Exhibit 10.5
LIFESTYLE FURNISHINGS INTERNATIONAL LTD.
$200,000,000
10-7/8% Senior Subordinated Notes due 2006
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
August 5, 1996
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
World Financial Center
North Tower
New York, New York 10281
Dear Sirs:
Lifestyle Furnishings International Ltd., a Delaware corporation
(the "Company"), proposes to issue and sell to certain purchasers (the "Initial
Purchasers"), upon the terms set forth in a purchase agreement dated July 31,
1996 (the "Purchase Agreement"), $200,000,000 principal amount of its Senior
Subordinated Notes due 2006 (the "Notes") to be unconditionally guaranteed on a
senior subordinated basis (the "Guarantees" and, together with the Notes, the
"Securities") by certain of the Company's subsidiaries signatory hereto
(collectively, the "Guarantors"). The Securities are to be issued pursuant to an
Indenture dated as of August 5, 1996 (the "Indenture"), among the Company, the
Guarantors and IBJ Schroder Bank &
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Trust Company, as trustee (the "Trustee"). Capitalized terms used but not
specifically defined herein are defined in the Purchase Agreement. As an
inducement to the Initial Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to your obligations thereunder, the Company and the
Guarantors each agrees with you, for the benefit of the holders of the
Securities (including the Initial Purchasers) (the "Holders"), as follows:
1. Registered Exchange Offer. The Company and the Guarantors shall
prepare and, not later than 45 days following the Closing Date, shall file with
the Commission a registration statement (the "Exchange Offer Registration
Statement") on an appropriate form under the Securities Act with respect to a
proposed offer (the "Registered Exchange Offer") to the Holders to issue and
deliver to such Holders, in exchange for the Securities, a like aggregate
principal amount of debt securities of the Company (the "Exchange Notes")
unconditionally guaranteed on a senior subordinated basis by the Guarantors (the
"Exchange Guarantee" and, together with the Exchange Notes, the "Exchange
Securities") identical in all material respects to the Securities, except for
the transfer restrictions relating to the Securities, shall use its best efforts
to cause the Exchange Offer Registration Statement to become effective under the
Securities Act within 105 days of the Closing Date and to keep the Exchange
Offer Registration Statement effective for not less than 30 days (or longer, if
required by applicable law) after the date notice of the Exchange Offer is
mailed to the Holders (such period being called the "Exchange Offer Registration
Period"). The Exchange Securities will be issued under the Indenture or an
indenture (the "Exchange Securities Indenture") between the Company, the
Guarantors and the Trustee or such other bank or trust company reasonably
satisfactory to you, as trustee (the "Exchange Securities Trustee"), such
indenture to be identical in all material respects with the Indenture except for
the transfer restrictions relating to the Securities (as described above).
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Upon the effectiveness of the Exchange Offer Registration Statement,
the Company and the Guarantors shall promptly commence the Registered Exchange
Offer, it being the objective of such Registered Exchange Offer to enable each
Holder electing to exchange Securities for Exchange Securities (assuming that
such Holder is not an affiliate of the Company or any of the Guarantors within
the meaning of the Securities Act, acquires the Exchange Securities in the
ordinary course of such Holder's business and has no arrangements or
understandings with any person to participate in the distribution of the
Exchange Securities) to trade such Exchange Securities from and after their
receipt without any limitations or restrictions under the Securities Act and
without material restrictions under the securities laws of the several states of
the United States. The Company and each of the Guarantors acknowledge that,
pursuant to current interpretations by the Commission's staff of Section 5 of
the Securities Act, (i) each Holder which is a broker-dealer electing to
exchange Securities, acquired for its own account as a result of market making
activities or other trading activities, for Exchange Securities (an "Exchanging
Dealer"), is required to deliver a prospectus containing the information set
forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section, and in
Annex C hereto in the "Plan of Distribution" section of such prospectus in
connection with a sale of any such Exchange Securities received by such
Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) if any
Initial Purchaser elects to sell Exchange Securities acquired in exchange for
Securities constituting any portion of an unsold allotment it is required to
deliver a prospectus, containing the information required by Items 507 and/or
508 of Regulation S-K under the Securities Act, as applicable, in connection
with such a sale.
