thereof under a Shelf Registration
Statement.
SECTION 2. SHELF REGISTRATION. (a) The Company shall, before
July 31, 1998, use its best efforts to file with the Commission a
Shelf Registration Statement relating to the offer and sale of the
Conversion Shares by the Holders from time to time in accordance with
the methods of distribution elected by such Holders and set forth in
such Shelf Registration Statement and, thereafter, shall use its best
efforts to cause such Shelf Registration Statement to be declared
effective under the Act on or prior to September 30, 1998; PROVIDED,
however, that no Holder shall be entitled to have the Conversion
Shares held by it covered by such Shelf Registration unless such
Holder is an Electing Holder.
(b) The Company shall use its best efforts:
(i) to keep the Shelf Registration Statement continuously
effective in order to permit the Prospectus forming part thereof
to be usable by Holders until the second anniversary of the Issue
Date or such shorter period that will terminate when all the
Conversion Shares covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement (the
"Effectiveness Period");
(ii) after the date the Shelf Registration Statement becomes
effective, within 35 days after the request of any holder of
Conversion Shares that is not then an Electing Holder, to take
any action necessary and required by law to enable such holder to
use the Prospectus forming a part thereof for resales of
Conversion Shares, including, without limitation, any action
necessary to identify such holder as a selling Securityholder in
the Shelf Registration Statement; PROVIDED, HOWEVER, that nothing
in this subparagraph shall relieve such holder of the obligation
to return a completed and signed Notice and Questionnaire to the
Company in accordance with Section 3(a)(2) hereof; and
(iii) if at any time, the Debentures, pursuant to Article V
of the Indenture, are convertible into securities other than
Common Stock, the Company shall, or shall cause any successor
under the Indenture to, cause such securities to be included in
the Shelf Registration Statement no later than the date on which
the Debentures may then be convertible into such securities.
The Company shall be deemed not to have used its best efforts to
keep the Shelf Registration Statement effective during the requisite
period if the Company voluntarily takes any action that would result
in Holders of Conversion Shares covered thereby not being able to
offer and sell any such Conversion Shares during that period, unless
(i) such action in required by applicable law, or (ii) the continued
effectiveness of the Shelf Registration Statement would require the
Company to disclose a material financing, acquisition or other
corporate trans action, and the Board of Directors shall have
determined in good faith that such disclosure is not in the best
interests of the Company and its stockholders; provided that in the
case of clause (i) above, the Company thereafter must promptly comply
with the requirements of paragraph 3(j) below, if applicable and in
the case of clauses (i) and (ii) above, the Company shall be entitled
to suspend the use of any prospectus forming a part of an effective
Registration Statement under this Section 2 for a reasonable period of
time (a "DELAY PERIOD"), except that the aggregate number of days
included in all Delay Periods during any consecutive 12 months shall
not exceed the aggregate of 90 days (whether or not consecutive).
SECTION 3. REGISTRATION PROCEDURES. In connection with any
Shelf Registration Statement, the following provisions shall apply:
(a) (1) Not less than 30 calendar days prior to the Effective
Time of the Shelf Registration Statement, the Company shall mail the
Notice and Questionnaire to the holders of Conversion Shares. No
holder shall be entitled to be named as a selling Securityholder in
the Shelf Registration Statement as of the Effective Time, and no
holder shall be entitled to use the Prospectus forming a part thereof
for resales of Conversion Shares at any time, unless such holder has
returned a completed and signed Notice and Questionnaire to the
Company by the deadline for response set forth therein; PROVIDED,
HOWEVER, holders of Conversion Shares shall have at least 28 calendar
days from the date on which the Notice and Questionnaire is first
mailed to such holders to return a completed and signed Notice and
Questionnaire to the Company.
(2) After the Effective Time of the Shelf Registration
Statement, the Company shall, upon the request of any holder of
Conversion Shares that is not then an Electing Holder, promptly send a
Notice and Questionnaire to such holder. The Company shall not be
required to take any action to name such holder as a selling
Securityholder in the Shelf Registration Statement or to enable such
holder to use the Prospectus forming a part thereof for resales of
Conversion Shares until such holder has returned a completed and
signed Notice and Questionnaire to the Company.
