Exhibit 4.7
EXECUTION COPY
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REGISTRATION RIGHTS AGREEMENT
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among
TUESDAY MORNING CORPORATION
COMPANY
TMI HOLDINGS, INC.
TUESDAY MORNING, INC.
FRIDAY MORNING, INC.
TMIL CORPORATION SUBSIDIARY GUARANTORS
and
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
GOLDMAN, SACHS & CO.
INITIAL PURCHASERS
Dated: December 29, 1997
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of December 29, 1997, by and among Tuesday Morning Corporation, a
Delaware corporation (the "Company"),TMI Holdings, Inc. ("TMI"), Tuesday
Morning, Inc. ("Tuesday Morning"), Friday Morning, Inc. ("Friday Morning") and
TMIL Corporation ("TMIL"), as guarantors, and Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Goldman, Sachs
& Co. (collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated December
15, 1997 among the Company, the Subsidiary Guarantors (as defined herein) and
the Initial Purchasers (the "Purchase Agreement"), which provides for the sale
by the Company and the Subsidiary Guarantors to the Initial Purchasers of
$100,000,000 aggregate principal amount of the Company's 11% Senior Subordinated
Notes due 2007 (the "Notes"). The obligations of the Company under the Notes
and the Indenture (as defined herein) will be guaranteed by (i) TMI, Tuesday
Morning, Friday Morning, TMIL and (ii) any future domestic subsidiaries of the
Company which are Restricted Subsidiaries (as defined in the Indenture)
(collectively, the "Subsidiary Guarantors"), on an unsecured subordinated basis
pursuant to the terms of the Indenture (the "Subsidiary Guarantees"). In order
to induce the Initial Purchasers to enter into the Purchase Agreement, the
Company and the Subsidiary Guarantors have agreed to provide to the Initial
Purchasers and their direct and indirect transferees and assigns the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
to time, and the rules and regulations of the SEC promulgated thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"Closing Time" shall mean the Closing Time as defined in the Purchase
Agreement.
"Company" shall have the meaning set forth in the preamble of this
Agreement and also includes the Company's successors.
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"Depositary" shall mean The Depositary Trust Company, or any other
depositary appointed by the Company, provided, however, that any such
depositary must have an address in the Borough of Manhattan, in the City of
New York.
"Exchange Notes" shall mean Series B Senior Subordinated Notes due
2007 issued by the Company which are unconditionally guaranteed on a senior
subordinated unsecured basis by the Subsidiary Guarantors under the
Indenture containing terms identical to the Notes (except that (i) interest
thereon shall accrue from the last date on which interest was paid on the
Notes or, if no such interest has been paid, from December 29, 1997, (ii)
the transfer restrictions thereon shall be eliminated and (iii) certain
provisions relating to an increase in the stated rate of interest thereon
shall be eliminated) to be offered to Holders of Notes in exchange for
Notes pursuant to the Exchange Offer.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Notes for Registrable Notes pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Holders" shall mean the Initial Purchasers, for so long as they own
any Registrable Notes, and each of their successors, assigns and direct and
indirect transferees who become registered owners of Registrable Notes
under the Indenture.
"Indenture" shall mean the Indenture relating to the Notes dated as of
December 29, 1997, among the Company, the Subsidiary Guarantors and Harris
Trust and Savings Bank, as trustee, as the same may be amended from time to
time in accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble
of this Agreement.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Notes; provided that
whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by the
Company or any of its affiliates (as such term is defined in Rule 405 under
the 1933 Act) (other than the Initial Purchasers or subsequent holders of
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Registrable Notes if such subsequent holders are deemed to be such
affiliates solely by reason of their holding of such Registrable Notes)
shall be disregarded in determining whether such consent or approval was
given by the Holders of such required percentage or amount.
"Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a 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 Notes covered by a Shelf Registration Statement,
and by all other amendments and supplements to a prospectus, including
post-effective amendments, and in each case including all material
incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
of this Agreement.
"Registrable Notes" shall mean the Notes and the Subsidiary
Guarantees; provided, however, that the Notes and the Subsidiary Guarantees
shall cease to be Registrable Notes when (i) a Registration Statement with
respect to such Notes and Subsidiary Guarantees shall have been declared
effective under the 1933 Act and such Notes and Subsidiary Guarantees shall
have been disposed of pursuant to such Registration Statement, (ii) such
Notes and Subsidiary Guarantees shall have been sold to the public pursuant
to Rule 144 (or any similar provision then in force, but not Rule 144A)
under the 1933 Act, (iii) such Notes and Subsidiary Guarantees shall have
ceased to be outstanding or (iv) such Notes and Subsidiary Guarantees have
been exchanged for Exchange Notes upon consummation of the Exchange Offer.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company and the Subsidiary Guarantors
with this Agreement, including without limitation: (i) all SEC, stock
exchange or National Association of Securities Dealers, Inc. ("NASD")
registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state or other securities or blue sky laws
and compliance with the rules of the NASD (including reasonable fees and
disbursements of one counsel for any underwriters and Holders in connection
with state or other securities or blue sky qualification of any of the
Exchange Notes or Registrable Notes), (iii) all expenses of any Persons in
preparing, or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales
agreements, certificates
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representing the Exchange Notes and other documents relating to the
performance of and compliance with this Agreement, (iv) all rating agency
fees, (v) all fees and expenses incurred in connection with the listing, if
any, of any of the Registrable Notes on any securities exchange or
exchanges, (vi) all fees and disbursements relating to the qualification of
the Indenture under applicable securities laws, (vii) the fees and
disbursements of counsel for the Company and the Subsidiary Guarantors and,
in the case of a Shelf Registration Statement, the reasonable fees and
disbursements (including the expenses of preparing and distributing any
underwriting or securities sales agreement) of one counsel (in addition to
appropriate local counsel) for the Holders (which counsel shall be selected
in writing by the Majority Holders), (viii) the fees and expenses of the
independent public accountants of the Company and the Subsidiary
Guarantors, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, (ix)
the fees and expenses of a "qualified independent underwriter" as defined
by Conduct Rule 2720 of the NASD, if required by the NASD rules, in
connection with the offering of the Registrable Securities, (x) the fees
and expenses of the trustee, including its counsel, and any escrow agent or
custodian, and (xi) any fees and disbursements of the underwriters
customarily required to be paid by issuers or sellers of securities and the
reasonable fees and expenses of any special experts retained by the Company
and the Subsidiary Guarantors in connection with any Registration
Statement, but excluding underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of Registrable
Notes by a Holder.