In connection with the Registered Exchange Offer, the Company and
the Guarantors shall:
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(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30
days after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(c) utilize the services of a Depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last business day on which
the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all applicable laws
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer, the Company and the Guarantors shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder of
Securities, Exchange Securities equal in principal amount to the
Securities of such Holder so accepted for exchange.
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Each of the Company and the Guarantors shall make available for a
period of 180 days after the consummation of the Registered Exchange Offer, a
copy of the prospectus forming part of the Exchange Offer Registration Statement
to any broker-dealer for use in connection with any resale of any Exchange
Securities.
Interest on each Exchange Security issued pursuant to the Registered
Exchange Offer will accrue from the last interest payment date on which interest
was paid on the Securities surrendered in exchange therefor or, if no interest
has been paid on the Securities, from the date of original issue of the
Securities.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company and the Guarantors that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act and (iii) such Holder is not an
affiliate of the Company or any of the Guarantors within the meaning of the
Securities Act.
Notwithstanding any other provisions hereof, the Company and the
Guarantors will ensure that (i) any Exchange Offer Registration Statement and
any amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations thereunder, (ii) any Exchange Offer Registration Statement and
any amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not include an untrue statement of a
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material fact or 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.
2. Shelf Registration. If, (a) because of any change in law or
applicable interpretations thereof by the Commission's staff, the Company and
the Guarantors determine that they are not permitted to effect the Registered
Exchange Offer as contemplated by Section 1 hereof, or (b) if for any other
reason the Registered Exchange Offer is not consummated within 135 days of the
date hereof, or (c) if any Initial Purchaser so requests with respect to
Securities not eligible to be exchanged for Exchange Securities in a Registered
Exchange Offer and held by it following consummation of the Registered Exchange
Offer, or (d) if any applicable laws or applicable interpretations do not permit
any Holder (including an Initial Purchaser, but excluding any Exchanging Dealer)
to participate in such Registered Exchange Offer, or (e) any Holder that
participates in the Registered Exchange Offer (other than an Exchanging Dealer),
does not receive freely tradeable Exchange Securities in exchange for tendered
Securities or (f) if the Company so elects, then the following provisions shall
apply:
(a) The Company and the Guarantors shall use its best efforts as
promptly as practicable to file with the Commission and thereafter shall use its
best efforts to cause to be declared effective a registration statement on an
appropriate form under the Securities Act relating to the offer and sale of the
Transfer Restricted Securities (as defined below) by the Holders from time to
time in accordance with the methods of distribution elected by such Holders and
set forth in such registration statement (hereafter, a "Shelf Registration
Statement" and, together with any Exchange Offer Registration Statement, a
"Registration Statement").
(b) The Company and the Guarantors each shall use its respective
best efforts to keep the Shelf Registration
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Statement continuously effective in order to permit the prospectus forming part
thereof to be usable by Holders for a period of three years from the Closing
Date or such shorter period that will terminate when all the Securities covered
by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or pursuant to Rule 144 under the Securities Act (in any
such case, such period being called the "Shelf Registration Period"). The
Company and the Guarantors each shall be deemed not to have used its best
efforts to keep the Shelf Registration Statement effective during the requisite
period if any of them voluntarily takes any action that would result in Holders
of Securities covered thereby not being able to offer and sell such Securities
during that period, unless such action, in the opinion of the Company after
consulting with legal counsel, is required by applicable law.