(3) The term "Electing Holder" shall mean any holder of
Conversion Shares that has returned a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(a)(1) or
3(a)(2) hereof.
(b) The Company shall furnish to the Placement Agent, prior to
the filing thereof with the Commission, a copy of any Shelf
Registration Statement, and each amendment thereof and each amendment
or supplement, if any, to the Prospectus included therein.
(c) The Company shall promptly take such action as may be
necessary so that (i) any Shelf Registration Statement and any
amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto (and each report or other document
incorporated therein by reference in each case) complies in all
material respects with the Securities Act and the Exchange Act and the
respective rules and regulations thereunder, (ii) any Shelf
Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(d) (1) The Company shall advise the Placement Agent and, in
the case of clause (i), the Electing Holders, and, if requested by the
Placement Agent or any such Electing Holder, confirm such advice in
writing:
(i) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission and
when the Shelf Registration Statement or any post-effective
amendment thereto has become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the
Prospectus included therein or for additional information.
(2) The Company shall advise the Placement Agent and the
Electing Holders and, if requested by the Placement Agent or any such
Electing Holder, confirm such advice in writing of:
(f) The Company shall furnish to each Electing Holder included
within the coverage of any Shelf Registration Statement, without
charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, and, if the Electing Holder so requests in writing, all
reports, other documents and exhibits that are filed with or
incorporated by reference in the Shelf Registration Statement.
(g) The Company shall, during the Effectiveness Period, deliver
to each Electing Holder of Conversion Shares included within the
coverage of any Shelf Registration Statement, without charge, as many
copies of the Prospectus (including each preliminary Prospectus, if
any) included in such Shelf Registration Statement and any amendment
or supplement thereto as such Electing Holder may reasonably request;
and the Company consents (except during the continuance of any event
described in Section 3(d)(2)(iii)) to the use of the Prospectus or any
amendment or supplement thereto by each of the Electing Holders of
Conversion Shares in connection with the offering and sale of the
Conversion Shares covered by the Prospectus or any amendment or
supplement thereto during the Shelf Registration Period.
(h) Prior to any offering of Conversion Shares pursuant to any
Shelf Registration Statement, the Company shall register or qualify or
cooperate with the Electing Holders of Conversion Shares included
therein and their respective counsel in connection with the
registration or qualification of such Conversion Shares for offer and
sale under the securities or, if required, blue sky laws of such
jurisdictions in the United States as any such Electing Holders
reasonably request in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such
jurisdictions of the Conversion Shares covered by such Shelf
Registration Statement; PROVIDED, HOWEVER, that in no event shall the
Company be obligated to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise
be required to so qualify but for this Section 3(h), (ii) file any
general consent to service of process in any jurisdiction where it is
not as of the date hereof then so subject or (iii) subject itself to
taxation in any such jurisdiction if it is not so subject.
(i) Unless any Conversion Shares shall be in book-entry only
form, the Company shall cooperate with the Electing Holders of
Conversion Shares to facilitate the timely preparation and delivery of
certificates representing Conversion Shares to be sold pursuant to any
Shelf Registration Statement free of any restrictive legends and in
such permitted denominations and registered in such names as Electing
Holders may request in connection with the sale of Conversion Shares
pursuant to such Shelf Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraph
3(d)(2)(iii) above, the Company shall promptly prepare a
post-effective amendment to any Shelf Registration Statement or an
amendment or supplement to the related Prospectus or file any other
required document so that, as thereafter delivered to purchasers of
the Conversion Shares included therein, the Prospectus will not
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. If
the Company notifies the Electing Holders of the occurrence of any
event contemplated by paragraph 3(c)(2)(iii) above, the Electing
Holders shall suspend the use of the Prospectus until the requisite
changes to the Prospectus have been made.