"Registration Statement" shall mean any registration statement of the
Company and the Subsidiary Guarantors which covers any of the Exchange
Notes or Registrable Notes pursuant to the provisions of this Agreement,
and all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and the Subsidiary Guarantors pursuant to the
provisions of Section 2(b) of this Agreement which covers all of the then
Registrable Notes on an appropriate form under Rule 415 under the 1933 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 material incorporated by reference therein.
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"Subsidiary Guarantees" shall have the meaning set forth in the
preamble of this Agreement.
"Subsidiary Guarantors" shall have the meaning set forth in the
preamble of this Agreement and shall also include the Subsidiary
Guarantors' successors.
"Trustee" shall mean the trustee with respect to the Notes under the
Indenture.
2. Registration Under the 1933 Act. (a) Exchange Offer Registration.
To the extent not prohibited by any applicable law or applicable interpretation
of the staff of the SEC, the Company and the Subsidiary Guarantors shall (i)
file within 45 days after the Closing Time an Exchange Offer Registration
Statement covering the offer by the Company and the Subsidiary Guarantors to the
Holders to exchange all of the Registrable Notes for Exchange Notes, (ii) use
their best efforts to cause such Exchange Offer Registration Statement to be
declared effective by the SEC within 120 days after the date hereof, (iii) use
their best efforts to cause such Exchange Offer Registration Statement to remain
effective until the closing of the Exchange Offer and (iv) use their best
efforts to consummate the Exchange Offer within 150 days following the date
hereof. The Exchange Notes will be issued under the Indenture. Upon the
effectiveness of the Exchange Offer Registration Statement, the Company and the
Subsidiary Guarantors shall promptly commence the Exchange Offer, it being the
objective of such Exchange Offer to enable each Holder (other than Participating
Broker-Dealers (as defined in Section 3(f)) eligible and electing to exchange
Registrable Notes for Exchange Notes (assuming that such Holder (i) is not an
affiliate of the Company within the meaning of Rule 405 under the 1933 Act, (ii)
acquires the Exchange Notes in the ordinary course of such Holder's business and
(iii) has no arrangements or understandings with any person to participate in
the Exchange Offer for the purpose of distributing the Exchange Notes) to trade
such Exchange Notes from and after their receipt without any limitations or
restrictions under the 1933 Act and without material restrictions under the
securities laws of a reasonable number of the several states of the United
States, such that a sufficient trading market for the Exchange Notes is
available.
In connection with the Exchange Offer, the Company and the Subsidiary
Guarantors shall:
(i) 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;
(ii) keep the Exchange Offer open for not less than 20 business days
after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) use the services of the Depositary for the Exchange Offer with
respect to Notes evidenced by global certificates;
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(iv) permit Holders to withdraw tendered Registrable Notes at any time
prior to the close of business, New York City time, on the last business
day on which the Exchange Offer shall remain open, by sending to the
institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Registrable Notes delivered for exchange, and a statement that
such Holder is withdrawing its election to have such Notes exchanged; and
(v) otherwise comply in all respects with all applicable laws relating
to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the
Company and the Subsidiary Guarantors shall:
(i) accept for exchange Registrable Notes duly tendered and not
validly withdrawn pursuant to the Exchange Offer in accordance with the
terms of the Exchange Offer Registration Statement and the letter of
transmittal which is an exhibit thereto;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes so accepted for exchange by the Company
and the Subsidiary Guarantors; and
(iii) cause the Trustee promptly to authenticate and deliver Exchange
Notes to each Holder of Registrable Notes equal in amount to the
Registrable Notes of such Holder so accepted for exchange.
Interest on each Exchange Note will accrue from the last date on which
interest was paid on the Registrable Notes surrendered in exchange therefor or,
if no interest has been paid on the Registrable Notes, from December 29, 1997.
The Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer, or the making of any exchange by a Holder, does not violate
applicable law or any applicable interpretation of the staff of the SEC. Each
Holder of Registrable Notes (other than Participating Broker-Dealers) who wishes
to exchange such Registrable Notes for Exchange Notes in the Exchange Offer
shall have represented that (i) it is not an affiliate (as defined in Rule 405
under the 1933 Act) of the Company, (ii) any Exchange Notes to be received by it
were acquired in the ordinary course of business, (iii) at the time of the
commencement of the Exchange Offer it has no arrangement with any person to
participate in the distribution (within the meaning of the 1933 Act) of the
Exchange Notes and (iv) it is not acting on behalf of any person who could not
make the representations in clauses (i) through (iii). The Company shall inform
the Initial Purchasers of the names and addresses of the Holders to whom the
Exchange Offer is made, and the Initial Purchasers shall have the right to
contact such Holders and otherwise facilitate the tender of Registrable Notes in
the Exchange Offer.