(c) Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Shelf Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any prospectus forming part
of any Shelf Registration Statement, and any supplement to such prospectus does
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the Holders
of Securities will suffer damages if the Company or any of the Guarantors fails
to fulfill its obligations under Section 1 or Section 2, as applicable, and that
it would not be feasible to ascertain the extent of such damages. Accordingly,
if (i) the applicable
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Registration Statement is not filed with the Commission on or prior to 45 days
after the Closing Date, (ii) the Exchange Offer Registration Statement or, as
the case may be, the Shelf Registration Statement, is not declared effective
within 105 days after the Closing Date, (iii) the Exchange Offer is not
consummated on or prior to 135 days after the Closing Date, or (iv) the Shelf
Registration Statement is filed and declared effective within 105 days after the
Closing Date but shall thereafter cease to be effective (at any time that the
Company is obligated to maintain the effectiveness thereof) without being
succeeded within 30 days by an additional Registration Statement filed and
declared effective (each such event referred to in clauses (i) through (iv), a
"Registration Default"), the Company will pay liquidated damages to each holder
of Transfer Restricted Securities (as defined below) in an amount equal to
$0.192 per week per $1,000 principal amount of the Securities constituting
Transfer Restricted Securities held by such holder until (i) the applicable
Registration Statement is filed, (ii) the Exchange Registration Statement is
declared effective and the Exchange Offer is consummated, (iii) the Shelf
Registration Statement is declared effective or (iv) the Shelf Registration
Statement again becomes effective, as the case may be. Following the cure of all
Registration Defaults, the accrual of liquidated damages will cease. "Transfer
Restricted Securities" means each Security until (i) the date on which such
Security has been exchanged for a freely transferrable Exchange Security in the
Exchange Offer, (ii) the date on which such Security has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) the date on which such Security is distributed
to the public pursuant to Rule 144 under the Securities Act or is salable
pursuant to Rule 144(k) under the Securities Act. Notwithstanding anything to
the contrary in this Section 3(a), the Company shall not be required to pay
liquidated damages to the holder of Transfer Restricted Securities if such
holder: (a) failed to comply with its obligations to make the representations in
the second to
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last paragraph of Section 1; or (b) failed to provide the information required
to be provided by it, if any, pursuant to Section 4(n).
(b) The Company shall notify the Trustee and Paying Agent under the
Indenture immediately upon the happening of each and every Registration Default.
The Company shall pay the liquidated damages due on the Transfer Restricted
Securities by depositing with the Paying Agent (which may not be the Company for
these purposes), in trust, for the benefit of the Holders thereof, prior to
10:00 a.m. New York City time on the next interest payment date specified by the
Indenture and the Securities, sums sufficient to pay the liquidated damages then
due. The liquidated damages due shall be payable on each interest payment date
specified by the Indenture and the Securities to the record holder entitled to
receive this interest payment to be made on such date. Each obligation to pay
liquidated damages shall be deemed to accrue from and including the applicable
Registration Default.
(c) The parties hereto agree that the liquidated damages provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to be declared effective or to remain effective, or
(iii) the Exchange Offer Registration Statement to be declared effective and the
Exchange Offer to be consummated, to the extent required by this Agreement.
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to you, prior to the filing
thereof with the Commission, a copy of the Registration Statement and each
amendment thereof and each
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supplement, if any, to the prospectus included therein and, in the event that
any of the Initial Purchasers (with respect to any portion of an unsold
allotment from the original offering) are participating in the Registered
Exchange Offer or the Shelf Registration, shall use reasonable efforts to
reflect in each such document, when so filed with the Commission, such comments
as you reasonably may propose; (ii) with respect to an Exchange Offer
Registration Statement, include the information set forth in Annex A hereto on
the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the
"Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of
Distribution" section of the prospectus forming a part of the Exchange Offer
Registration Statement, and include the information set forth in Annex D hereto
in the Letter of Transmittal delivered pursuant to the Registered Exchange
Offer; and (iii) if requested by any Initial Purchaser, include the information
required by Items 507 or 508 of Regulation S-K under the Securities Act, as
applicable, in the prospectus forming a part of the Exchange Offer Registration
Statement.