(k) Not later than the effective date of any Shelf Registration
Statement hereunder, the Company shall provide a CUSIP number for the
securities registered under such Shelf Registration Statement.
(l) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission, and to make
generally available to its securityholders as soon as practicable, but
in any event not later than eighteen months after (i) the effective
date (as defined in Rule 158(c) under the Securities Act) of the Shelf
Registration Statement, (ii) the effective date of each post-effective
amendment to the Shelf Registration Statement, and (iii) the date of
each filing by the Company with the Commission of an Annual Report on
Form 10-K that is incorporated by reference in the Shelf Registration
Statement, an earning statement of the Company and its subsidiaries
complying with Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder (including, at the option of
the Company, Rule 158).
(m) [Intentionally Omitted.]
(n) The Company may require each Electing Holder of Conversion
Shares to be sold pursuant to any Shelf Registration Statement to
furnish to the Company such information regarding the Electing Holder
and the distribution of such Conversion Shares as may be required by
applicable law or regulation for inclusion in such Shelf Registration
Statement and the Company may exclude from such registration the
Conversion Shares of any Electing Holder that fails to furnish such
information within a reasonable time after receiving such request.
(o) The Company shall, if requested, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to
a Shelf Registration Statement, such information as the Managing
Underwriters reasonably agree should be included therein and to which
the Company does not reasonably object and shall make all required
filings of such Prospectus supplement or post-effective amendment as
soon as practicable after they are notified of the matters to be
included or incorporated in such Prospectus supplement or
post-effective amendment.
(p) The Company shall enter into such customary agreements
(including underwriting agreements in customary form) to take all
other appropriate actions in order to expedite or facilitate the
registration or the disposition of the Conversion Shares, and in
connection therewith, if an underwriting agreement is entered into,
cause the same to contain indemnification provisions and procedures
substantially identical to those set forth in Section 5 (or such other
provisions and procedures acceptable to the Managing Underwriters, if
any) with respect to all parties to be indemnified pursuant to
Section 5.
(q) The Company shall:
(i) make reasonably available for inspection by the
Electing Holders of Conversion Shares to be registered
thereunder, any underwriter participating in any disposition
pursuant to such Shelf Registration Statement, and any attorney,
accountant or other agent retained by such Electing Holders or
any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and
its subsidiaries;
(ii) cause the Company's officers, directors and employees
to make reasonably available for inspection all relevant
information reasonably requested by such Electing Holders or any
such underwriter, attorney, accountant or agent in connection
with any such Shelf Registration Statement, in each case, as is
customary for similar due diligence examinations; PROVIDED,
HOWEVER, that any information that is designated in writing by
the Company, in good faith, as confidential at the time of
delivery of such information shall be kept confidential by such
Electing Holders or any such underwriter, attorney, accountant or
agent, unless such disclosure is made in connection with a court
proceeding or required by law, or such information becomes
available to the public generally or through a third party
without an accompanying obligation of confidentiality;
(iii) make such representations and warranties to the
Electing Holders of Conversion Shares registered thereunder and
the underwriters, if any, in form, substance and scope as are
customarily made by the Company to underwriters in primary
underwritten offerings and covering matters including, but not
limited to, those set forth in the Purchase Agreement;
(iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing
Underwriters, if any) in customary form addressed to each
Electing Holder and the underwriters, if any, covering such
matters as are customarily covered in opinions requested in
underwritten offerings and such other matters as may be
reasonably requested by such Electing Holders and underwriters
(it being agreed that the matters to be covered by such opinion
or written statement by such counsel delivered in connection with
such opinions shall include in customary form, without
limitation, as of the date of the opinion and as of the effective
date of the Shelf Registration Statement or most recent
post-effective amendment thereto, as the case may be, the absence
from such Shelf Registration Statement and the prospectus
included therein, as then amended or supplemented, including the
documents incorporated by reference therein, of an untrue
statement of a material fact or the omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading);
(v) obtain "cold comfort" letters and updates thereof from
the independent public accountants of the Company (and, if
necessary, any other independent public accountants of any
subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data are, or
are required to be, included in the Shelf Registration
Statement), addressed to each such Electing Holder of Conversion
Shares registered thereunder and the underwriters, if any, in
customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with primary
underwritten offerings;
(vi) deliver such documents and certificates as may be
reasonably requested by any such Electing Holders and the
Managing Underwriters, if any, including those to evidence
compliance with Section 3(i) and with any customary conditions
contained in the underwriting agreement or other agreement
entered into by the Company. The foregoing actions set forth in
clauses (iii), (iv), (v) and (vi) of this Section 3(q) shall be
performed at each closing under any underwritten offering to the
extent required thereunder.