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(b) Shelf Registration. (i) If, because of any change in law or
applicable interpretations thereof by the staff of the SEC, the Company and the
Subsidiary Guarantors are not permitted to effect the Exchange Offer as
contemplated by Section 2(a) hereof, or (ii) if for any other reason the
Exchange Offer is not consummated within 150 days following the date hereof, or
(iii) if any Holder (other than an Initial Purchaser) is not eligible to
participate in the Exchange Offer or (iv) upon the written request of any
Initial Purchaser (with respect to any Registrable Notes which it acquired from
the Company) following the consummation of the Exchange Offer if any such
Initial Purchaser shall hold Registrable Notes which it acquired directly from
the Company and if such Initial Purchaser is not permitted, in the opinion of
counsel to such Initial Purchaser, pursuant to applicable law or applicable
interpretation of the staff of the SEC to participate in the Exchange Offer, the
Company and the Subsidiary Guarantors shall, at their own cost:
(A) as promptly as practicable, file with the SEC a Shelf Registration
Statement relating to the offer and sale of the then outstanding
Registrable Notes by the Holders from time to time in accordance with the
methods of distribution elected by the Majority Holders of such Registrable
Notes and set forth in such Shelf Registration Statement, and use their
best efforts to cause such Shelf Registration Statement to be declared
effective by the SEC by the 150th day after the date hereof (or promptly in
the event of a request by any Initial Purchaser pursuant to clause (iv)
above). In the event that the Company and the Subsidiary Guarantors are
required to file a Shelf Registration Statement upon the request of any
Holder (other than an Initial Purchaser) not eligible to participate in the
Exchange Offer pursuant to clause (iii) above or upon the request of any
Initial Purchaser pursuant to clause (iv) above, the Company and the
Subsidiary Guarantors shall file and use their best efforts to have
declared effective by the SEC both an Exchange Offer Registration Statement
pursuant to Section 2(a) with respect to all Registrable Notes and a Shelf
Registration Statement (which may be a Registration Statement combined with
the Exchange Offer Registration Statement) with respect to offers and sales
of Registrable Notes held by such Holder or such Initial Purchaser after
completion of the Exchange Offer;
(B) use their best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of two years from the Closing
Time (or one year from the date the Shelf Registration Statement is
declared effective if such Shelf Registration Statement is filed upon the
request of any Initial Purchaser pursuant to clause (iv) above) or such
shorter period which will terminate when all of the Registrable Notes
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or all of the Registrable Notes become
eligible for resale pursuant to Rule 144 under the 1933 Act without volume
restrictions; and
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(C) notwithstanding any other provisions hereof, use their best
efforts to 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 1933 Act,
(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 (as amended or supplemented from time to time), 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 light of the
circumstances under which they were made, not misleading.
The Company and the Subsidiary Guarantors further agree, if necessary,
to supplement or amend the Shelf Registration Statement if reasonably requested
by the Majority Holders with respect to information relating to the Holders and
otherwise as required by Section 3(b) below, to use all reasonable efforts to
cause any such amendment to become effective and such Shelf Registration to
become usable as soon as practicable thereafter and to furnish to the Holders of
Registrable Notes copies of any such supplement or amendment promptly after its
being used or filed with the SEC.
(c) Expenses. The Company and the Subsidiary Guarantors shall pay all
Registration Expenses in connection with the registration pursuant to Section
2(a) and 2(b). Each Holder shall pay all expenses of its counsel other than as
set forth in the preceding sentence, underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Notes pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. (i) The Company and the
Subsidiary Guarantors will be deemed not to have used their best efforts to
cause a Registration Statement to become, or to remain, effective during the
requisite periods set forth herein if the Company or the Subsidiary Guarantors
voluntarily take any action that would result in any such Registration Statement
not being declared effective or in the Holders of Registrable Notes covered
thereby not being able to exchange or offer and sell such Registrable Notes
during that period unless (A) such action is required by applicable law or (B)
such action is taken by the Company or the Subsidiary Guarantors in good faith
and for valid business reasons (but not including avoidance of the Company's or
the Subsidiary Guarantors', as applicable, obligations hereunder), including a
material corporate transaction, so long as the Company and the Subsidiary
Guarantors promptly comply with the requirements of Section 3(k) hereof, if
applicable.
(ii) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof 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 Notes pursuant to a Registration
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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
Registration Statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Notes pursuant to
such Registration Statement may legally resume.
(e) Increase in Interest Rate. In the event that (i) the Exchange
Offer Registration Statement is not filed with the SEC on or prior to the 45th
day following the date hereof, (ii) the Exchange Offer Registration Statement is
not declared effective on or prior to the 120th day following the date hereof or
(iii) the Exchange Offer is not consummated prior to the 150th day following the
date hereof or a Shelf Registration Statement with respect to the Registrable
Notes is not declared effective on or prior to the 150th day following the date
hereof, the interest rate borne by the Notes shall be increased by one-quarter
of one percent per annum following such 45-day period in the case of clause (i)
above, following such 120-day period in the case of clause (ii) above or
following such 150-day period in the case of clause (iii) above, which rate will
be increased by an additional one-quarter of one percent per annum for each 90-
day period that any additional interest continues to accrue, provided that the
aggregate increase in such interest rate will in no event exceed one percent per
annum. Upon (x) the filing of the Exchange Offer Registration Statement after
the 45-day period described in clause (i) above, (y) the effectiveness of the
Exchange Offer Registration Statement, after the 120-day period described in
clause (ii) above or (z) consummation of the Exchange Offer, or the
effectiveness of the Shelf Registration Statement, as the case may be, after the
150-day period described in clause (iii) above, the interest rate borne by the
Notes from the date of such filing, effectiveness or consummation, as the case
may be, will be reduced to the original interest rate if the Company and the
Subsidiary Guarantors are otherwise in compliance with this paragraph; provided,
however, that, if after any such reduction in interest rate, a different event
specified in clauses (i), (ii) or (iii) above occurs, the interest rate will
again be increased and thereafter reduced pursuant to the foregoing conditions.