(b) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders (if applicable), and, if requested by you or
any such Holder, confirm such advice in writing (which advice pursuant to
clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the
use of the prospectus until the requisite changes have been made):
(i) when the Registration Statement and any amendment thereto has
been filed with the Commission and when the Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to the Registration Statement or the prospectus included therein or for
additional information;
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(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Securities or the Exchange
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of any
changes in the Registration Statement or the prospectus so that, as of
such date, the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) The Company and the Guarantors will use its best efforts to
obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement at the earliest possible time.
(d) The Company will furnish to each Holder of Securities included
within the coverage of any Shelf Registration Statement, without charge, at
least one copy of such Shelf Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if the
Holder so requests in writing, all exhibits (including those incorporated by
reference).
(e) The Company will deliver to each Holder of Securities included
within the coverage of any Shelf Registration Statement, without charge, as many
copies of the prospectus (including each preliminary prospectus) included in
such Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company and the Guarantors each
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consents to the use of the prospectus or any amendment or supplement thereto by
each of the selling Holders of Securities in connection with the offering and
sale of the Securities covered by the prospectus or any amendment or supplement
thereto.
(f) The Company will furnish to each Exchanging Dealer or Initial
Purchaser, as applicable, which so requests, without charge, at least one copy
of the Exchange Offer Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Exchanging
Dealer or Initial Purchaser, as applicable, so requests in writing, all exhibits
(including those incorporated by reference).
(g) The Company will, during the Exchange Offer Registration Period
or the Shelf Registration Period, as applicable, promptly deliver to each
Exchanging Dealer or Initial Purchaser, as applicable, without charge, as many
copies of the prospectus included in such Exchange Offer Registration Statement
or Shelf Registration Statement, as applicable, and any amendment or supplement
thereto as such Exchanging Dealer or Initial Purchaser, as applicable, may
reasonably request for delivery by (i) such Exchanging Dealer in connection with
a sale of Exchange Securities received by it pursuant to the Registered Exchange
Offer or (ii) such Initial Purchaser in connection with a sale of Exchange
Securities received by it in exchange for Securities constituting any portion of
an unsold allotment; and the Company consents to the use of the prospectus or
any amendment or supplement thereto by any such Exchanging Dealer or Initial
Purchaser, as applicable, as aforesaid.
(h) Prior to any public offering of Securities or Exchange
Securities pursuant to any Registration Statement, the Company and the
Guarantors each will use its respective best efforts to register or qualify or
cooperate with the Holders of Securities included therein and their respective
counsel in connection with the registration or qualification of such securities
for offer and sale under the securities
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or blue sky laws of such jurisdictions as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Securities or Exchange
Securities covered by such Registration Statement; provided, however, that
neither the Company nor the Guarantors will be required to qualify generally to
do business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process or to taxation in
any such jurisdiction where it is not then so subject.
(i) The Company and the Guarantors each will cooperate with the
Holders of Securities to facilitate the timely preparation and delivery of
certificates representing Securities or Exchange Securities to be sold pursuant
to any Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request in writing
prior to sales of Securities or Exchange Securities pursuant to such
Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraphs
(b)(ii) through (v) above during the period for which the Company and the
Guarantors are required to maintain an effective Registration Statement, the
Company and the Guarantors will promptly prepare a post-effective amendment to
the Registration Statement or a supplement to the related prospectus or file any
other required document so that, as so amended or supplemented, the prospectus
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities or
Exchange Securities, as the case may be, and provide the applicable trustee with
printed certificates for the Securities or Exchange
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Securities, as the case may be, in a form eligible for deposit with The
Depositary Trust Company.
(l) The Company and the Guarantors each will comply with all
applicable rules and regulations of the Commission and will make generally
available to its security holders as soon as practicable after the effective
date of the applicable Registration Statement an earnings statement (which need
not be audited) satisfying the provisions of Section 11(a) of the Securities
Act.
(m) The Company and the Guarantors will cause the Indenture or the
Exchange Securities Indenture, as the case may be, to be qualified under the
Trust Indenture Act as required by applicable law in a timely manner.
(n) The Company may require each Holder of Securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company and the
Guarantors such information regarding the Holder and the distribution of such
Securities as the Company may from time to time reasonably require for inclusion
in such Registration Statement, and the Company or the Guarantors may exclude
from such registration the Securities of any Holder that unreasonably fails to
furnish such information within a reasonable time after receiving such request.
(o) The Company and the Guarantors each shall enter into such
customary agreements (including, if requested, an underwriting agreement in
customary form) and take all such other action, if any, as Holders of a majority
in aggregate principal amount of Securities or Exchange Securities being sold or
the managing underwriters (if any) shall reasonably request in order to
facilitate the disposition of Securities pursuant to any Shelf Registration
Statement.
(p) In the case of a Shelf Registration Statement, the Company and
the Guarantors each shall (i) make reasonably available for inspection by a
representative
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of, and Special Counsel (as defined) acting for, a majority in aggregate
principal amount of the Holders, and any underwriter participating in any
disposition pursuant to a Shelf Registration Statement, all relevant financial
and other records, pertinent corporate documents and properties of the Company
and the Subsidiaries and (ii) use reasonable efforts to have Company's and the
Subsidiaries' officers, directors, employees, accountants and auditors supply
all relevant information reasonably requested by such representative, counsel or
any such underwriter (an "Inspector") in connection with any such Registration
Statement, subject to executing a confidentiality undertaking in customary form
with respect to confidential or proprietary information of the Company or such
Subsidiary.
(q) In the case of a Shelf Registration Statement, the Company and
the Guarantors, if requested by Holders of a majority in aggregate principal
amount of the Securities and Exchange Securities being sold, their Special
Counsel, or the managing underwriters (if any) in connection with any Shelf
Registration Statement, shall use their best efforts to cause (w) its counsel to
deliver an opinion relating to the Registration Statement and the Securities or
the Exchange Securities, as applicable, in customary form, (x) its officers to
execute and deliver all customary documents and certificates requested by
Holders of a majority in aggregate principal amount of the Securities and
Exchange Securities being sold, their Special Counsel, or the managing
underwriters (if any) and (y) its independent public accountants to provide a
comfort letter in customary form, subject to receipt of appropriate
documentation as contemplated, and only if permitted, by Statement of Auditing
Standards No. 72.
(r) The Company and the Guarantors each will use reasonable efforts
to cause the Securities or the Exchange Securities, as applicable, covered by a
Registration Statement to be rated with an appropriate rating agency, if so
requested by Holders of a majority in aggregate principal
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amount of Securities covered by such Registration Statement or the Exchange
Securities, as the case may be, or by the managing underwriters, if any.
(s) The Company and the Guarantors each will use reasonable efforts
to cause the Securities or the Exchange Securities, as applicable, relating to
such Registration Statement to be listed on each securities exchange, if any, on
which debt securities issued by the Company or the Guarantors are then listed,
if so requested by Holders of a majority in aggregate principal amount of
Securities covered by such Registration Statement or the Exchange Securities, as
the case may be, or by the managing underwriters, if any.
(t) In the case of a Shelf Registration Statement, each Holder of
Securities agrees by acquisition of such Securities that, upon receipt of any
notice of the Company pursuant to Section 4(b)(ii) through (v) hereof, such
Holder will discontinue disposition of such Securities covered by such
Registration Statement until such Holder's receipt of copies of the supplemental
or amended prospectus contemplated by Section 4(j) hereof, or until advised in
writing (the "Advice") by the Company that the use of the applicable prospectus
may be resumed. If the Company shall give any notice under Section 4(b)(ii)
through (v) during the period that the Company is required to maintain an
effective Registration Statement (the "Effectiveness Period"), such
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Securities covered by such Registration Statement shall
have received (x) the copies of the supplemental or amended prospectus
contemplated by Section 4(j) (if an amended or supplemental prospectus is
required) or (y) the Advice (if no amended or supplemental prospectus is
required).
5. Registration Expenses. The Company and the Guarantors each will
bear all expenses incurred in connection with the performance of its obligations
under
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Sections 1, 2, 3 and 4 hereof and the Company and the Guarantors, jointly and
severally, will reimburse the Initial Purchasers and the Holders for the
reasonable fees and disbursements of one firm of attorneys (in addition to local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Securities and the Exchange Securities to be sold pursuant to a Registration
Statement (the "Special Counsel") acting for the Initial Purchasers or Holders
in connection therewith. The Holders shall be responsible for all underwriting
commissions and discounts in the case of a Shelf Registration Statement.
6. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Exchanging Dealer or Initial Purchaser, as
applicable, as contemplated in Section 4(g) above, the Company and the
Guarantors, jointly and severally, shall indemnify and hold harmless each Holder
and each person, if any, who controls such Holder within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act 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 any such Registration
Statement or any prospectus forming part thereof 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; and
(ii) against any and all expense whatsoever, as incurred (including,
subject to Section 6(c) hereof, the reasonable fees and disbursements of
counsel chosen by the indemnified party) reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental or regulatory agency or
body, commenced or
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threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission;
provided, however, that (i) this indemnity shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company or the
Guarantors by you or the indemnified party expressly for use in such
Registration Statement and (ii) this indemnity with respect to any untrue
statement or alleged untrue statement or omission or alleged omission in any
related preliminary prospectus shall not enure to the benefit of any indemnified
party from whom the person asserting any such loss, claim damage or liability
received Securities or Exchange Securities if such persons did not receive a
copy of the final prospectus at or prior to the confirmation of the sale of such
Securities or Exchange Securities to such person in any case where such delivery
is required by the Securities Act and the untrue statement or omission of
material fact contained in the related preliminary prospectus was corrected in
the final prospectus unless such failure to deliver the final prospectus was a
result of noncompliance by the Company or any of the Guarantors with Sections
4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder
agrees to indemnify and hold harmless each of the Company and the Guarantors,
each of their respective directors, officers, agents and employees and each
person, if any, who controls each of the Company and the Guarantors within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and the directors, officers, agents and employees of such controlling persons
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 6(a) hereof, as incurred, arising out of or based
upon any untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment or
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supplement thereto) in reliance on and in conformity with written information
furnished to the Company or the Guarantors by such Holder expressly for use in
the Registration Statement (or in such amendment or supplement); provided,
however, that no such Holder shall be liable for any indemnity claims hereunder
in excess of the amount of net proceeds received by such Holder from the sale of
Securities or Exchange Securities pursuant to the Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any claim or action
commenced against it in respect of which indemnity may be sought hereunder;
provided, however, that failure to so notify an indemnifying party shall not
relieve such indemnifying party from any obligation that it may have pursuant to
this Section except to the extent it has been materially prejudiced by such
failure; provided further, however, that the failure to notify the indemnifying
party shall not relieve it from any liability that it may have to an indemnified
party otherwise than on account of this Section. If any such claim or action
shall be brought against an indemnified party, the indemnified party shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified
20
party has been authorized in writing by the indemnifying party, (2) the
indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(3) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm of attorneys (in addition to any local counsel) at any one time for all
such indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 6(a) and 6(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent, but if
settled with its written consent (which consent shall not be unreasonably
withheld) or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of
21
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If a claim by an indemnified party for indemnification under
this Section 6 is found unenforceable in a final judgment by a court of
competent jurisdiction (not subject to further appeal or review) even though the
express provisions hereof provide for indemnification in such case, 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 in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in connection
with the actions, statements or omissions that resulted in such losses as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any losses shall be deemed to include, subject to the limitations set forth
in Section 6(c) herein, any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section, an indemnifying party that is a
holder of Transfer Restricted Securities or Exchange Securities shall not be
required to contribute any amount in excess of the amount by
22
which the total price at which the Securities or Exchange Securities sold by
such indemnifying party and distributed to the public were offered to the public
exceeds the amount of any damages that such indemnifying party 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
any contribution from any person who was not guilty of such fraudulent
misrepresentation.
7. Rules 144 and 144A. Each of the Company and the Guarantors shall
use its best efforts to file the reports required to be filed by it under the
Securities Act and the Exchange Act in a timely manner and, if at any time the
Company or any of the Guarantors is not required to file such reports, it will,
upon the written request of any holder of Transfer Restricted Securities, make
publicly available other information so long as necessary to permit sales of
their securities pursuant to Rules 144 and 144A. The Company covenants that it
will take such further action as any holder of Transfer Restricted Securities
may reasonably request, all to the extent required from time to time to enable
such holder to sell Transfer Restricted Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rules 144
and 144A (including, without limitation, the requirements of Rule 144A(d)(4)).
Upon the written request of any holder of Transfer Restricted Securities, the
Company shall deliver to such holder a written statement as to whether it has
complied with such requirements. Notwithstanding the foregoing, nothing in this
Section 7 shall be deemed to require the Company or the Guarantors to register
any of its securities pursuant to the Exchange Act.
8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected
23
by the holders of a majority in aggregate principal amount of such Transfer
Restricted Securities included in such offering, subject to the consent of the
Company (which shall not be unreasonably withheld or delayed). The Holders shall
be responsible for all underwriting commissions and discounts.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
9. Miscellaneous. (a) Amendments and Waivers. The provisions of this
Agreement 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 principal
amount of the Securities and the Exchange Securities, taken as a single class.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of the
Holders of Securities whose Securities or Exchange Securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of a majority in
aggregate principal amount of the Securities or Exchange Securities being sold
by such Holders pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
24
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 9(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy
in like manner to Chase Securities Inc.;
(2) if to you, initially at the respective addresses set forth in
the Purchase Agreement; and
(3) if to the Company or any of the Guarantors, initially at their
respective addresses set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; when answered back, if faxed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
(c) Successors And Assigns. This Agreement shall be binding upon the
Company and each of the Guarantors and their respective successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopies) 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.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
25
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
THE COMPANY AND THE GUARANTORS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE COMPANY AND THE GUARANTORS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY 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.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A TRANSFER RESTRICTED
SECURITY TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY OR ANY OF THE GUARANTORS IN
ANY OTHER JURISDICTION.
(g) Remedies. In the event of a breach by the Company or any of the
Guarantors, or by a holder of Transfer Restricted Securities, of any of their
obligations under this Agreement, each holder of Transfer Restricted Securities
or the Company or the Guarantors, as the case may be, in addition to being
entitled to exercise all rights granted by law, including recovery of damages
(other than the recovery of damages for a breach by the Company or the
Guarantors of their obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of its rights under this Agreement. The
Company, the Guarantors and each holder of Transfer Restricted Securities, agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of a
26
breach by it of any of the provisions of this Agreement and hereby further agree
that, in the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be adequate.
(h) No Inconsistent Agreements. Neither the Company nor any of the
Guarantors has, nor shall the Company or any of the Guarantors on or after the
date of this Agreement, enter into any agreement that is inconsistent with the
rights granted to the holders of Transfer Restricted Securities in this
Agreement or otherwise conflicts with the provisions hereof. Neither the Company
nor any of the Guarantors has previously entered into any agreement which
remains in effect granting any registration rights with respect to any of its
debt securities to any person. Without limiting the generality of the foregoing,
without the written consent of the holders of a majority in aggregate principal
amount of the then outstanding Transfer Restricted Securities, neither the
Company nor any of the Guarantors shall grant to any person the right to request
the Company or any of the Guarantors to register any debt securities of the
Company or any of the Guarantors under the Securities Act unless the rights so
granted are subject in all respects to the prior rights of the holders of
Transfer Restricted Securities set forth herein, and are not otherwise in
conflict or inconsistent with the provisions of the Agreement.
(i) No Piggyback on Registrations. None of the Company, the
Guarantors nor any of their respective securityholders (other than the holders
of Transfer Restricted Securities in such capacity) shall have the right to
include any securities of the Company or the Guarantors in any Shelf
Registration or Exchange Offer other than Transfer Restricted Securities.
(j) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
27
to be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
28
Please confirm that the foregoing correctly sets forth the agreement
among the Company, each of the Guarantors and you.
Very truly yours,
LIFESTYLE FURNISHINGS
INTERNATIONAL LTD.,
By:_____________________________
Name:
Title:
LIFESTYLE HOLDINGS LTD.,
By:_____________________________
Name:
Title:
AMETEX FABRICS, INC.,
By:_____________________________
Name:
Title:
THE BERKLINE CORPORATION,
By:_____________________________
Name:
Title:
29
BLUE MOUNTAIN TRUCKING
CORPORATION,
By:_____________________________
Name:
Title:
CUSTOM TRUCK TIRES, INC.,
By:_____________________________
Name:
Title:
D-H RETAIL SPACE, INC.,
By:_____________________________
Name:
Title:
DREXEL HERITAGE
ADVERTISING, INC.,
By:_____________________________
Name:
Title:
DREXEL HERITAGE
FURNISHINGS INC.,
By:_____________________________
Name:
Title:
30
DREXEL HERITAGE
HOME INSPIRATIONS, INC.,
By:_____________________________
Name:
Title:
HENREDON FURNITURE
INDUSTRIES, INC.,
By:_____________________________
Name:
Title:
HENREDON TRANSPORTATION
COMPANY,
By:_____________________________
Name:
Title:
INTERIOR FABRIC DESIGN, INC.,
By:_____________________________
Name:
Title:
INTRO EUROPE, INC.,
By:_____________________________
Name:
Title:
31
LA BARGE, INC.,
By:_____________________________
Name:
Title:
LEXINGTON FURNITURE
INDUSTRIES, INC.,
By:_____________________________
Name:
Title:
MAITLAND-SMITH, INC.,
By:_____________________________
Name:
Title:
MARBRO LAMP COMPANY,
By:_____________________________
Name:
Title:
32
RAMM, SON & CROCKER, INC.,
By:_____________________________
Name:
Title:
ROBERT ALLEN FABRICS, INC.,
By:_____________________________
Name:
Title:
ROBERT ALLEN FABRICS
OF N.Y., INC.,
By:_____________________________
Name:
Title:
SUNBURY TEXTILE MILLS, INC.,
By:_____________________________
Name:
Title:
UNIVERSAL FURNITURE
INDUSTRIES, INC.,
By:_____________________________
Name:
Title:
33
UNIVERSAL FURNITURE LIMITED,
By:_____________________________
Name:
Title:
34
Accepted in New York, New York
CHASE SECURITIES INC.
By:_____________________________
Name:
Title:
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By:_____________________________
Name:
Title:
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Existing Notes
where such Existing Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. Each of the Company and
the Guarantors has agreed that, for a period of 180 days after the Expiration
Date (as defined herein), it will make this Prospectus available to any
broker-dealer for use in connection with any such resale.
See "Plan of Distribution."
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Existing Notes where such Existing Notes were acquired as a result
of market-making activities or other trading activities. Each of the Company and
the Guarantors has agreed that, for a period of 180 days after the Expiration
Date, it will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
, 199 , all dealers effecting transactions in the
Exchange Securities may be required to deliver a
prospectus.*
Neither the Company nor the Guarantors will receive any proceeds
from any sale of Exchange Securities by broker-dealers. Exchange Securities
received by broker-dealers for their own account pursuant to the Exchange Offer
may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received
- --------
*In addition, the legend required by Item 502(e) of Regulation S-K will appear
on the back cover page of the Exchange Offer prospectus.
2
by it for its own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company and each of the Guarantors have
jointly and severally agreed to pay all expenses incident to the Exchange Offer
(including the expenses of one counsel for the Holders of the Securities) other
than commissions or concessions of any brokers or dealers and will indemnify the
Holders of the Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
ANNEX D
____
/____/ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO
RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND
10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ____________________________________________
Address: _________________________________________
_________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.