(r) The Company shall use its best reasonable efforts to cause
the Conversion Shares to be listed for quotation on the NASDAQ stock
market or other stock exchange or trading system on which the Common
Stock primarily trades on or prior to the effective date of any Shelf
Registration Statement hereunder.
(s) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Conversion Shares or participate as
a member of an underwriting syndicate or selling group or "assist in
the distribution" (within the meaning of the Conduct Rules and the
By-Laws of the National Association of Securities Dealers, Inc.
("NASD")) thereof, whether as an Electing Holder of such Conversion
Shares or as an underwriter, a placement or sales agent or a broker or
dealer in respect thereof, or otherwise, assist such broker-dealer in
complying with the requirements of such Rules and By-Laws, including,
without limitation, by (A) such Rules or By-Laws, including Schedule E
thereto, shall so require, engaging a "qualified independent
underwriter" (as defined in Schedule E) to participate in the
preparation of the Shelf Registration Statement relating to such
Conversion Shares and to exercise usual standards of due diligence in
respect thereto, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of under writers
provided in Section 5 hereof and (C) providing such information to
such broker-dealer as may be required in order for such broker-dealer
to comply with the requirements of the Rules of Fair Practice of the
NASD.
(t) The Company shall use its best efforts to take all other
steps necessary to effect the registration, offering and sale of the
Conversion Shares covered by the Shelf Registration Statement
contemplated hereby.
SECTION 4. REGISTRATION EXPENSES. The Company shall bear all
fees and expenses incurred in connection with the performance of its
obligations under Sections 2 and 3 thereof.
SECTION 5. INDEMNIFICATION AND CONTRIBUTION. (a) In connection
with any Shelf Registration Statement, the Company shall indemnify and
hold harmless the Placement Agent, each Electing Holder, each
underwriter who participates in an offering of Conversion Shares, each
person, if any, who controls any of such parties within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act and
each of their respective directors, officers, employees, trustees and
agents (each such person being sometimes referred to as an
"indemnified party"), from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified
party may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Shelf
Registration Statement under which such Conversion Shares are to be
registered under the Securities Act, or any Prospectus contained
therein or furnished by the Company to any indemnified party, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and the Company hereby agrees to reimburse such
indemnified party for any legal or other expenses reasonably incurred
by them in connection with investigating or defending or preparing to
defend or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are
incurred; PROVIDED, HOWEVER, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Shelf Registration Statement or Prospectus in reliance upon and in
conformity with written information furnished to the Company by such
indemnified party expressly for use therein.
(b) Each Electing Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Placement Agent, each
underwriter who participates in an offering of Conversion Shares and
the other Electing Holders and each of their respective directors,
officers (including each officer of the Company who signed the Shelf
Registration Statement), employees, trustees and agents and each
Person, if any, who controls the Company, the Placement Agent, any
under writer or any other Electing Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all loss, liability, claim, damage and
expense whatsoever described in the indemnity contained in Section
5(a) hereof, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the
Shelf Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto) in reliance upon
and in conformity with written information furnished to the Company by
such Electing Holder expressly for use in the Shelf Registration
Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto); PROVIDED, HOWEVER, that, no such
Electing Holder shall be liable for any claims hereunder in excess of
the amount of net proceeds received by such Electing Holder from the
sale of Conversion Shares pursuant to the Shelf Registration
Statement.