If the Company and the Subsidiary Guarantors issue a notice that the Shelf
Registration Statement is unusable pending the announcement of a material
corporate transaction or otherwise pursuant to Section 3(k) hereof, or such a
notice is required under applicable securities laws to be issued by the Company
and the Subsidiary Guarantors, and the aggregate number of days in any
consecutive twelve-month period for which all such notices are issued or
required to be issued exceeds 30 days per occurrence or more than 60 days in the
aggregate, then the interest rate borne by the Notes will be increased by one-
quarter of one percent per annum following the date that such Shelf Registration
Statement ceases to be usable beyond the period permitted above, which rate
shall be increased by an additional one-quarter of one percent per annum for
each subsequent 90-day period that such additional interest continues to accrue;
provided that the aggregate increase in such annual interest rate may in no
event exceed one percent. Upon the Company and the Subsidiary Guarantors
declaring that the Shelf Registration Statement is usable after the interest
rate has been increased pursuant to the preceding sentence, the interest rate
borne by the Notes will be reduced to the original interest rate if the Company
and the Subsidiary Guarantors are otherwise in compliance with this paragraph;
provided, however, that if after any such reduction in interest rate the Shelf
Registration Statement again ceases to be
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usable beyond the period permitted above, the interest rate will again be
increased and thereafter reduced pursuant to the foregoing conditions.
(f) Specific Enforcement. Without limiting the remedies available to
the Initial Purchasers and the Holders, the Company and the Subsidiary
Guarantors acknowledge that any failure by the Company and the Subsidiary
Guarantors to comply with their respective obligations under Sections 2(a) and
2(b) hereof may result in material irreparable injury to the Initial Purchasers
or the Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such relief
as may be required to specifically enforce the Company's and the Subsidiary
Guarantors' obligations under Sections 2(a) and 2(b) hereof.
3. Registration Procedures. In connection with the obligations of the
Company and the Subsidiary Guarantors with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the Company and the
Subsidiary Guarantors shall:
(a) prepare and file with the SEC a Registration Statement, within the
time period specified in Section 2, on the appropriate form under the 1933
Act, which form (i) shall be selected by the Company and the Subsidiary
Guarantors, (ii) shall, in the case of a Shelf Registration, be available
for the sale of the Registrable Notes by the selling Holders thereof and
(iii) shall comply as to form in all material respects with the
requirements of the applicable form required by the SEC and include or
incorporate by reference all financial statements required by the SEC to be
filed therewith, and use their best efforts to cause such Registration
Statement to become effective and remain effective in accordance with
Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to (i) the Exchange Offer Registration Statement as may be
necessary under applicable law to keep such Exchange Offer Registration
Statement effective for the period required to comply with Section 2(a)
(except to the extent the Company is unable to consummate the Exchange
Offer and the Company complies with Section 2(b), subject in all respects
to Section 3(f) hereof), and (ii) the Shelf Registration Statement as may
be necessary under applicable law to keep such Shelf Registration Statement
effective for the period required pursuant to Section 2(b) hereof; cause
each Prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the 1933 Act;
and comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by each Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the selling Holders thereof;
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(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Notes, at least ten days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Notes is being filed
and advising such Holders that the distribution of Registrable Notes will
be made in accordance with the method elected by the Majority Holders; and
(ii) furnish to each Holder of Registrable Notes, to counsel for the
Initial Purchasers, to counsel for the Holders and to each underwriter of
an underwritten offering of Registrable Notes, 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, including financial statements and
schedules and, if the Holder so requests, all exhibits (including those
incorporated by reference) in order to facilitate the public sale or other
disposition of the Registrable Notes; and (iii) subject to the last
paragraph of Section 3, hereby consent to the use of the Prospectus,
including each preliminary Prospectus, or any amendment or supplement
thereto by each of the selling Holders of Registrable Notes in connection
with the offering and sale of the Registrable Notes covered by the
Prospectus or any amendment or supplement thereto;
(d) use their best efforts to register or qualify the Registrable
Notes under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Notes covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Notes shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the SEC, to cooperate with
the Holders in connection with any filings required to be made with the
NASD, keep each such registration or qualification effective during the
period such Registration Statement is required to be effective and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Notes owned by such Holder; provided,
however, that neither the Company nor the Subsidiary Guarantors shall be
