EXHIBIT 4(i)B
REGISTRATION RIGHTS AGREEMENT
Dated as of December 16, 1997
between
FARMLAND INDUSTRIES, INC.
and
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
as Initial Purchaser
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of December 16, 1997 between FARMLAND INDUSTRIES, INC., a Kansas
corporation (the "Company"), and MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED (the "Initial Purchaser").
This Agreement is made pursuant to the Purchase Agreement, dated
December 16, 1997 (the "Purchase Agreement"), between the Company, as issuer of
the 8% Series A Cumulative Redeemable Preferred Shares (par value $25 per share)
(liquidation preference equivalent to $50 per share) (the "Securities"), the
Company and the Initial Purchaser, which provides for, among other things, the
sale by the Company to the Initial Purchaser of 2,000,000 Securities. In order
to induce the Initial Purchaser to enter into the Purchase Agreement, the
Company has agreed to provide to the Initial Purchaser and their direct and
indirect transferees the registration rights set forth in this Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
Definitions. As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"Advice" shall have the meaning set forth in the last paragraph of Section
3 hereof.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in The City of New York are authorized or required by
law or executive order to remain closed.
"Closing Time" shall mean the Closing Time as defined in the Purchase
Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
"Effectiveness Period" shall have the meaning set forth in Section 2(a)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Holder" shall mean the Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities.
"Initial Purchaser" shall have the meaning set forth in the preamble to
this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(m) hereof.
"Issue Date" shall mean December 19, 1997, the date of original issuance of
the Securities.
"Liquidated Damages" shall have the meaning set forth in Section 2(d)
hereof.
"Majority Holders" shall mean the Holders of a majority of the aggregate
liquidation preference of outstanding Securities.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, limited liability company, or a government or
agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in the Shelf Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all documents incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble to
this Agreement.
"Records" shall have the meaning set forth in Section 3(m) hereof.
"Registrable Securities" shall mean the Securities; provided, however, that
Securities shall cease to be Registrable Securities when (i) a Shelf
Registration Statement with respect to such Securities for the resale thereof
shall have been declared effective under the Securities Act and such Securities
shall have been disposed of pursuant to such Shelf Registration Statement, (ii)
such Securities shall have been sold to the public pursuant to Rule 144 (or any
similar provision then in force, but not Rule 144A) under the Securities Act or
are eligible to be sold without restriction as contemplated by Rule 144(k) or
(iii) such Securities shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities Dealers,
Inc. (the "NASD") registration and filing fees, including, if applicable, the
fees and expenses of any "qualified independent underwriter" (and its counsel)
that is required to be retained by any Holder of Registrable Securities in
accordance with the rules and regulations of the NASD, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of one counsel for all
underwriters or Holders as a group in connection with blue sky qualification of
any of the Registrable Securities) and compliance with the rules of the NASD,
(iii) all expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing the Shelf Registration Statement, any
Prospectus and any amendments or supplements thereto, and in preparing or
assisting in preparing, printing and distributing any underwriting agreements,
securities sales agreements and other documents relating to the performance of
and compliance with this Agreement, (iv) all rating agency fees and (v) any fees
and disbursements of its counsel or accountants required by or incident to the
performance of and compliance with this Agreement.
"Rule 144(k) Period" shall mean the period of two years (or such shorter
period as may hereafter be referred to in Rule 144(k) under the Securities Act
(or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble to this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Shelf Registration" shall mean a registration effected pursuant to Section
2(a) hereof.
"Shelf Registration Statement" shall mean the "shelf" registration
statement of the Company pursuant to the provisions of Section 2(a) hereof which
covers all of the Registrable Securities on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the SEC,
and all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all documents incorporated by reference
therein.
