REGISTRATION RIGHTS AGREEMENT
by and among
Action Performance Companies, Inc.
and
NationsBanc Xxxxxxxxxx Securities LLC
CIBC Xxxxxxxxxxx Corp.
EVEREN Securities, Inc.
Xxxxx Xxxxxxx Inc.
Dated as of March 24, 1998
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of March 24, 1998, by and among Action Performance Companies,
Inc., an Arizona corporation (the "Company"), and NationsBanc Xxxxxxxxxx
Securities LLC, CIBC Xxxxxxxxxxx Corp., EVEREN Securities, Inc. and Xxxxx
Xxxxxxx Inc. (each an "Initial Purchaser" and, collectively, the "Initial
Purchasers"), each of whom has agreed to purchase the Company's 4 3/4%
Convertible Subordinated Notes due 2005 (the "Initial Notes") pursuant to the
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated as of
March 18, 1998 (the "Purchase Agreement"), by and among the Company and the
Initial Purchasers (i) for your benefit and for the benefit of each other
Initial Purchaser and (ii) for the benefit of the holders from time to time of
the Securities, as defined below, (including you and each other Initial
Purchaser). In order to induce the Initial Purchasers to purchase the Notes, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in Section 5(h) of the Purchase
Agreement.
The parties hereby agree as follows:
Section 1. Definitions
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Damages Payment Date: Each of the semi-annual interest payment dates
provided in the Indenture.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Securities to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Securities Act,
and to certain institutional "accredited investors," as such term is
defined in Rule 501(a)(1), (2), (3) and (7) of Regulation D under the
Securities Act ("Accredited Institutions"), and to certain non-U.S.
persons outside the United States in reliance on Regulation S under the
Securities Act.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 7(a) hereof.
Indenture: The Indenture, dated as of March 24, 1998, among the Company
and First Union National Bank, as trustee (the "Trustee"), pursuant to
which the Securities are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchaser: As defined in the preamble hereto.
Initial Placement: The issuance and sale by the Company of the Initial
Notes to the Initial Purchasers pursuant to the Purchase Agreement.
Interest Payment Date: As defined in the Indenture and the Notes.
Liquidated Damages: As defined in Section 4 hereof.
NASD: National Association of Securities Dealers, Inc.
Notes: The 4 3/4% Convertible Subordinated Notes due 2005, issued
pursuant to the Purchase Agreement, for so long as such securities
constitute Transfer Restricted Securities, as defined below.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as
defined below, as amended or supplemented by any prospectus supplement
and by all other amendments thereto, including post-effective
amendments, and all material incorporated by reference into such
Prospectus.
Record Holder: With respect to any Damages Payment Date relating to the
Notes, each Person who is a Holder of Notes on the record date with
respect to the Interest Payment Date on which such Damages Payment Date
shall occur.
Registration Default: As defined in Section 4 hereof.
Registration Statement: Any registration statement of the Company
relating to the registration for resale of Transfer Restricted
Securities, as defined below, pursuant to the Shelf Registration
Statement, which is filed pursuant to the provisions of this Agreement,
including the Prospectus included therein, all amendments and
supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Securities: The Notes and the Underlying Securities, as defined below.
Securities Act: The Securities Act of 1933, as amended.
Shelf Filing Deadline: As defined in Section 3 hereof.
Shelf Registration Statement: As defined in Section 3 hereof.
Special Counsel: Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx or such other
counsel as shall be specified by the Holders of a majority in principal
amount of the Transfer Restricted
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Securities and shall be acceptable to the Company (based on, among
other factors, the anticipated costliness thereof) acting in good
faith, the fees and expenses of which will be paid by the Company
pursuant to Section 6(b) hereof.
Trust Indenture Act: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Security, until the earliest to
occur of (a) the date on which such Security has been effectively
registered under the Securities Act and disposed of in accordance with
a Shelf Registration Statement, (b) the date on which such Security is
distributed to the public pursuant to Rule 144 under the Securities
Act, and (c) the date on which such Security may be sold or transferred
pursuant to Rule 144(k) under the Securities Act.
Underlying Securities: The Common Stock, par value $0.01 per share, of
the Company into which the Notes are convertible.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for
reoffering to the public.
Section 2. Securities Subject To This Agreement
(a) Transfer Restricted Securities. The securities entitled to
the benefits of this Agreement are the Transfer Restricted Securities
(b) Holders of Transfer Restricted Securities. A Person is
deemed to be a holder of Transfer Restricted Securities (each, a "Holder")
whenever such Person owns Transfer Restricted Securities.