required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where they would not otherwise be required
to qualify but for this Section 3(d) or (ii) take any action which would
subject them to general service of process or taxation in any such
jurisdiction if they are not then so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Notes and counsel for such Holders promptly and, if requested
by such Holder or counsel, confirm such advice in writing promptly (i) when
a Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by
the SEC or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the 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 a Registration Statement or the initiation
of any proceedings for that purpose, (iv) if ,
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between the effective date of a Registration Statement and the closing of
any sale of Registrable Notes covered thereby, the representations and
warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any, relating to
such offering cease to be true and correct in all material respects, (v) of
the receipt by the Company or the Subsidiary Guarantors of any notification
with respect to the suspension of the qualification of the Registrable
Notes for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (vi) of the happening of any event or the
discovery of any facts during the period a Shelf Registration Statement is
effective which makes any statement made in such Shelf Registration
Statement or the related Prospectus untrue in any material respect or which
requires the making of any changes in such Shelf Registration Statement or
Prospectus in order to make the statements therein not misleading and (vii)
of any determination by the Company and the Subsidiary Guarantors that a
post-effective amendment to a Registration Statement would be appropriate;
(f) (A) in the case of the Exchange Offer, (i) include in the
Exchange Offer Registration Statement a "Plan of Distribution" section
covering the use of the Prospectus included in the Exchange Offer
Registration Statement by broker-dealers who have exchanged their
Registrable Notes for Exchange Notes for the resale of such Exchange Notes,
(ii) furnish to each broker-dealer who desires to participate in the
Exchange Offer, without charge, as many copies of each Prospectus included
in the Exchange Offer Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such broker-dealer
may reasonably request, (iii) include in the Exchange Offer Registration
Statement a statement that any broker-dealer who holds Registrable Notes
acquired for its own account as a result of market-making activities or
other trading activities (a "Participating Broker-Dealer"), and who
receives Exchange Notes for Registrable Notes pursuant to the Exchange
Offer, may be a statutory underwriter and must deliver a prospectus meeting
the requirements of the 1933 Act in connection with any resale of such
Exchange Notes, (iv) subject to the last paragraph of Section 3, hereby
consent to the use of the Prospectus forming part of the Exchange Offer
Registration Statement or any amendment or supplement thereto, by any
broker-dealer in connection with the sale or transfer of the Exchange Notes
covered by the Prospectus or any amendment or supplement thereto, and (v)
include in the transmittal letter or similar documentation to be executed
by an exchange offeree in order to participate in the Exchange Offer (x)
the following provision:
"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 Notes. If the undersigned is a broker-dealer
that will receive Exchange Notes for its own account in exchange for
Registrable Notes, it represents that the Registrable Notes to be
exchanged for Exchange Notes were acquired by it as a result of
market-making activities or other trading activities and acknowledges
that it will deliver
13
a prospectus meeting the requirements of the 1933 Act in connection
with any resale of such Exchange Notes pursuant to the Exchange Offer;
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 1933 Act;"
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in subclause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, the broker-dealer
will not be deemed to admit that it is an underwriter within the meaning
of the 1933 Act; and
(B) to the extent any Participating Broker-Dealer participates in the
Exchange Offer, the Company and the Subsidiary Guarantors shall use their
best efforts to cause to be delivered at the request of an entity
representing the Participating Broker-Dealers (which entity shall be one of
the Initial Purchasers, unless it elects not to act as such representative)
only one, if any, "cold comfort" letter with respect to the Prospectus in
the form existing on the last date for which exchanges are accepted
pursuant to the Exchange Offer and with respect to each subsequent
amendment or supplement, if any, effected during the period specified in
clause (C) below; and
(C) to the extent any Participating Broker-Dealer participates in the
Exchange Offer, the Company and the Subsidiary Guarantors shall use their
best efforts to maintain the effectiveness of the Exchange Offer
Registration Statement for a period of one year following the closing of
the Exchange Offer; and
(D) the Company and the Subsidiary Guarantors shall not be required to
amend or supplement the Prospectus contained in the Exchange Offer
Registration Statement as would otherwise be contemplated by Section 3(b),
or take any other action as a result of this Section 3(f), for a period
exceeding 180 days after the last date for which exchanges are accepted
pursuant to the Exchange Offer (as such period may be extended by the
Company) and Participating Broker-Dealers shall not be authorized by the
Company to, and shall not, deliver such Prospectus after such period in
connection with resales contemplated by this Section 3.