(c) In case any action or proceeding (including any governmental
or regulatory investigation or proceeding) shall be instituted
involving any person in respect of which indemnity may be sought
pursuant to either of the two preceding paragraphs, such person
(hereinafter called the indemnified party) shall promptly notify the
person against whom such indemnity may be sought (hereinafter called
the indemnifying party) in writing; however, the omission to so notify
the indemnifying party shall relieve the indemnifying party from
liability only to the extent prejudiced thereby. The indemnifying
party, upon request of the indemnified party, shall assume the defense
thereof, including the employment of counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any
others that the indemnifying party may designate and shall pay the
fees and disbursements of such counsel related to such proceeding. In
any such action or proceeding any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i)
the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. It is understood that
the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm (in
addition to any local counsel) for all indemnified parties and all
persons, if any, who control such indemnified parties within the
meaning of either Section 15 of the Act or Section 20 of the Exchange
Act.
(d) If the indemnification provided for in this Section 5 is
insufficient or unavailable to an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified
party or parties on the other from the offering of the Debentures or
(ii) if the allocation provided by clause (i) above is not permitted
by applicable law or if the indemnified party shall have failed to the
prejudice of the indemnifying party to give the notice required by
Section 5(c), in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand
and the indemnified party or parties on the other in connection with
the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company, on the one hand, or by the Electing Holder or such other
indemnified party, in the other hand, and the parties, relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Placement Agent
and the Electing Holders of the Conversion Shares agree that it would
not be just and equitable if contribution pursuant to this Section 5
were to be determined by pro rata allocation or by any other method of
allocation that does not take into account the relevant equitable
considerations. For purposes of this Section 5(d), each director,
officer, employee, trustee, agent and Person, if any, who controls the
Placement Agent or an Electing Holder within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall have the
same rights to contribution as the Placement Agent or such Electing
Holder, and each director, officer, employee, trustee and agent of the
Company, and each Person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the
Company. No party shall be liable for contribution with respect to
any action, suit, proceeding or claim settled without its written
consent. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
(e) Notwithstanding any other provision of this Section 5, in no
event will any (i) Electing Holder be required to undertake liability
to any person under this Section 5 for any amounts in excess of the
dollar amount of the proceeds to be received by such holder from the
sale of such holder's Conversion Shares (after deducting any fees,
discounts and commissions applicable thereto) pursuant to any Shelf
Registration Statement under which such Conversion Shares are to be
registered under the Securities Act and (ii) underwriter, selling
agent or other securities professional be required to undertake
liability to any person hereunder for any amounts in excess of the
discount, commission or other compensation payable to such
underwriter, selling agent or other securities professional with
respect to the Conversion Shares underwritten by it and distributed to
the public.
(f) The obligations of the Company under this Section 5 shall be
in addition to any liability which the Company may otherwise have and
shall extend, or not extend, as the case may be, to any Indemnified
Person and the obligations of any Indemnified Person under this
Section 5 shall be in addition to any liability which such Indemnified
Person may otherwise have and shall extend, or not extend, as the case
may be, to the Company. The remedies provided in this Section 5 are
not exclusive and shall not limit any rights or remedies which may
otherwise be available to an indemnified party at law or in equity.
SECTION 6. UNDERWRITTEN OFFERING. The Electing Holders of
Conversion Shares covered by the Shelf Registration Statement who
desire to do so may sell such Conversion Shares in an underwritten
offering in accordance with the conditions set forth below. In any
such underwritten offering, the investment banker or bankers and
manager or managers that will administer the offering will be selected
by, and the underwriting arrangements with respect thereto will be
approved by the Electing Holders of a majority of the Conversion
Shares to be included in such offering; PROVIDED, HOWEVER, that (i)
with respect to the investment bankers and managers, such investment
bankers and managers will be selected by the Company from a list of
nationally recognized firms to be provided by the Electing Holders and
(ii) the Company shall not be obligated to arrange for more than two
underwritten offering during the Effectiveness Period. No Electing
Holder may participate in any underwritten offering contemplated
hereby unless such Electing Holder (a) agrees to sell such Electing
Holder's Conversion Shares in accordance with any approved
underwriting arrangements and (b) completes and executes all
reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required
under the terms of such approved underwriting arrangements. Except as
otherwise set forth herein, the Electing Holders of Conversion Shares
covered by the Shelf Registration Statement selling under an
underwritten offering as contemplated hereby will pay such expenses as
are ordinarily and customarily paid in connection with underwritten
secondary offerings.