Section 3. Shelf Registration
(a) Shelf Registration. The Company shall (i) cause to be
filed a shelf registration statement pursuant to Rule 415 under the Securities
Act (the "Shelf Registration Statement") as soon as practicable but in any event
on or prior to 60 days after the Closing Date (such date being the "Shelf Filing
Deadline") on Form S-1 or Form S-3, if the use of such form is then available,
or another appropriate form permitting registration of the Transfer Restricted
Securities, and as determined by the Company, which Shelf Registration Statement
shall provide for resales of all Transfer Restricted Securities by the Holders
thereof who shall have provided the information required pursuant to Section
3(b) hereof; and (ii) use its reasonable best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission on or prior to
120 days after the Closing Date (the "Effectiveness Target Date").
The Company shall use its best efforts to keep such Shelf Registration
Statement continuously effective, supplemented, and amended as required by the
provisions of Sections 5(a) and (b) hereof to the extent necessary to ensure
that it is available for resales of Securities by the Holders of Transfer
Restricted Securities entitled to the benefit of this Section 3(a), and to
ensure that it conforms with the requirements of this Agreement, the Securities
Act and the policies, rules, and regulations of the Commission as announced from
time to time, for a period of at least two years following the effective date of
such Shelf Registration Statement (or shorter period that will terminate when
each of the Transfer Restricted Securities covered by such Shelf Registration
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Statement have been sold pursuant to such Shelf Registration Statement).
Notwithstanding the foregoing, the Company shall not be obligated to maintain
the effectiveness of the Shelf Registration Statement if it has obtained an
opinion of counsel that the Transfer Restricted Securities may be freely offered
and sold in the public markets without the continued effectiveness of the Shelf
Registration Statement.
(b) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 10 business days after receipt of a
request therefor, such information as the Company may reasonably request for use
in connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all new
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not misleading.
Section 4. Liquidated Damages
If (i) the applicable Shelf Registration Statement required by this
Agreement is not filed with the Commission on or prior to the Shelf Filing
Deadline, (ii) the applicable Shelf Registration Statement has not been declared
effective by the Commission on or prior to the Effectiveness Target Date, or
(iii) the applicable Shelf Registration Statement required by this Agreement is
filed and declared effective but shall thereafter cease to be effective or fail
to be usable for its intended purpose for a period of time which shall exceed 60
days in the aggregate in any twelve-month period without being succeeded
promptly by a post-effective amendment to such Shelf Registration Statement that
cures such failure and that is itself declared effective (each such event
referred to in clauses (i) through (iii), a "Registration Default"), the Company
hereby agrees to pay, as liquidated damages, and not as a penalty, during any
period during which a Registration Default shall have occurred and be
continuing, an additional amount (the "Liquidated Damages") which is equal to
one-quarter of one percent (25 basis points) per $1,000 principal amount of
Notes or $2.50 per 20.7469 shares of Common Stock (subject to adjustment in the
event of stock splits, stock recombination's, stock dividends and the like)
constituting Transfer Restricted Securities for each 90-day period until the
applicable Registration Statement is filed and the applicable Registration
Statement is declared effective or the Shelf Registration Statement again become
effective or usable, as the case may be, but in no event shall the amount of
Liquidated Damages exceed one and one-quarter percent (125 basis points) per
$1,000 principal amount of Notes or $12.50 per 20.7469 shares of Common Stock
(subject to adjustments in certain instances as set forth above) constituting
Transfer Restricted Securities. All accrued Liquidated Damages shall be paid by
the Company to the Record Holders by wire transfer of immediately available
funds or by federal funds check on each Damages Payment Date.
All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such Note shall have
been satisfied in full.
Section 5. Registration Procedures
(a) Shelf Registration Statement. In connection with the Shelf
Registration
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Statement, the Company shall comply with all the provisions of
Section 5(b) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof, and pursuant
thereto the Company will as expeditiously as possible prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Securities Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended
method or methods of distribution thereof.
(b) General Provisions. In connection with any Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities, the Company shall:
(i) use its best efforts to keep such Registration
Statement continuously effective and provide all requisite financial statements
for the period specified in Section 3 of this Agreement; upon the occurrence of
any event that would cause any such Registration Statement or the Prospectus
contained therein (A) to contain a material misstatement or omission or (B) not
to be effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company shall file promptly an
appropriate amendment to such Registration Statement, in the case of clause (A),
correcting any such misstatement or omission, and, in the case of either clause
(A) or (B), use its best efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus to become
usable for their intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable period
set forth in Section 3 hereof, or such shorter period as will terminate when all
Transfer Restricted Securities covered by such Registration Statement have been
sold or cease to be Transfer Restricted Securities; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Securities Act in a
timely manner; and comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Registration Statement
or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B) of any
request by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Securities
Act or of the suspension by any state securities commission of the qualification
of the Transfer Restricted Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any statement
of a material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the
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Registration Statement or the Prospectus in order to make the statements therein
not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Company shall
use its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) furnish without charge to each of the Initial
Purchasers, each selling Holder named in any Registration Statement, and each of
the underwriter(s), if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or Prospectus (including all
documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review of such
Holders and underwriter(s) in connection with such sale, if any, for a period of
at least five business days, and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus to which an Initial Purchaser of Transfer Restricted
Securities covered by such Registration Statement or the underwriter(s), if any,
shall reasonably object in writing within five business days after the receipt
thereof (such objection to be deemed timely made upon confirmation of telecopy
transmission within such period). The objection of an Initial Purchaser or
underwriter, if any, shall be deemed to be reasonable if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission;
(v) within two business days following the filing of
any document that is to be incorporated by reference into a Registration
Statement or Prospectus, provide copies of such document (or to provide
notification of the fact and nature of the filing) to the Initial Purchasers,
the Special Counsel, and to the underwriter(s), if any, participating in a
disposition pursuant to such Registration Statement or Prospectus;
(vi) make available at reasonable times for
inspection by the Initial Purchasers, any managing underwriter participating in
any disposition pursuant to such Registration Statement, the Special Counsel and
any attorney or accountant retained by such Initial Purchasers or any of the
underwriter(s), all financial and other records, pertinent corporate documents
and properties of the Company and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such Initial
Purchaser, underwriter, attorney or accountant in connection with such
Registration Statement subsequent to the filing thereof and prior to its
effectiveness; following the effectiveness of such Registration Statement, make
appropriate representatives of the Company available at reasonable times and on
reasonable notice to the Special Counsel and to representatives of the
underwriter(s), if any, participating in a disposition pursuant to such
Registration Statement for reasonable and customary due diligence discussions
relating to the Registration Statement, including any disclosure incorporated
therein by reference;
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if necessary,
such information regarding the selling Holders or the underwriters as such
selling Holders and underwriter(s), if any, may reasonably request to have
included therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being sold to
such underwriter(s), the purchase price being paid therefor, and
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any other terms of the offering of the Transfer Restricted Securities to be sold
in such offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Company is notified of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(viii) cause the Transfer Restricted Securities
covered by the Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate principal
amount of Notes covered thereby or the underwriter(s), if any, provided that the
requesting Holders will reimburse the Company for any out of pocket expenses
incurred in connection with such rating;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each amendment thereto,
including financial statements and schedules, all documents incorporated by
reference therein and all exhibits (including exhibits incorporated therein by
reference), provided that the Company need not furnish documents or exhibits
incorporated by reference if previously furnished to such Persons or filed with
the Commission more than one year prior to such filing;
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons reasonably may request; the Company hereby consents to the use
of the Prospectus and any amendment or supplement thereto by each of the selling
Holders and each of the underwriter(s), if any, in connection with the offering
and the sale of the Transfer Restricted Securities covered by the Prospectus or
any amendment or supplement thereto;
(xi) enter into such agreements (including a
customary underwriting agreement), and make such customary representations and
warranties, and take all such other reasonable actions in connection therewith
in order to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any Registration Statement contemplated by this
Agreement, all to such extent as may reasonably be requested by any Initial
Purchaser or by any Holder of Transfer Restricted Securities or underwriter in
connection with any sale or resale pursuant to any Registration Statement
contemplated by this Agreement; and whether or not an underwriting agreement is
entered into and whether or not the registration is an Underwritten
Registration, the Company shall:
(A) furnish to each Initial Purchaser, the
Special Counsel, and to the extent requested in writing, each
selling Holder and each underwriter, if any, in such substance
and scope as they may reasonably request and as are
customarily made by issuers to underwriters in primary
underwritten offerings, upon the date of the effectiveness of
the Shelf Registration Statement:
(1) a certificate, dated the date of
effectiveness of the Shelf Registration Statement signed by
(y) the President or any Vice President and (z) a principal
financial or accounting officer of the Company confirming, as
of the date thereof, the matters set forth in paragraphs (i),
(ii) and (iii) of Section 5 (e) of the Purchase Agreement and
such other matters as such parties may reasonably request;
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(2) a customary opinion, dated the
date of effectiveness of the Shelf Registration Statement of
counsel for the Company, covering the matters set forth in
paragraph (c) of Section 5 of the Purchase Agreement (to the
extent applicable to any sale or resale contemplated by this
Agreement) and such other matters as such parties may
reasonably request, and in any event including a statement to
the effect that such counsel has participated in conferences
with officers and other representatives of the Company,
representatives of the independent public accountants for the
Company, the Initial Purchasers' representatives and the
Initial Purchasers' counsel in connection with the preparation
of such Registration Statement and the related Prospectus and
have considered the matters required to be stated therein and
the statements contained therein, although such counsel has
not independently verified the accuracy, completeness or
fairness of such statements; and that such counsel advises
that, on the basis of the foregoing (relying as to materiality
upon facts provided to such counsel by officers and other
representatives of the Company and without independent check
or verification), no facts came to such counsel's attention
that caused such counsel to believe that the applicable
Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became
effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or
that the Prospectus contained in such Registration Statement,
as of its date, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading. Without limiting
the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness
of the financial statements, notes and schedules and other
financial data included in any Registration Statement
contemplated by this Agreement or the related Prospectus; and
(3) a customary comfort letter,
dated as of the date of effectiveness of the Shelf
Registration Statement, from the Company's independent
accountants, in the customary form and covering matters of the
type customarily covered in comfort letters by underwriters in
connection with primary underwritten offerings, and affirming
the matters set forth in the comfort letters delivered
pursuant to Section 5(a) of the Purchase Agreement, without
exception;
(B) set forth in full or incorporate by
reference in the underwriting agreement, if any, the
indemnification provisions and procedures of Section 8 hereof
with respect to all parties to be indemnified pursuant to said
Section; and
(C) deliver such other documents and
certificates as may be reasonably requested by such parties to
evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement
or other agreement entered into by the Company pursuant to
this clause (xi), if any.
If at any time the representations and warranties of the Company
contemplated in clause (A)(1) above cease to be true and correct, the Company
shall so advise the Initial Purchasers and the underwriter(s), if any, and each
selling Holder promptly and, if requested by such Persons, shall
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confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if any, and
their respective counsel in connection with the registration and qualification
of the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or underwriter(s) may reasonably
request and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the Shelf Registration Statement; provided,
however, that the Company shall not be required to register or qualify as a
foreign corporation where it is not then so qualified or to take any action that
would subject it to the service of process in suits or to taxation, other than
as to matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not then so subject;
(xiii) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends; and enable such Transfer Restricted Securities
to be in such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least five business days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);
(xiv) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the underwriter(s), if any, to
consummate the disposition of such Transfer Restricted Securities;
(xv) if any fact or event contemplated by Section 5(b)(iii)(D)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration Statement and
provide the Trustee under the Indenture with printed certificates for the
Transfer Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xvii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is required
to be retained in accordance with the rules and regulations of the NASD, and use
its reasonable best efforts to cause such Registration Statement to become
effective and approved by such governmental agencies or authorities as may be
necessary to enable the Holders selling Transfer Restricted Securities to
consummate the disposition of such Transfer Restricted Securities;
(xviii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally available
to its security holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited) for
the twelve-month period (A) commencing at the end of any fiscal quarter in
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which Transfer Restricted Securities are sold to underwriters in a firm or best
efforts Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration Statement;
(xix) cause the Indenture to be qualified under the Trust
Indenture Act not later than the effective date of the first Registration
Statement required by this Agreement, and, in connection therewith, cooperate
with the Trustee and the Holders of Securities to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in accordance
with the terms of the Trust Indenture Act; and to execute and use its best
efforts to cause the Trustee to execute all documents that may be required to
effect such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely manner;
(xx) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange or other trading
market on which similar securities issued by the Company are then listed if
requested by the Holders of a majority in aggregate principal amount of
Securities or the managing underwriter(s), if any; and
(xxi) provide promptly to each Holder upon request each
document filed by the Company with the Commission pursuant to the requirements
of Section 13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company of the existence of any fact
of the kind described in Section 5(b)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 5(b)(xv) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 hereof shall
be extended by the number of days during the period from and including the date
of the giving of such notice pursuant to Section 5(b)(iii)(D) hereof to and
including the date when each selling Holder covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 5(b)(xv) hereof or shall have received the
Advice; however, no such extension shall be taken into account in determining
whether Liquidated Damages are due pursuant to Section 4 hereof or the amount of
such Liquidated Damages, it being agreed that the Company's option to suspend
use of a Registration Statement pursuant to this paragraph shall be treated as a
Registration Default for purposes of Section 4.
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Section 6. Registration Expenses
(a) Subject to Section 6(b) below, all expenses incident to
the Company's performance of or compliance with this Agreement will be borne by
the Company regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and expenses
(including filings made by any Initial Purchaser or Holder with the NASD (and,
if applicable, the fees and expenses of any "qualified independent underwriter"
and its counsel that may be required by the rules and regulations of the NASD));
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all expenses of printing, messenger and delivery
services and telephone; (iv) all fees and disbursements of counsel for the
Company and, subject to Section 6(b) below, the Holders of Transfer Restricted
Securities; and (v) all fees and disbursements of independent certified public
accountants of the Company (including the expenses of any special audit and
comfort letters required by or incident to such performance).
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
(b) In connection with any Registration Statement required by
this Agreement, the Company will reimburse the Initial Purchasers and the
Holders of Transfer Restricted Securities being registered pursuant to the Shelf
Registration Statement, for the reasonable fees and disbursements of not more
than one counsel, who shall be the Special Counsel.
Section 7. Indemnification
(a) The Company agrees to indemnify and hold harmless (i) each
Holder and (ii) each person, if any, who controls (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) any Holder (any of
the persons referred to in this clause (ii) being hereinafter referred to as a
"controlling person") and (iii) the respective officers, directors, partners,
employees, representatives and agents of any Holder or any controlling person
(any person referred to in clause (i), (ii) or (iii) may hereinafter be referred
to as an "Indemnified Holder"), to the fullest extent lawful, from and against
any and all losses, claims, damages, liabilities, judgments, actions and
expenses (including without limitation and as incurred, reimbursement of all
reasonable costs of investigating, preparing, pursuing, settling, compromising,
paying or defending any claim or action, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, including the
reasonable fees and expenses of counsel to any Indemnified Holder), joint or
several, directly or indirectly caused by, related to, based upon, arising out
of or in connection with any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus (or any
amendment or supplement thereto), or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by an untrue statement or omission
or alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to any of the Holders furnished in writing
to the Company by any of the Holders expressly for use therein. This indemnity
agreement shall be in addition to any liability which the Company may otherwise
have.
In case any action or proceeding (including any governmental
or regulatory
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investigation or proceeding) shall be brought or asserted against any of the
Indemnified Holders with respect to which indemnity may be sought against the
Company such Indemnified Holder (or the Indemnified Holder controlled by such
controlling person) shall promptly notify the Company in writing (provided, that
the failure to give such notice shall not relieve the Company of its obligations
pursuant to this Agreement except to the extent the Company is prejudiced by the
failure to give such notice). Such Indemnified Holder shall have the right to
employ its own counsel in any such action and the reasonable fees and expenses
of such counsel shall be paid, as incurred, by the Company (until it is
determined that an Indemnified Holder is not entitled to indemnification
hereunder). The Company shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for such Indemnified Holders, which firm shall be designated by the Holders. The
Company shall be liable for any settlement of any such action or proceeding
effected with the Company's prior written consent, which consent shall not be
withheld unreasonably, and the Company agrees to indemnify and hold harmless any
Indemnified Holder from and against any loss, claim, damage, liability or
expense by reason of any settlement of any action effected with the written
consent of the Company. The Company shall not, without the prior written consent
of each Indemnified Holder, settle or compromise or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened action,
claim, litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any Indemnified Holder is a
party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Holder from all liability
arising out of such action, claim, litigation or proceeding.
(b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the Company and its
directors, officers of the Company who sign a Registration Statement, and any
person controlling (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) the Company, and the respective officers,
directors, partners, employees, representatives and agents of each such person,
to the same extent as the foregoing indemnity from the Company to each of the
Indemnified Holders, but only with respect to claims and actions based on
information relating to such Holder furnished in writing by such Holder
expressly for use in any Registration Statement. In case any action or
proceeding shall be brought against the Company or its directors or officers or
any such controlling person in respect of which indemnity may be sought against
a Holder of Transfer Restricted Securities, such Holder shall have the rights
and duties given the Company and the Company or its directors or officers or
such controlling person shall have the rights and duties given to each Holder by
the preceding paragraph. In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the proceeds received
by such Holder upon the sale of the Securities giving rise to such
indemnification obligation.
(c) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under Section 7(a) or Section 7(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities, judgments, actions or expenses
referred to therein, then each applicable 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 or expenses in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand, and the Holders on
the other hand, from the Initial Placement (which in the case of the Company
shall be deemed to be equal to the total net proceeds from the Initial Placement
as set forth on the cover page of the
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Offering Memorandum), the amount of Liquidated Damages which did not become
payable as a result of the filing of the Registration Statement resulting in
such losses, claims, damages, liabilities, judgments actions or expenses, and
such Registration Statement, or if such allocation is not permitted by
applicable law, the relative fault of the Company on the one hand, and of the
Indemnified Holder, on the other hand, 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 Company on the one hand and of the Indemnified Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Indemnified Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 7(a),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
The Company and each Holder of Transfer Restricted Securities
agree that it would not be just and equitable if contribution pursuant to this
Section 7(c) were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Xxxxxxx 0, xxxx of the Holders (and its related Indemnified Holders) shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total discount received by such Holder or the Initial Purchaser from
whom it ultimately acquired the Notes exceeds the amount of any damages which
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders' obligations to
contribute pursuant to this Section 7(c) are several in proportion to the
respective principal amount of Notes held by each of the Holders hereunder and
not joint.
Section 8. Rule 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Securities Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
-13-
Section 9. Participation In Underwritten Registrations
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such 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 underwriting arrangements.
Section 10. Selection Of Underwriters
Notwithstanding any other provision of this Agreement, the Holders of
Transfer Restricted Securities covered by the Shelf Registration Statement who
desire to do so may sell such Transfer Restricted Securities in an Underwritten
Offering, provided that the Company shall not be required to file more than one
Shelf Registration Statement for an Underwritten Offering pursuant to this
Agreement. In any such Underwritten Offering, the investment banker or
investment bankers and manager or managers that will administer the offering
will be selected by the Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities included in such offering; provided, that
such investment bankers and managers must be reasonably satisfactory to the
Company.
Section 11. Miscellaneous
(a) Remedies. The Company hereby agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Agreement and hereby agrees to waive the defense
in any action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or
after the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Except as disclosed
in the Company's filings with the Commission or as otherwise disclosed to the
Initial Purchasers or their counsel prior to the date of this Agreement, the
Company has not previously entered into any agreement granting any registration
rights with respect to its securities to any Person. The rights of Holders under
this Agreement shall be subject to any limitations and restrictions required in
order to comply with the terms of any registration right previously granted by
the Company and disclosed in its filings with the Commission or as otherwise
disclosed to the Initial Purchasers or their counsel prior to the date of this
Agreement. Notwithstanding any other provision of this Agreement, with respect
to any other securities of the Company for which the Company has granted
registration rights prior to the date of this Agreement, the Transfer Restricted
Securities shall not be registered and sold at the same time as such other
securities are being sold pursuant to an underwritten offering if the managing
underwriter of such offering believes that the sale of the Transfer Restricted
Securities could have a material adverse effect on the amount of, or price at
which, such other securities being registered can be sold; provided that any
such limitations on the ability of Holders to sell Transfer Restricted
Securities pursuant to a Registration Statement shall be taken into account for
purposes of determining whether there has been a Registration Default.
(c) Amendments and Waivers. The provisions of this Agreement
may not be
-14-
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities; provided that, with respect to any matter that
directly or indirectly affects the rights of any Initial Purchaser hereunder,
the Company shall obtain the written consent of each such Initial Purchaser with
respect to which such amendment, qualification, supplement, waiver, consent or
departure is to be effective.
(d) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
(ii) if to the Company
Action Performance Companies, Inc.
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Chief Financial Officer
With a copy to:
X'Xxxxxx, Cavanagh, Anderson,
Xxxxxxxxxxxxx & Xxxxxxxx
Xxx Xxxx Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt acknowledged, if telecopied; and on the next
business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities from such Holder.
-15-
(f) 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.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
-16-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Action Performance Companies, Inc.
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chairman of the Board,
President, and Chief
Executive Officer
The foregoing Registration Rights Agreement is hereby
confirmed and accepted as of the date first above written.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
CIBC Xxxxxxxxxxx Corp.
EVEREN Securities, Inc.
Xxxxx Xxxxxxx Inc.
By: NATIONSBANC XXXXXXXXXX SECURITIES LLC
By: /s/ Xxx Xxxxxxx
-------------------------------
Name: Xxx Xxxxxxx
Title: Senior Managing Director
-17-