(g) (A) in the case of an Exchange Offer, furnish counsel for the
Initial Purchasers and (B) in the case of a Shelf Registration, furnish
counsel for the Holders of Registrable Notes copies of any request by the
SEC or any state securities authority for amendments or supplements to a
Registration Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement as soon as
practicable and provide notice as soon as practicable to each Holder of the
withdrawal of any such order;
14
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Notes, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(j) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Notes to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold and not
bearing any restrictive legends; and cause such Registrable Notes to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the underwriters, if
any, may reasonably request at least one business day prior to the closing
of any sale of Registrable Notes;
(k) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Section
3(e)(vi) hereof, use their best efforts to prepare a supplement or post-
effective amendment to a 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 Notes, such Prospectus will not contain at the time of such
delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
agrees 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 and the
Subsidiary Guarantors have amended or supplemented the Prospectus to
correct such misstatement or omission. At such time as such public
disclosure is otherwise made or the Company determines that such disclosure
is not necessary, in each case to correct any misstatement of a material
fact or to include any omitted material fact, the Company agrees promptly
to notify each Holder of such determination and to furnish each Holder such
numbers of copies of the Prospectus, as amended or supplemented, as such
Holder may reasonably request;
(l) obtain CUSIP number for all Exchange Notes, or Registrable Notes,
as the case may be, not later than the effective date of a Registration
Statement, and provide the Trustee with printed certificates for the
Exchange Notes or the Registrable Notes, as the case may be, in a form
eligible for deposit with the Depositary;
(m) (i) cause the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), in connection with the registration of
the Exchange Notes, or Registrable Notes, as the case may be, (ii)
cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and (iii) execute, and use their best
efforts to cause the Trustee to execute, all documents as may be required
to effect such
15
changes, and all other forms and documents required to be filed with the
SEC to enable the Indenture to be so qualified in a timely manner;
(n) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and
appropriate actions (including those reasonably requested by the Majority
Holders) in order to expedite or facilitate the disposition of such
Registrable Notes and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration:
(i) make such representations and warranties to the Holders of
such Registrable Notes and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in similar underwritten offerings as may be reasonably requested by
them;
(ii) obtain opinions of counsel to the Company and the Subsidiary
Guarantors and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and the holders of a majority in principal
amount of the Registrable Notes being sold) addressed to each selling
Holder and the underwriters, if any, covering the matters customarily
covered in opinions requested in sales of securities or underwritten
offerings and such other matters as may be reasonably requested by
such Holders and underwriters;
(iii) obtain "cold comfort" letters and updates thereof from the
Company's and the Subsidiary Guarantors' independent certified public
accountants addressed to the underwriters, if any, and will use best
efforts to have such letters addressed to the selling Holders of
Registrable Notes, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters to
underwriters in connection with similar underwritten offerings;
(iv) enter into a securities sales agreement with the Holders and
an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose of
soliciting purchases of Registrable Notes, which agreement shall be in
form, substance and scope customary for similar offerings;
(v) if an underwriting agreement is entered into, cause the same
to set forth indemnification provisions and procedures substantially
equivalent to the indemnification provisions and procedures set forth
in Section 5 hereof with respect to the underwriters and all other
parties to be indemnified pursuant to said Section; and
16
(vi) deliver such documents and certificates as may be reasonably
requested and as are customarily delivered in similar offerings.
The above shall be done at (i) the effectiveness of such Shelf Registration
Statement (and, if appropriate, each post-effective amendment thereto) and
(ii) each closing under any underwriting or similar agreement as and to the
extent required thereunder. In the case of any underwritten offering, the
Company and the Subsidiary Guarantors shall provide written notice to the
Holders of all Registrable Notes of such underwritten offering at least 30
days prior to the filing of a prospectus supplement for such underwritten
offering. Such notice shall (x) offer each such Holder the right to
participate in such underwritten offering, (y) specify a date, which shall
be no earlier than 10 days following the date of such notice, by which such
Holder must inform the Company of its intent to participate in such
underwritten offering and (z) include the instructions such Holder must
follow in order to participate in such underwritten offering;
(o) in the case of a Shelf Registration, make available for inspection
by representatives of the Holders of the Registrable Notes and any
underwriters participating in any disposition pursuant to a Shelf
Registration Statement and any counsel or accountant retained by such
Holders or underwriters, upon reasonable notice, at reasonable times and in
a reasonable manner, all relevant financial and other records, pertinent
corporate documents and properties of the Company and the Subsidiary
Guarantors reasonably requested by any such persons, and cause the
respective officers, directors, employees, and any other agents of the
Company and the Subsidiary Guarantors to supply all relevant information
reasonably requested by any such representative, underwriter, special
counsel or accountant in connection with such Shelf Registration Statement;
provided, however, that such Persons shall first agree in writing with the
Company and the Subsidiary Guarantors that any information that is
reasonably and in good faith designated by the Company and the Subsidiary
Guarantors as confidential at the time of delivery of such information
shall be kept confidential by such Persons, unless (i) disclosure of such
information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements
pursuant to Federal securities laws in connection with the filing of such
Shelf Registration Statement or use of any Prospectus), (iii) such
information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard such information by such
Person or (iv) such information becomes available to such Person from a
source other than the Company and the Subsidiary Guarantors and such source
is not bound by a confidentiality agreement; and provided, further, that
the foregoing investigation shall be coordinated on behalf of the Holders
by one representative designated by and on behalf of such Holders and any
such confidential information shall be available from such representative
to such Holders so long as any Holder agrees to be bound by such
confidentiality agreement.
17
(p) (i) a reasonable time prior to the filing of any Exchange Offer
Registration Statement, any Prospectus forming a part thereof, any
amendment to an Exchange Offer Registration Statement or amendment or
supplement to a Prospectus, provide copies of such document to the Initial
Purchasers, and make such changes in any such document prior to the filing
thereof as any of the Initial Purchasers or their counsel may reasonably
request; provided, however, that the sole basis for such changes shall be
to correct a material misstatement or omission in the Exchange Offer
Registration Statement; (ii) in the case of a Shelf Registration, a
reasonable time prior to filing any Shelf Registration Statement, any
Prospectus forming a part thereof, any amendment to such Shelf Registration
Statement or amendment or supplement to such Prospectus, provide copies of
such document to the Holders of Registrable Notes, to the Initial
Purchasers, to counsel on behalf of the Holders and to the underwriter or
underwriters of an underwritten offering of Registrable Notes, if any, and
make such changes in any such document prior to the filing thereof as the
Holders of Registrable Notes, the Initial Purchasers on behalf of such
Holders, their counsel and any underwriter may reasonably request; and
(iii) cause the representatives of the Company and the Subsidiary
Guarantors to be available for discussion of such document as shall be
reasonably requested by the Holders of Registrable Notes, the Initial
Purchasers on behalf of such Holders or any underwriter and shall not at
any time make any filing of any such document of which such Holders, the
Initial Purchasers on behalf of such Holders, their counsel or any
underwriter shall not have previously been advised and furnished a copy or
to which such Holders, the Initial Purchasers on behalf of such Holders,
their counsel or any underwriter shall reasonably object;
(q) in the case of a Shelf Registration, use their best efforts to
cause all Registrable Securities to be listed on any securities exchange on
which similar debt securities issued by the Company or the Subsidiary
Guarantors are then listed if requested by the Majority Holders or by the
underwriter or underwriters of an underwritten offering of Registrable
Securities, if any;
(r) in the case of a Shelf Registration, unless the rating in effect
for the Notes applies to the Exchange Notes and the Notes to be sold
pursuant to a Shelf Registration, use their best efforts to cause the
Registrable Notes to be rated with the appropriate rating agencies, if so
requested by the Majority Holders or by the underwriter or underwriters of
an underwritten offering of Registrable Notes, if any, unless the
Registrable Notes are already so rated;
(s) otherwise use their best efforts to comply with all applicable
rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
at least 12 months which shall satisfy the provisions of Section 11(a) of
the 1933 Act and Rule 158 thereunder; and
18
(t) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter and its counsel.