1. Registration Under the Securities Act.
(a) Shelf Registration. The Company shall use its best efforts to
cause to be filed, as promptly as practicable after the Issue Date, but in any
event within 150 days after the Issue Date, a Shelf Registration Statement
providing for the sale by the Holders of all of the Registrable Securities;
provided, however, that, notwithstanding the foregoing, upon the request of the
Initial Purchaser with respect to any Registrable Securities held by it, the
Company shall use its best efforts to cause to be filed such Shelf Registration
Statement within 45 days of such request (which shall be no earlier than 75 days
after the Closing Time). In addition, the Company shall use its best efforts to
have such Shelf Registration Statement declared effective by the SEC as promptly
as practicable after filing thereof, but in any event within 180 days after the
Issue Date (or 60 days after the filing of a Shelf Registration Statement
pursuant to a request from the Initial Purchaser). No Holder of Registrable
Securities shall be entitled to include any of its Registrable Securities in the
Shelf Registration pursuant to this Agreement unless and until such Holder
agrees in writing to be bound by all of the provisions of this Agreement
applicable to such Holder and furnishes to the Company in writing, within 15
days after receipt of a request therefor, such information as the Company may,
after conferring with counsel with regard to information relating to Holders
that would be required by the SEC to be included in such Shelf Registration
Statement or Prospectus included therein, reasonably request for inclusion in
the Shelf Registration Statement or Prospectus included therein. Each Holder as
to which the Shelf Registration is being effected agrees to furnish to the
Company all information with respect to such Holder necessary to make the
information previously furnished to the Company by such Holder not materially
misleading. The Initial Purchaser agrees to furnish to the Company from time to
time, upon the Company's request, information in its possession regarding the
beneficial owners of the Securities required for inclusion in the Shelf
Registration Statement, including, but not limited to, the names and addresses,
in order to assist the Company in its preparation of the Shelf Registration
Statement.
Subject to the provisions of Section 3(i) hereof, the Company agrees
to use its best efforts to keep the Shelf Registration Statement continuously
effective and usable for resales for the Rule 144(k) Period (subject to
extension pursuant to the last paragraph of Section 3 hereof), or for such
shorter period which will terminate when all of the Securities covered by the
Shelf Registration Statement have been sold pursuant to the Shelf Registration
Statement or cease to be Registrable Securities (the "Effectiveness Period").
The Company shall not permit any securities other than (i) with respect to
holders of the Company securities currently possessing incidental registration
rights and (ii) Registrable Securities to be included in the Shelf Registration.
The Company will, in the event the Shelf Registration Statement is declared
effective, provide to each Holder a reasonable number of copies of the
Prospectus which is a part of the Shelf Registration Statement, notify each such
Holder when the Shelf Registration Statement has become effective and take such
other actions as are required to permit certain unrestricted resales of the
Registrable Securities. The Company further agrees to supplement or amend the
Shelf Registration Statement if and as required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registrations, and the Company agrees to
furnish to the Holders of Registrable Securities copies of any such supplement
or amendment promptly after its being used or filed with the SEC.
(a) Expenses. The Company shall pay all Registration Expenses in
connection with the Shelf Registration Statement filed pursuant to Section 2(a)
hereof and will reimburse the Initial Purchaser for the fees and disbursements
of any single counsel designated in writing by the Majority Holders to act as
counsel for the Holders of the Registrable Securities in connection with the
Shelf Registration Statement, which counsel shall be reasonably satisfactory to
the Company. Except as provided herein, each Holder shall pay all expenses of
its counsel, underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement.
(b) Effective Shelf Registration Statement. The Shelf Registration
Statement will not be deemed to have become effective unless it has been
declared effective by the SEC; provided, however, that if, after it has been
declared effective, the offering of Registrable Securities pursuant to such
Shelf Registration Statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or court,
such Shelf Registration Statement will be deemed not to have been effective
during the period of such interference, until the offering of Registrable
Securities pursuant to such Shelf Registration Statement may legally resume.
The Company will be deemed not to have used its best efforts to cause the Shelf
Registration Statement to become, or to remain, effective during the requisite
period if it voluntarily takes any action that would result in any such Shelf
Registration Statement not being declared effective or that would result in the
Holders of Registrable Securities covered thereby not being able to offer and
sell such Registrable Securities during that period, unless such action is
required by applicable law or relates to a transaction of the type contemplated
by the proviso to Section 3(i) hereof.
(c) Liquidated Damages. In the event that:
(i) the Shelf Registration Statement is not filed with the SEC on
or prior to the date required under Section 2(a) then, commencing on the day
after such required filing date hereof, liquidated damages ("Liquidated
Damages") shall be payable at a rate of 0.50% per annum on the liquidation
preference of the Securities;
(ii) the Shelf Registration Statement is not declared effective
by the SEC on or prior to the 180th day after the Issue Date (or the 60th day
after the date such Shelf Registration Statement was required to be filed
pursuant to Section 2(a) hereof in the case of the filing of a Shelf
Registration Statement pursuant to a request from the Initial Purchaser), then,
commencing on the 181st day after the Issue Date (or the 61st day after the
filing in the case of the filing of a Shelf Registration Statement pursuant to a
request from the Initial Purchaser) Liquidated Damages shall be payable at a
rate of 0.50% per annum on the liquidation preference of the Securities; or
(iii) the Shelf Registration Statement has been declared
effective and such Shelf Registration Statement ceases to be effective or usable
for resales at any time prior to the expiration of the Rule 144(k) Period (other
than after such time as all Securities have been disposed of thereunder or
otherwise cease to be Registered Securities), except as permitted pursuant to
Section 3(i) hereof with respect to suspensions under circumstances relating to
the negotiation or completion of any transaction being contemplated by the
Company at such time, then, commencing on the day such Shelf Registration
Statement ceases to be effective or usable for resales, Liquidated Damages shall
be payable at a rate of 0.50% per annum on the liquidation preference of the
Securities;
provided, however, that the Liquidated Damages may not exceed in the aggregate
0.50% per annum of the liquidation preference of the Securities ; provided,
further, however, that (1) upon the filing of the Shelf Registration Statement
(in the case of clause (i) above), (2) upon the effectiveness of the Shelf
Registration Statement (in the case of clause (ii) above), or (3) upon such time
as the Shelf Registration Statement which had ceased to remain effective or
usable for resales again becomes effective and usable for resales (in the case
of clause (iii) above), Liquidated Damages on the liquidation preference of the
Securities as a result thereof shall cease to be payable.
Any amounts of Liquidated Damages due pursuant to Section 2(d)(i), (ii) or
(iii) above will be payable in cash on the next succeeding dividend payment date
to Holders on the relevant record date for the payment of dividends.
(d) Specific Enforcement. Without limiting the remedies available to
the Holders, the Company acknowledges that any failure by it to comply with its
obligations under Section 2(a) hereof may result in material irreparable injury
to the Holders for which there is no adequate remedy at law, that it would not
be possible to measure damages for such injuries precisely and that, in the
event of any such failure, any Holder may obtain such relief as may be required
to specifically enforce the Company's obligations under Section 2(a) hereof.
Registration Procedures. In connection with the obligations of the
Company with respect to the Shelf Registration Statement pursuant to Section
2(a) hereof, the Company shall use its best efforts to:
(a) prepare and file with the SEC a Shelf Registration Statement as
prescribed by Sections 2(a) hereof within the relevant time period
specified in Section 2(a) hereof on the appropriate form under the
Securities Act, which form shall (i) be selected by the Company, (ii) be
available for the sale of the Registrable Securities by the selling Holders
thereof, and (iii) comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith; and use its best efforts to
cause such Shelf Registration Statement to become effective and remain
effective and, usable for resales in accordance with Section 2 hereof;
provided, however, that, before filing the Shelf Registration Statement or
Prospectus or any amendments or supplements thereto, the Company shall
furnish to and afford the Holders of the Registrable Securities covered by
such Shelf Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed, except
that the foregoing provision shall not apply to regular periodic reports
filed with the SEC on Form 10-K or 10-Q or current reports on Form 8-K (or
any similar successor forms), except to the extent a filing on Form 8-K
contains material which describes a change in the terms, preferences or
rights of the Securities. The Company shall not file any Shelf
Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an opportunity to
review prior to the filing of such document if the Majority Holders, their
counsel or the managing underwriters, if any, shall reasonably object in a
timely manner; prepare and file with the (SEC such amendments and post-
effective amendments to the Shelf Registration Statement as may be
necessary to keep such Shelf Registration Statement effective for the
Effectiveness Period; and cause each Prospectus to be supplemented, if so
determined by the Company or requested by the SEC, by any required
prospectus supplement and as so supplemented to be filed pursuant to Rule
424 (or any similar provision then in force) under the Securities Act, and
comply with the provisions of the Securities Act, the Exchange Act and the
rules and regulations promulgated thereunder applicable to it with respect
to the disposition of all securities covered by the Shelf Registration
Statement during the Effectiveness Period in accordance with the intended
method or methods of distribution by the selling Holders thereof;
(e) (i) notify each Holder of Registrable Securities included in the
Shelf Registration Statement, at least three Business Days prior to filing,
that the Shelf Registration Statement with respect to the Registrable
Securities is being filed and advising such Holder that the distribution of
Registrable Securities will be made in accordance with the method selected
by the Majority Holders; (ii) furnish to each Holder of Registrable
Securities included in the Shelf Registration Statement and to each
underwriter of an underwritten offering of Registrable Securities, if any,
without charge, as many copies of each Prospectus, including each
preliminary prospectus, and any amendment or supplement thereto, and such
other documents as such Holder or underwriter may reasonably request, in
order to facilitate the public sale or other disposition of the Registrable
Securities; and (iii) consent to the use of the Prospectus or any amendment
or supplement thereto by each of the selling Holders of Registrable
Securities included in the Shelf Registration Statement in connection with
the offering and sale of the Registrable Securities covered by the
Prospectus or any amendment or supplement thereto;
(f) register or qualify the Registrable Securities under all
applicable state securities or "blue sky" laws of such jurisdictions by the
time the applicable Shelf Registration Statement is declared effective by
the SEC as any Holder of Registrable Securities covered by the Shelf
Registration Statement and each underwriter of an underwritten offering of
Registrable Securities shall reasonably request in writing in advance of
such date of effectiveness, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Holder and
underwriter to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the
Company shall not be required to (i) qualify as a foreign corporation or as
a dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (ii) file any general
consent to service of process in any jurisdiction where it would not
otherwise be subject to such service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not then so subject;
(g) promptly notify each Holder of Registrable Securities, their
counsel and the managing underwriters, if any, and promptly confirm such
notice in writing (i) when the Shelf Registration Statement has become
effective and when any post-effective amendments thereto become effective,
(ii) of any request by the SEC or any state securities authority for
amendments and supplements to the Shelf Registration Statement or
Prospectus or for additional information after the Shelf Registration
Statement has become effective, (iii) of the issuance by the SEC or any
state securities authority of any stop order suspending the effectiveness
of the Shelf Registration Statement or the qualification of the Registrable
Securities in any jurisdiction described in Section 3(d) hereof or the
initiation of any proceedings for that purpose, (iv) if, between the
effective date of the Shelf Registration Statement and the closing of any
sale of Registrable Securities covered thereby, the representations and
warranties of the Company contained in any purchase agreement, securities
sales agreement or other similar agreement cease to be true and correct in
all material respects, (v) of the happening of any event or the failure of
any event to occur or the discovery of any facts, during the Effectiveness
Period, which makes any statement made in the Shelf Registration Statement
or the related Prospectus untrue in any material respect or which causes
such Shelf Registration Statement or Prospectus to omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (vi) of the
reasonable determination of the Company that a post-effective amendment to
the Shelf Registration Statement would be appropriate;
(h) obtain the withdrawal of any order suspending the effectiveness
of the Shelf Registration Statement at the earliest possible moment;
(i) furnish to each Holder of Registrable Securities included within
the coverage of the Shelf Registration Statement, without charge, at least
one conformed copy of the Shelf Registration Statement relating to such
Shelf Registration and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(j) cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends
and registered in such names as the selling Holders or the underwriters may
reasonably request at least two Business Days prior to the closing of any
sale of Registrable Securities pursuant to the Shelf Registration
Statement;
(k) promptly after the occurrence of any event specified in Section
3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, prepare a supplement or
post-effective amendment to the Shelf Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities, such Prospectus will not include any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; and to notify each Holder to suspend use of
the Prospectus as promptly as practicable after the occurrence of such an
event, and each Holder hereby agrees to suspend use of the Prospectus until
the Company has amended or supplemented the Prospectus to correct such
misstatement or omission provided, however, the Company will be permitted
to suspend the use of the Prospectus for one or more periods not to exceed
90 days in the aggregate in any twelve-month period under circumstances
relating to corporate developments or the negotiation or completion of any
transaction being contemplated by the Company at such time;
(l) promptly after the filing of any document which is to be
incorporated by reference into a Shelf Registration Statement or a
Prospectus subsequent to the initial filing of the Shelf Registration
Statement, provide a reasonable number of copies of such document to the
Holders; and make such of the representatives of the Company as shall be
reasonably requested by the Holders of Registrable Securities or the
Initial Purchaser on behalf of such Holders available for discussion of
such document;
(m) enter into such agreements (including underwriting agreements) as
are customary in underwritten offerings and take all such other appropriate
actions in connection therewith as are reasonably requested by the Holders
of at least 25% in aggregate liquidation preference of the Registrable
Securities in order to expedite or facilitate the registration or the
disposition or the Registrable Securities;
(n) whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration, if
requested by (x) the Initial Purchaser, in the case where the Initial
Purchaser holds Securities acquired by it as part of its initial placement
and (y) Holders of at least 25% in aggregate liquidation preference of the
Registrable Securities covered thereby: (i) make such representations and
warranties to Holders of such Registrable Securities and the underwriters
(if any), with respect to the business of the Company and its subsidiaries
as then conducted and with respect to the Shelf Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated
by reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings, and confirm the same if and when
requested; (ii) furnish customary closing documentation in form and
substance reasonably requested and reasonably satisfactory to the managing
underwriters (if any) and the Holders of a majority in amount of the
Registrable Securities being sold; and (iii) if an underwriting agreement
is entered into, the same shall contain indemnification provisions and
procedures no less favorable than those set forth in Section 4 hereof (or
such other provisions and procedures acceptable to Holders of a majority in
aggregate liquidation preference of Registrable Securities covered by such
Shelf Registration Statement and the managing underwriters) customary for
such agreements with respect to all parties to be indemnified pursuant to
said Section (including, without limitation, such underwriters and selling
Holders); and in the case of an underwritten registration, the above
requirements shall be satisfied at each closing under the related
underwriting agreement or as and to the extent required thereunder
provided, however that, except as specified in Section 2(b), the Company is
not obligated to pay the costs and expenses of counsel for the selling
Holders or accountants' "cold comfort" letters in connection with any such
underwriting and the officers and directors of the Company are not
obligated to participate in marketing efforts on behalf of such Holders;
(o) make reasonably available for inspection by any selling Holder of
Registrable Securities who certifies to the Company that it has a current
intention to sell Registrable Securities pursuant to the Shelf
Registration, any underwriter participating in any such disposition of
Registrable Securities, if any, and any attorney, accountant or other agent
retained by any such selling Holder or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during the Company's
normal business hours, all financial and other records, pertinent corporate
and partnership documents and properties of the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably necessary
to enable them to exercise any applicable due diligence responsibilities,
and cause the Company and its subsidiaries to supply all relevant
information in each case reasonably requested by any such Inspector in
connection with the Shelf Registration Statement; records and information
which the Company determines, in good faith, to be confidential and any
Records and information which it notifies the Inspectors are confidential
shall not be disclosed to any Inspector except where (i) the disclosure of
such Records or information is necessary to avoid or correct a material
misstatement or omission in such Shelf Registration Statement, (ii) the
release of such Records or information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction or is necessary in
connection with any action, suit or proceeding or (iii) such Records or
information previously has been made generally available to the public;
each selling Holder of such Registrable Securities will be required to
agree in writing that Records and information obtained by it as a result of
such inspections shall be deemed confidential and shall not be used by it
as the basis for any market transactions in the securities of the Company
unless and until such is made generally available to the public through no
fault of an Inspector or a selling Holder; and each selling Holder of such
Registrable Securities will be required to further agree in writing that it
will, upon learning that disclosure of such Records or information is
sought in a court of competent jurisdiction, or in connection with any
action, suit or proceeding, give notice to the Company and allow the
Company at its expense to undertake appropriate action to prevent
disclosure of the Records and information deemed confidential;
(p) comply with all applicable rules and regulations of the SEC so
long as any provision of this Agreement shall be applicable and make
generally available to its securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no
later than 45 days after the end of any 12-month period (or 90 days after
the end of any 12-month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Shelf Registration Statement, which
statements shall cover said 12-month periods, provided that the obligations
under this Section 3(n) shall be satisfied by the timely filing of
quarterly and annual reports on Forms 10-Q and 10-K under the Exchange Act;
(q) cooperate with each seller of Registrable Securities covered by
the Shelf Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with
the NASD;
(r) take all other steps necessary to effect the registration of the
Registrable Securities covered by the Shelf Registration Statement
contemplated hereby; and
(s) the Company may require each seller of Registrable Securities as
to which any registration is being effected to furnish to it such
information regarding such seller as may be required by the staff of the
SEC to be included in the Shelf Registration Statement; the Company may
exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time
after receiving such request; and the Company shall have no obligation to
register under the Securities Act the Registrable Securities of a seller
who so fails to furnish such information.
Each Holder agrees that, upon receipt of any notice from the Company
of the occurrence of any event specified in Section 3(e)(ii), 3(e)(iii), 3(e)(v)
or 3(e)(vi) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Shelf Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(i) hereof or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies in such Holder's possession, other
than permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. If the Company shall give any such notice to suspend the disposition of
Registrable Securities pursuant to the Shelf Registration Statement, the Company
shall use its best efforts to file and have declared effective (if an amendment)
as soon as practicable after the resolution of the related matters an amendment
or supplement to the Shelf Registration Statement and related Prospectus and
shall extend the period during which such Shelf Registration Statement is
required to be maintained effective and usable for resales pursuant to this
Agreement by the number of days in the period from and including the date of the
giving of such notice to and including the date when the Company shall have made
available to the Holders (x) copies of the supplemented or amended Prospectus
necessary to resume such dispositions or (y) the Advice.
4. Indemnification and Contribution. (a) The Company hereby agrees
to indemnify and hold harmless the Initial Purchaser, each Holder, each
underwriter who participates in an offering of the Registrable Securities, each
Person, if any, who controls any of such parties within the meaning of Section
15 of the Securities Act and each of their respective directors, officers,
employees and agents, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Shelf Registration
Statement (or any amendment thereto) or preliminary prospectus or
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
4(d)) any such settlement is effected with the prior written consent of the
Company; and
(iii) against any and all expenses whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Initial Purchaser or
such Holder), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) of this Section 4(a);
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished in writing to the Company by the
Initial Purchaser or such Holder for use in the Shelf Registration Statement (or
any amendment thereto) or any Prospectus (or the related amendment or supplement
thereto).
(b) The Initial Purchaser, each Holder and each underwriter agree,
severally and not jointly, to indemnify and hold harmless the Company, its
directors and officers (including each officer of the Company who signed the
Shelf Registration Statement) and each Person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act against any and all loss,
liability, claim, damage and expense whatsoever described in the indemnity
contained in Section 4(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 the related
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by the Initial
Purchaser, such Holder or such underwriter, as the case may be, expressly for
use in such Shelf Registration Statement (or any amendment thereto) or such
Prospectus (or any amendment or supplement thereto); provided, however, that no
Holder shall be liable for any claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Registrable Securities.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 4(a) above,
counsel to the indemnified parties shall be selected by the Initial Purchaser
and, in the case of parties indemnified pursuant to Section 4(b), by the
Company. An indemnifying party may participate at its own expense in the
defense of such action; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one counsel (in addition to local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 4 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have validly requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 4(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement set forth in this Section 4 is
for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms the Company and the Holders shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnity agreement incurred by the Company and
the Holders, as incurred; provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Person that was not guilty of such fraudulent
misrepresentation. As between the Company, on the one hand, and the Holders, on
the other hand, such parties shall contribute to such aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement in such proportion as shall be appropriate to reflect the
relative fault of the Company, on the one hand, and the Holders, on the other
hand, with respect to the statements or omissions which resulted in such loss,
liability, claim, damage or expense, or action in respect thereof, as well as
any other relevant equitable considerations. The relative fault of the Company,
on the one hand, and of the Holders, on the other hand, 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 or on
behalf of the Holders, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Holders of the Registrable Securities agree that
it would not be just and equitable if contribution pursuant to this Section 4
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. The aggregate amount of losses, liabilities, claims, damages
and expenses incurred by an indemnified party and referred to above in this
Section 4(e) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue or alleged untrue statement or omission or alleged omission.
For purposes of this Section 4, each Affiliate of a Holder, and each
director, officer and employee and Person, if any, who controls a Holder or such
Affiliate within the meaning of Section 15 of the Securities Act shall have the
same rights to contribution as such Holder, and each director, officer or
employee of the Company and each Person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act shall have the same rights to
contribution as the Company.
5. Participation in an Underwritten Registration. No Holder may
participate in an underwritten registration hereunder unless such Holder
(a) agrees to sell such Holder's Registrable Securities on the basis provided in
the underwriting arrangement 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 reasonably required under the terms of such
underwriting arrangements.
6. Selection of Underwriters. The Holders of Registrable Securities
covered by the Shelf Registration Statement who desire to do so may sell the
Securities covered by such Shelf Registration in an underwritten offering,
subject to the provisions of Section 3(l) hereof. In any such underwritten
offering, the underwriter or underwriters and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate liquidation preference of the Registrable Securities included in such
offering; provided, however, that such underwriters and managers must be
reasonably satisfactory to the Company.
7. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the Company is subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act and any
Registrable Securities remain outstanding, the Company will file the reports
required to be filed by it under the Securities Act and Section 13(a) or 15(d)
of the Exchange Act and the rules and regulations adopted by the SEC thereunder;
provided, however, that if the Company ceases to be so required to file such
reports, it will, upon the request of any Holder of Registrable Securities (a)
make publicly available such information as is necessary to permit sales of its
securities pursuant to Rule 144 under the Securities Act, (b) deliver such
information to a prospective purchaser as is necessary to permit sales of its
securities pursuant to Rule 144A under the Securities Act, and (c) take such
further action that is reasonable in the circumstances, in each case, to the
extent required from time to time to enable such Holder to sell its Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
rule may be amended from time to time, (ii) Rule 144A under the Securities Act,
as such rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
(b) No Inconsistent Agreements. The Company has not entered into,
nor will the Company enter into, any agreement which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority in aggregate liquidation preference of the outstanding Registrable
Securities affected by such amendment, modification, supplement, waiver or
departure; provided that no amendment, modification or supplement or waiver or
consent to the departure with respect to the provisions of Section 4 hereof
shall be effective as against any Holder of Registrable Securities unless
consented to in writing by such Holder of Registrable Securities.
Notwithstanding the foregoing sentence, (i) this Agreement may be amended,
without the consent of any Holder of Registrable Securities, by written
agreement signed by the Company and the Initial Purchaser, to cure any
ambiguity, correct or supplement any provision of this Agreement that may be
inconsistent with any other provision of this Agreement or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with other provisions of this Agreement, (ii)
this Agreement may be amended, modified or supplemented, and waivers and
consents to departures from the provisions hereof may be given, by written
agreement signed by the Company and the Initial Purchaser to the extent that any
such amendment, modification, supplement, waiver or consent is, in their
reasonable judgment, necessary or appropriate to comply with applicable law
(including any interpretation of the Staff of the SEC) or any change therein and
(iii) to the extent any provision of this Agreement relates to the Initial
Purchaser, such provision may be amended, modified or supplemented, and waivers
or consents to departures from such provisions may be given, by written
agreement signed by the Initial Purchaser and the Company.
Notwithstanding the foregoing, in the event that the SEC changes its
position to allow exchange offers of non-investment grade preferred stock, this
Agreement may be amended without the consent of any Holder of Registrable
Securities in a form mutually acceptable to the Company and the Initial
Purchaser.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 7(d), which address initially is, with respect to the Initial Purchaser,
the address set forth in the Purchase Agreement; and (ii) if to the Company,
initially at the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 7(d).
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 is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of the
Initial Purchaser, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Purchase Agreement or
amended charter of the Company. If any transferee of any Holder shall acquire
Registrable Securities, in any manner, whether by operation of law or otherwise,
such Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
(f) Third Party Beneficiaries. Each Holder shall be a third party
beneficiary of the agreements made hereunder among the Company and the Initial
Purchaser, and the Initial Purchaser shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE
IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICT OF LAWS. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY
DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
SUCH COURT. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(j) 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.
(k) Securities Held by the Company or its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
any Affiliates shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Very truly yours,
FARMLAND INDUSTRIES, INC.
By:
Name: Terry M. Campbell
Title: Executive Vice President
and Chief Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first
above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
Authorized Signatory