SECTION 7. MISCELLANEOUS. (a) OTHER REGISTRATION RIGHTS. From
the date of this Agreement, the Company may grant registration rights
that would permit any Person that is a third party the right to
piggy-back on any Shelf Registration Statement; PROVIDED that if the
Managing Underwriter, if any, of such offering delivers an opinion to
the Electing Holders that the total amount of securities which they
and the holders of such piggy-back rights intend to include in any
Shelf Registration Statement is so large as to materially adversely
affect the success of such offering (including the price at which such
securities can be sold), then only the amount, the number or kind of
securities to be offered for the account of holders of such piggy-back
rights granted after the date of this agreement will be reduced to the
extent necessary to reduce the total amount of securities to be
included in such offering to the amount, number or kind recommended by
the Managing Underwriter prior to any reduction in the amount of
Conversion Shares to be included.
(b) AMENDMENTS AND WAIVERS. This Agreement, including this
Section 7(b), may be amended, and waivers or consents to departures
from the provisions hereof may be given, only upon the written consent
of the Placement Agent or by a written instrument duly executed by the
Company and the holders of a majority in aggregate principal amount of
the Debentures and the holders of a majority of the Conversion Shares
then outstanding. Each holder of the Debentures or Conversion Shares
outstanding at the time of any such amendment, waiver or consent or
thereafter shall be bound by any amendment, waiver or consent effected
pursuant to this Section 7(b), whether or not any notice, writing or
marking indicating such amendment, waiver or consent appears on the
Debentures or the Conversion Shares or is delivered to such holder.
(c) NOTICES. All notices and other communications provided for
or permitted hereunder shall be given as provided in the Indenture.
(d) PARTIES IN INTEREST. The parties to this Agreement intend
that all holders of Debentures and the Conversion Shares shall be
entitled to receive the benefits of this Agreement and that any
Electing Holder shall be bound by the terms and provisions of this
Agreement by reason of such election with respect to the Conversion
Shares which are included in a Shelf Registration Statement. All the
terms and provisions of this Agreement shall be binding upon, shall
inure to the benefit of and shall be enforceable by the respective
successors and assigns of the parties hereto and any holder from time
to time of the Debentures or the Conversion Shares to the aforesaid
extent. In the event that any transferee of any holder of Debentures
or Conversion Shares shall acquire Debentures or Conversion Shares, in
any manner, whether by gift, bequest, purchase, operation of law or
otherwise, such transferee shall, without any further writing or
action of any kind, be entitled to receive the benefits of and, if an
Electing Holder, be conclusively deemed to have agreed to be bound by
and to perform all of the terms and provisions of this Agreement to
the aforesaid extent.
(e) COUNTERPARTS. This agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
(f) HEADINGS. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(g) GOVERNING LAW. This agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of
any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by
law.
(i) SURVIVAL. The respective indemnities, agreements,
representations, warranties and other provisions set forth in this
Agreement or made pursuant hereto shall remain in full force and
effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Electing Holder, any
director, officer or partner of such holder, any agent or underwriter,
any director, officer or partner of such agent or underwriter, or any
controlling person of any of the foregoing, and shall survive the
transfer and registration of the Conversion Shares of such holder.
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
SOURCE CAPITAL CORPORATION,
By: /s/ X.X. XXXXX
---------------------------------
Name: X.X. Xxxxx
Title: President
The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written:
PACIFIC CREST SECURITIES, INC.
By: /s/ X.X. XXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