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Notes to furnish to the Company such information regarding
such Holder and the proposed distribution by such Holder of such Registrable
Notes as the Company may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
or the discovery of any facts, each of the kind described in Section 3(e)(ii)-
(vi) hereof, such Holder will forthwith discontinue disposition of Registrable
Notes pursuant to a Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 3(k)
hereof, and, if so directed by the Company and the Subsidiary Guarantors, such
Holder will deliver to the Company and the Subsidiary Guarantors (at their
expense) all copies in its possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Notes
current at the time of receipt of such notice. If the Company and the
Subsidiary Guarantors shall give any such notice to suspend the disposition of
Registrable Notes pursuant to a Shelf Registration Statement as a result of the
happening of any event or the discovery of any facts, each of the kind described
in Section 3(e)(vi) hereof, the Company and the Subsidiary Guarantors shall be
deemed to have used their best efforts to keep the Shelf Registration Statement
effective during such period of suspension provided that the Company and the
Subsidiary Guarantors shall use their best efforts to file and have declared
effective (if an amendment) as soon as practicable an amendment or supplement to
the Shelf Registration Statement and shall extend the period during which the
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions.
4. Underwritten Registrations. If any of the Registrable Notes 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 manage
the offering will be selected by the Majority Holders of such Registrable Notes
included in such offering and shall be reasonably acceptable to the Company and
the Subsidiary Guarantors.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
19
5. Indemnification and Contribution. (a) The Company shall
indemnify and hold harmless each Initial Purchaser, each Holder, including
Participating Broker-Dealers, their respective affiliates, and their respective
directors, officers, employees, agents and each Person, if any, who controls any
of such parties within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 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 Registration Statement
(or any amendment thereto) pursuant to which Exchange Notes or Registrable
Notes were registered under the 1933 Act, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
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
5(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expenses whatsoever, as incurred (including
fees and disbursements of counsel chosen by any indemnified party),
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any court or 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 5(a);
provided, however, that this indemnity agreement shall 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 to the Company by the
Initial Purchasers, any Holder, including Participating Broker-Dealers,
expressly for use in the Registration Statement (or any amendment or supplement
thereto) or the Prospectus (or any amendment or supplement thereto). The
foregoing indemnity with respect to any untrue statement contained in or any
omission from a Prospectus shall not inure to the benefit of any Initial
Purchaser, Holder (in its capacity as Holder), including Participating Broker-
Dealers (or any person who controls such party within the meaning of Section 15
of the 1933 Act or
20
Section 20 of the 1934 Act) from whom the person asserting any such loss,
liability, claim, damage or expense purchased any of the Notes that are the
subject thereof, was not sent or given a copy of such Prospectus (as amended or
supplemented) by such Initial Purchaser or such selling Holder (in its capacity
as Holder) to the extent such Initial Purchaser or such Holder (in its capacity
as Holder) was required by law to deliver such Prospectus as amended or
supplemented, at or prior to the written confirmation of the sale of such Notes
and the untrue statement contained in or the omission from such Prospectus was
corrected in such amended or supplemented Prospectus, unless such failure
resulted from noncompliance by the Company with its obligations hereunder to
furnish such Initial Purchaser or such Holder (in its capacity as Holder), as
the case may be, with copies of such Prospectus as amended or supplemented.
(b) In the case of a Shelf Registration, each Holder agrees, severally
and not jointly, to indemnify and hold harmless the Company, the Subsidiary
Guarantors, each Initial Purchaser and the other selling Holders and each of
their respective directors and officers (including each officer of the Company
and the Subsidiary Guarantors who signed the Registration Statement) and each
Person, if any, who controls the Company, the Subsidiary Guarantors, any Initial
Purchaser or any other selling Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense whatsoever described in the indemnity contained in
Section 5(a) hereof, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company and the Subsidiary Guarantors by such Holder, as the
case may be, expressly for use in the Registration Statement (or any amendment
thereto), or the Prospectus (or any amendment or supplement thereto); provided,
however, that no such 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 Notes pursuant to such Shelf Registration Statement.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to either paragraph (a) or
paragraph (b) above, such person (the "indemnified party") shall give notice as
promptly as reasonably practicable to each person against whom such indemnity
may be sought (the "indemnifying party"), but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. 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 party or parties be liable for the fees and expenses of more
than one counsel (in addition to any local 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. In case any such action is brought against any indemnified
party, and it notifies
21
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party or parties
and such indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or parties.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by such indemnified party
of counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 5 for any subsequent legal
or other expenses incurred pursuant to such action, other than reasonable costs
of investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, selected by any indemnified party in
the case of Section 5(a), representing the indemnified parties under such
paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party does not promptly retain counsel satisfactory to the
indemnified party or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the consent
of the indemnifying party. 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 5 hereof (whether or not the indemnified parties
are actual or potential parties thereof), 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) Except with respect to fees and expenses not required to be
reimbursed pursuant to the assumption of the defense of an action in accordance
with Section 5(c) above, if at any time an indemnified party shall have
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 5(a)(ii) hereof effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such
22
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) If the indemnification provided for in any of the indemnity
provisions set forth in this Section 5 is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by such indemnifying party or parties on the one hand, and
such indemnified party or parties on the other hand from the offering of the
Exchange Notes or Registrable Notes included in such offering or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of such indemnifying party or
parties on the one hand, and such indemnified party or parties on the other
hand, in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party or
parties on the one hand, and such indemnified party or parties on the other hand
shall be determined by reference to, among other things, whether any such untrue
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by such indemnifying
party or parties and such indemnified party or parties and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Initial Purchasers and the Holders
of the Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 5 were determined by pro rata allocation
(even if the Initial Purchasers were treated as one entity, and the Holders were
treated as one entity, for such purpose) or by another method of allocation
which does not take account of the equitable considerations referred to above in
Section 5. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
5 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 an 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. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1993 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 5,
each person, if any, who controls an Initial Purchaser or Holder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as such Initial Purchaser or Holder, and each
director of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the
23
Company. The parties hereto agree that any underwriting discount or commission
or reimbursement of fees paid to any Initial Purchaser pursuant to the Purchase
Agreement shall not be deemed to be a benefit received by any Initial Purchaser
in connection with the offering of the Exchange Securities or Registrable
Securities in such offering.
6. Miscellaneous. (a) Rule 144 and Rule 144A. For so long as the
Company is subject to the reporting requirements of Section 13 or 15 of the 1934
Act, the Company covenants that it will file the reports required to be filed by
it under Section 13(a) or 15(d) of the 1934 Act and the rules and regulations
adopted by the SEC thereunder, that if it ceases to be so required to file such
reports, it will upon the request of any Holder of Registrable Notes (i) make
publicly available such information as is necessary to permit sales pursuant to
Rule 144 under the 1933 Act, (ii) deliver such information to a prospective
purchaser as is necessary to permit sales pursuant to Rule 144A under the 1933
Act and it will take such further action as any Holder of Registrable Notes may
reasonably request in writing, and (iii) 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 Notes without registration
under the 1933 Act within the limitation of the exemptions provided by (x) Rule
144 under the 1933 Act, as such Rule may be amended from time to time, (y) Rule
144A under the 1933 Act, as such Rule may be amended from time to time, or (z)
any similar rules or regulations hereafter adopted by the SEC. Upon the written
request of any Holder of Registrable Notes, the Company will deliver to such
Holder a written statement as to whether it has complied with such requirements.
(b) No Inconsistent Agreements. Neither the Company nor the
Subsidiary Guarantors have entered into nor will the Company or the Subsidiary
Guarantors on or after the date of this Agreement enter into any agreement which
is inconsistent with the rights granted to the Holders of Registrable Notes 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 or the
Subsidiary Guarantors' 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 and the Subsidiary Guarantors have obtained
the written consent of Holders of at least a majority in aggregate principal
amount of the outstanding Registrable Notes affected by such amendment,
modification, supplement, waiver or departure; provided, however, that no
amendment, modification, supplement or waiver or consent to any departure from
the provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Notes unless consented to in writing by such Holder.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telecopier, or any
24
courier guaranteeing overnight delivery (i) if to a Holder (other than an
Initial Purchaser), at the most current address set forth on the records of the
Registrar under the Indenture, (ii) if to an Initial Purchaser, at the most
current address given by such Initial Purchaser to the Company and the
Subsidiary Guarantors by means of a notice given in accordance with the
provisions of this Section 6(d), which address initially is the address set
forth in the Purchase Agreement; and (iii) if to the Company or the Subsidiary
Guarantors, initially at the 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 6(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 receipt
is acknowledged, if telecopied; and on the next business day if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms hereof or of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Notes, in any manner,
whether by operation of law or otherwise, such Registrable Notes shall be held
subject to all of the terms of this Agreement, and by taking and holding such
Registrable Notes, 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,
including the restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such Person shall be entitled to receive
the benefits hereof.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Subsidiary Guarantors on the one hand, and the Initial Purchasers, on the other
hand, and 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.
25
(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 GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(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.
26
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TUESDAY MORNING CORPORATION
By
----------------------------------------
Name: Mark E. Jarvis
Title: Senior Vice President, Chief
Financial Officer and Secretary
TMI HOLDINGS, INC.
By
----------------------------------------
Name: Alan L. Oppenheimer
Title: Senior Vice President, Secretary
and Treasurer
TUESDAY MORNING, INC.
By
----------------------------------------
Name: Mark E. Jarvis
Title: Senior Vice President, Chief
Financial Officer and Secretary
FRIDAY MORNING, INC.
By
----------------------------------------
Name: Jerry M. Smith
Title: President and Chief Operating Officer
TMIL CORPORATION
By
----------------------------------------
Name: Alan L. Oppenheimer
Title: Senior Vice President, Secretary
and Treasurer
27
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
GOLDMAN, SACHS & CO.
By: MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
By:
-----------------------------------------------
Name:
Title: