EXHIBIT 4.2
Payless ShoeSource, Inc.
8.25% Senior Subordinated Notes due 2013
unconditionally guaranteed as to the
payment of principal, premium,
if any, and interest by
the Guarantors named in Schedule I hereto
--------------------
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
July 28, 2003
Goldman, Sachs & Co.
As representative of the several Purchasers
named in Schedule I to the Purchase Agreement
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Payless ShoeSource, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the Purchasers (as defined herein) upon the terms
set forth in the Purchase Agreement (as defined herein) an aggregate of
$200,000,000 principal amount of its 8.25% Senior Subordinated Notes due 2013,
which are unconditionally guaranteed by the Guarantors named in Schedule I
hereto. As an inducement to the Purchasers to enter into the Purchase Agreement
and in satisfaction of a condition to the obligations of the Purchasers
thereunder, the Company and the Guarantors agree with the Purchasers for the
benefit of holders (as defined herein) from time to time of the Registrable
Securities (as defined herein) as follows:
1. Certain Definitions. For purposes of this Exchange and
Registration Rights Agreement, the following terms shall have the following
respective meanings:
"Base Interest" shall mean the interest that would otherwise accrue on
the Securities under the terms thereof and the Indenture, without giving
effect to the provisions of this Agreement.
The term "broker-dealer" shall mean any broker or dealer registered as
such under the Exchange Act.
"Closing Date" shall mean the date hereof.
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the
Exchange Act or the Securities Act, whichever is the relevant statute for
the particular purpose.
"Effective Time," in the case of (a) an Exchange Registration, shall
mean the time and date as of which the Commission declares the Exchange
Registration Statement effective or as of which the Exchange Registration
Statement otherwise becomes effective and (b) a Shelf Registration, shall
mean the time and date as of which the Commission declares the Shelf
Registration Statement effective or as of which the Shelf Registration
Statement otherwise becomes effective.
"Electing Holder" shall mean any holder of Registrable Securities that
has returned a completed and signed Notice and Questionnaire to the Company
in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or any
successor thereto, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be amended from time to time.
"Exchange Offer" shall have the meaning assigned thereto in Section
2(a) hereof.
"Exchange Registration" shall have the meaning assigned thereto in
Section 3(c) hereof.
"Exchange Registration Statement" shall have the meaning assigned
thereto in Section 2(a) hereof.
"Exchange Securities" shall have the meaning assigned thereto in
Section 2(a) hereof.
"Guarantors" shall have the meaning assigned thereto in the Indenture.
The term "holder" shall mean each of the Purchasers and other persons
who acquire Registrable Securities from time to time (including any
successors or assigns), in each case for so long as such person owns any
Registrable Securities.
"Indenture" shall mean the Indenture, dated as of July 28, 2003, among
the Company, the Guarantors and Wells Fargo Bank Minnesota, National
Association, as trustee (the "Trustee"), as the same shall be amended from
time to time.
"Notice and Questionnaire" means a Notice of Registration Statement and
Selling Securityholder Questionnaire substantially in the form of Exhibit A
hereto.
The term "person" shall mean a corporation, association, partnership,
limited liability company, trust or unincorporated organization, business,
individual, government or political subdivision thereof or governmental
agency.
"Purchase Agreement" shall mean the Purchase Agreement, dated as of
July 23, 2003, among the Purchasers, the Guarantors and the Company
relating to the Securities.
"Purchasers" shall mean the Purchasers named in Schedule I to the
Purchase Agreement.
"Registrable Securities" shall mean the Securities; provided, however,
that a Security shall cease to be a Registrable Security when (a) in the
circumstances contemplated by Section 2(a) hereof, the Security has been
exchanged for an Exchange Security in an Exchange Offer as contemplated in
Section 2(a) hereof (provided that any Exchange Security that, pursuant to
the last two sentences of Section 2(a) hereof, is included in a
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prospectus for use in connection with resales by broker-dealers shall be
deemed to be a Registrable Security with respect to Sections 5, 6 and 9
hereof until resale of such Registrable Security has been effected within
the 180-day period referred to in Section 2(a) hereof); (b) in the
circumstances contemplated by Section 2(b) hereof, a Shelf Registration
Statement registering such Security under the Securities Act has been
declared or becomes effective and such Security has been sold or otherwise
transferred by the holder thereof pursuant to and in a manner contemplated
by such effective Shelf Registration Statement; (c) such Security is sold
pursuant to Rule 144 under circumstances in which any legend borne by such
Security relating to restrictions on transferability thereof, under the
Securities Act or otherwise, is removed by the Company or pursuant to the
Indenture; (d) such Security is eligible to be sold pursuant to paragraph
(k) of Rule 144; or (e) such Security shall cease to be outstanding.
"Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
"Resale Period" shall have the meaning assigned thereto in Section 2(a)
hereof.
"Restricted Holder" shall mean (a) a holder that is an affiliate of the
Company within the meaning of Rule 405, (b) a holder who acquires Exchange
Securities outside the ordinary course of such holder's business, (c) a
holder who has arrangements or understandings with any person to
participate in the Exchange Offer for the purpose of distributing Exchange
Securities and (d) a holder that is a broker-dealer, but only with respect
to Exchange Securities received by such broker-dealer pursuant to an
Exchange Offer in exchange for Registrable Securities acquired by the
broker-dealer directly from the Company.
"Rule 144," "Rule 144A," "Rule 405" and "Rule 415" shall mean, in each
case, such rule promulgated under the Securities Act (or any successor
provision), as the same shall be amended from time to time.
"Securities" shall mean, collectively, the 8.25% Senior Subordinated
Notes due 2013 of the Company to be issued and sold to the Purchasers, and
securities issued in exchange therefor or in lieu thereof pursuant to the
Indenture. Each Security is entitled to the benefit of the guarantees
provided for in the Indenture (the "Guarantees") and, unless the context
otherwise requires, any reference herein to a "Security," an "Exchange
Security" or a "Registrable Security" shall include a reference to the
related Guarantees.
"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be amended from time to time.
"Shelf Registration" shall have the meaning assigned thereto in Section
2(b) hereof.
"Shelf Registration Statement" shall have the meaning assigned thereto
in Section 2(b) hereof.
"Special Interest" shall have the meaning assigned thereto in Section
2(c) hereof.
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"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or
any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Exchange and Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Exchange and
Registration Rights Agreement as a whole and not to any particular Section or
other subdivision.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company and the
Guarantors agree to file under the Securities Act, as soon as reasonably
practicable, but no later than 90 days after the Closing Date, a
registration statement relating to an offer to exchange (such registration
statement, the "Exchange Registration Statement", and such offer, the
"Exchange Offer") any and all of the Registrable Securities for a like
aggregate principal amount of debt securities issued by the Company and
guaranteed by the Guarantors, which debt securities and guarantees shall be
substantially identical to the Securities and the related Guarantees,
respectively (and shall be entitled to the benefits of a trust indenture
which is substantially identical to the Indenture or is the Indenture and
which has been qualified under the Trust Indenture Act), except that they
will have been issued in a transaction registered pursuant to an effective
registration statement under the Securities Act and will not contain
provisions for the additional interest contemplated in Section 2(c) below
(such new debt securities hereinafter called "Exchange Securities"). The
Company and the Guarantors agree to use commercially reasonable efforts to
cause the Exchange Registration Statement to become effective under the
Securities Act as soon as reasonably practicable, but no later than 180
days after the Closing Date. The Exchange Offer will be registered under
the Securities Act on the appropriate form and will comply with all
applicable tender offer rules and regulations under the Exchange Act. The
Company and the Guarantors further agree to use commercially reasonable
efforts to commence and complete the Exchange Offer promptly, but no later
than 30 business days after such registration statement has become
effective, or such later date as is required by the Securities Act, hold
the Exchange Offer open for at least 20 business days after the date notice
of the Exchange Offer is mailed to holders and exchange Exchange Securities
for all Registrable Securities that have been properly tendered and not
withdrawn on or prior to the expiration of the Exchange Offer. The Exchange
Offer will be deemed to have been "completed" only if the debt securities
and related guarantees received by holders other than Restricted Holders in
the Exchange Offer for Registrable Securities are, upon receipt,
transferable by each such holder without restriction under the Securities
Act and the Exchange Act and without material restrictions under the blue
sky or securities laws of a substantial majority of the States of the
United States of America. The Exchange Offer shall be deemed to have been
completed upon the earlier to occur of (i) the Company having exchanged the
Exchange Securities for all outstanding Registrable Securities pursuant to
the Exchange Offer and (ii) the Company having exchanged, pursuant to the
Exchange Offer, Exchange Securities for all Registrable Securities that
have been properly tendered and not withdrawn before the expiration of the
Exchange Offer, which shall be on a date that is at least 30 business days
following the initial date that the Exchange Registration
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Statement becomes effective. The Company agrees (x) to include in the
Exchange Registration Statement a prospectus for use in any resales by any
holder of Exchange Securities that is a broker-dealer and (y) to keep such
Exchange Registration Statement effective for a period (the "Resale
Period") ending on the earlier of 180 days from the date on which the
Exchange Registration Statement is declared effective or such time as such
broker-dealers are no longer required to deliver a prospectus in connection
with market-making or other trading activities. With respect to such
Exchange Registration Statement, such holders shall have the benefit of the
rights of indemnification and contribution set forth in Sections 6(a), (c),
(d) and (e) hereof.
(b) If (i) on or prior to the time the Exchange Offer is completed
applicable law or existing Commission interpretations are changed such that
the debt securities or the related guarantees received by holders other
than Restricted Holders in the Exchange Offer for Registrable Securities
are not or would not be, upon receipt, transferable by each such holder
without restriction under the Securities Act, (ii) the Exchange Offer has
not been completed within 225 days following the Closing Date or (iii) any
holder shall notify the Company prior to the 20th day following the
completion of the Exchange Offer that (A) such holder is a Purchaser with
respect to Securities not eligible to be exchanged in the Exchange Offer or
(B) is other than an Purchaser, if such holder is not eligible to exchange
Securities in the Exchange Offer or does not receive freely tradeable
Exchange Securities in the Exchange Offer other than by reason of the
holder being a Restricted Holder (it being understood that the requirement
that certain broker-dealers deliver the prospectus included in the Exchange
Offer Registration Statement in connection with the sales of Exchange
Securities will not result in such Exchange Securities not being freely
tradeable), the Company and the Guarantors shall, in lieu of (or, in the
case of clause (iii), in addition to) conducting the Exchange Offer
contemplated by Section 2(a), file under the Securities Act as soon as
practicable, but no later than the later of 30 days after the time such
obligation to file arises, a "shelf" registration statement providing for
the registration of, and the sale on a continuous or delayed basis by the
holders of, all of the Registrable Securities, pursuant to Rule 415 or any
similar rule that may be adopted by the Commission, which may be an
amendment to the Exchange Registration Statement (such filing, the "Shelf
Registration" and such registration statement, the "Shelf Registration
Statement"). The Company and the Guarantors agree to use commercially
reasonable efforts (x) to cause the Shelf Registration Statement to become
or be declared effective no later than 90 days after such obligation arises
and to keep such Shelf Registration Statement continuously effective for a
period ending on the earlier of the second anniversary of the Closing Date
or the first anniversary of the Closing Date if such Shelf Registration is
filed at the request of a holder as contemplated by clause (b)(iii) above
or such shorter period as will terminate when all the Registrable
Securities covered by such Shelf Registration Statement (x) have been sold
pursuant thereto or (y) are no longer Registrable Securities, provided,
however, that no holder shall be entitled to be named as a selling
securityholder in the Shelf Registration Statement or to use the prospectus
forming a part thereof for resales of Registrable Securities unless such
holder is an Electing Holder, and (y) after the Effective Time of the Shelf
Registration Statement, promptly upon the request of any holder of
Registrable Securities that is not then an Electing Holder, to take any
action reasonably necessary to enable such holder to use the prospectus
forming a part thereof for resales of Registrable Securities, including,
without limitation, any action necessary to identify such holder as a
selling securityholder in the Shelf Registration Statement, provided,
however, that nothing in this Clause (y) shall relieve any such holder of
the obligation to return a completed and signed Notice and Questionnaire to
the Company in accordance with Section 3(d)(iii) hereof. The Company and
the
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Guarantors further agree to supplement or make amendments to the Shelf
Registration Statement, as and when required by the rules, regulations or
instructions applicable to the registration form used by the Company and
the Guarantors for such Shelf Registration Statement or by the Securities
Act or rules and regulations thereunder for shelf registration, and the
Company agrees to furnish to each Electing Holder copies of any such
supplement or amendment prior to its being used or promptly following its
filing with the Commission.
(c) In the event that (i) the Company and the Guarantors have not filed
the Exchange Registration Statement or Shelf Registration Statement on or
before the date on which such registration statement is required to be
filed pursuant to Section 2(a) or 2(b), respectively, or (ii) such Exchange
Registration Statement or Shelf Registration Statement has not become
effective or been declared effective by the Commission on or before the
date on which such registration statement is required to become or be
declared effective pursuant to Section 2(a) or 2(b), respectively, or (iii)
the Exchange Offer has not been completed within 30 business days after the
initial effective date of the Exchange Registration Statement relating to
the Exchange Offer (if the Exchange Offer is then required to be made and
other than in the event the Company files a Shelf Registration Statement in
accordance with Section 2(b)(i) hereof) or (iv) any Exchange Registration
Statement or Shelf Registration Statement required by Section 2(a) or 2(b)
hereof is filed and declared effective but shall thereafter either be
withdrawn by the Company or shall become subject to an effective stop order
issued pursuant to Section 8(d) of the Securities Act suspending the
effectiveness of such registration statement (except as specifically
permitted herein) without being succeeded immediately by an additional
registration statement filed and declared effective, except, in the case of
a Shelf Registration Statement, where such withdrawal or stop order is
determined to be the direct result of information provided by Electing
Holders supplied to the Company under Section 3(d)(ii) and (iii) for
inclusion in such Shelf Registration Statement being or becoming misleading
(each such event referred to in clauses (i) through (iv), a "Registration
Default" and each period during which a Registration Default has occurred
and is continuing, a "Registration Default Period"), then, as liquidated
damages for such Registration Default, subject to the provisions of Section
9(b), special interest ("Special Interest"), in addition to the Base
Interest, shall accrue at $.05 per whole week per $1,000 principal amount
of notes for the first 90 days of the Registration Default Period. Such
Special Interest shall increase by an additional $.05 per whole week per
$1,000 principal amount of notes for every subsequent 90-day period until
all Registration Defaults have been cured, up to a maximum amount of
Special Interest for all Registration Defaults of $.50 per whole week per
$1,000 principal amount of notes.
(d) The Company shall take, and shall cause the Guarantors to take, all
actions necessary or advisable to be taken by it to ensure that the
transactions contemplated herein are effected as so contemplated, including
all actions necessary or desirable to register the Guarantees under the
registration statement contemplated in Section 2(a) or 2(b) hereof, as
applicable.
(e) Any reference herein to a registration statement as of any time
shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time and any reference herein
to any post-effective amendment to a registration statement as of any time
shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time.
3. Registration Procedures.
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If the Company and the Guarantors file a registration statement
pursuant to Section 2(a) or Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer or the Shelf
Registration, as the case may be, the Company shall qualify the Indenture
under the Trust Indenture Act of 1939.
(b) In the event that such qualification would require the appointment
of a new trustee under the Indenture, the Company shall appoint a new
trustee thereunder pursuant to the applicable provisions of the Indenture.
(c) In connection with the Company's and the Guarantors' obligations
with respect to the registration of Exchange Securities as contemplated by
Section 2(a) (the "Exchange Registration"), if applicable, the Company and
the Guarantors shall, as soon as practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as practicable
but no later than 90 days after the Closing Date, an Exchange
Registration Statement on any form which may be utilized by the
Company and the Guarantors and which shall permit the Exchange Offer
and resales of Exchange Securities by broker-dealers during the Resale
Period to be effected as contemplated by Section 2(a), and use
commercially reasonable efforts to cause such Exchange Registration
Statement to become effective as soon as practicable thereafter, but
no later than 180 days after the Closing Date;
(ii) as soon as practicable prepare and file with the Commission
such amendments and supplements to such Exchange Registration
Statement and the prospectus included therein as may be necessary to
effect and maintain the effectiveness of such Exchange Registration
Statement for the periods and purposes contemplated in Section 2(a)
hereof and as may be required by the applicable rules and regulations
of the Commission and the instructions applicable to the form of such
Exchange Registration Statement, and promptly provide each
broker-dealer holding Exchange Securities with such number of copies
of the prospectus included therein (as then amended or supplemented),
in conformity in all material respects with the requirements of the
Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder, as such broker-dealer
reasonably may request prior to the expiration of the Resale Period,
for use in connection with resales of Exchange Securities; provided,
however, that notwithstanding the foregoing, the Company may allow any
such Exchange Registration Statement to cease to become effective and
usable for no more than 90 days in any 360 day period if (A) the Board
of Directors of the Company determines in good faith that such action
would impede, delay or otherwise interfere with any proposed or
pending material corporate transaction involving the Company or that
such action would require the disclosure of material non-public
information, the disclosure of which at such time would not be in the
best interests of the Company or its stockholders, and the Company
notifies the holders within two business days after the Board of
Directors makes such determination or (B) the prospectus contained in
any such Exchange Registration Statement contains an untrue statement
of the material fact or omits 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, provided
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that, the periods referred to in Section 2(a) hereof during which such
Exchange Registration Statement is required to be effective and usable
shall be extended by the number of days during which such Exchange
Registration Statement was not effective or usable pursuant to the
foregoing provisions (but in no event past the second anniversary of
the Closing Date (one year, if it is filed at the request of a
holder));
(iii) promptly notify each broker-dealer that has requested or
received copies of the prospectus included in such registration
statement, and confirm such advice in writing, (A) when such Exchange
Registration Statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has
been filed, and, with respect to such Exchange Registration Statement
or any post-effective amendment, when the same has become effective,
(B) of any comments by the Commission and by the blue sky or
securities commissioner or regulator of any state with respect thereto
or any request by the Commission for amendments or supplements to such
Exchange Registration Statement or prospectus or for additional
information, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of such Exchange Registration Statement
or the initiation or threatening of any proceedings for that purpose,
(D) if at any time the representations and warranties of the Company
contemplated by Section 5 cease to be true and correct in all material
respects, (E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Exchange
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or (F) if the Company
allows any Exchange Registration Statement to cease to become
effective and usable pursuant to Section 3(c)(ii) or if such Exchange
Registration Statement, prospectus, prospectus amendment or supplement
or post-effective amendment does not conform in all material respects
to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder or contains an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the
circumstances then existing, at any time during the Resale Period when
a prospectus is required to be delivered under the Securities Act;
(iv) subject to Section 3(c)(ii), in the event that the Company
and the Guarantors would be required, pursuant to Section 3(e)(iii)(F)
above, to notify any broker-dealers holding Exchange Securities,
without delay prepare and furnish to each such holder a reasonable
number of copies of a prospectus supplemented or amended so that, as
thereafter delivered to purchasers of such Exchange Securities during
the Resale Period, such prospectus shall conform in all material
respects to the applicable requirements of the Securities Act and the
Trust Indenture Act and the rules and regulations of the Commission
thereunder and shall not 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 in light of
the circumstances then existing;
(v) subject to Section 3(c)(ii), use its commercially reasonable
efforts to obtain the withdrawal of any order suspending the
effectiveness of such Exchange Registration Statement or any
post-effective amendment thereto at the earliest practicable date;
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(vi) use its commercially reasonable efforts to (A) register or
qualify the Exchange Securities under the securities laws or blue sky
laws of such jurisdictions as are contemplated by Section 2(a) no
later than the commencement of the Exchange Offer, (B) subject to
Section 3(c)(ii), keep such registrations or qualifications in effect
and comply with such laws so as to permit the continuance of offers,
sales and dealings therein in such jurisdictions until the expiration
of the Resale Period and (C) take any and all other actions as may be
reasonably necessary or advisable to enable each broker-dealer holding
Exchange Securities to consummate the disposition thereof in such
jurisdictions; provided, however, that none of the Company or any of
the Guarantors shall be required for any such purpose to (1) qualify
as a foreign corporation in any jurisdiction wherein it would not
otherwise be required to qualify but for the requirements of this
Section 3(c)(vi), (2) consent to general service of process in any
such jurisdiction or (3) make any changes to its certificate of
incorporation or bylaws or any agreement between it and its
stockholders;
(vii) use its commercially reasonable efforts to obtain the
consent or approval of each governmental agency or authority, whether
federal, state or local, which may be required to effect the Exchange
Registration, the Exchange Offer and the offering and sale of Exchange
Securities by broker-dealers during the Resale Period;
(viii) provide a CUSIP number for all Exchange Securities, not
later than the applicable Effective Time;
(ix) comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders as
soon as practicable but no later than eighteen months after the
effective date of such Exchange Registration Statement, an earning
statement of the Company and its subsidiaries complying with Section
11(a) of the Securities Act (including, at the option of the Company,
Rule 158 thereunder);
(x) the Company shall indicate in a "Plan of Distribution"
section contained in the prospectus forming a part of the Exchange
Registration Statement that any broker-dealer that (i) holds
Securities that were acquired for its own account as a result of
market-making activities or other trading activities (other than
Securities acquired directly from the Company or any of its
Affiliates) that intends to participate in the Exchange Offer or (ii)
holds Exchange Securities acquired in the Exchange Offer may exchange
such Securities pursuant to the Exchange Offer; however, such
broker-dealer may be deemed to be an "underwriter" within the meaning
of the Securities Act and must, therefore, deliver a prospectus
meeting the requirements of the Securities Act in connection with any
resales of the Exchange Securities received by such broker-dealer in
the Exchange Offer, which prospectus delivery requirement may be
satisfied by the delivery by such broker-dealer of the prospectus
contained in the Exchange Registration Statement. Such "Plan of
Distribution" section shall also contain all other information with
respect to such resales by such broker-dealers that the Commission may
require in order to permit such resales pursuant thereto, but such
"Plan of Distribution" shall not name any such broker-dealer or
disclose the amount of Securities held by any such broker-dealer
except to the extent required by the Commission; and
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(xi) as a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each holder of Registrable
Securities shall furnish, upon the request of the Company, prior to
the completion thereof, a written representation to the Company (which
may be contained in the letter of transmittal contemplated by the
Exchange Registration Statement) to the effect that (A) it is not an
affiliate (as defined in Rule 405) of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement
or understanding with any person to participate in, a distribution of
the Exchange Securities to be issued in the Exchange Offer; (C) it is
acquiring the Exchange Securities in its ordinary course of business;
(D) if it is a broker-dealer that (i) holds Securities that were
acquired for its own account as a result of market-making activities
or other trading activities (other than Securities acquired directly
from the Company or any of its Affiliates) that intends to participate
in the Exchange Offer or (ii) holds Exchange Securities acquired in
the Exchange Offer, that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of
the Exchange Securities received by it in the Exchange Offer; (E) if
it is a broker-dealer that it did purchase the Securities to be
exchanged in the Exchange Offer from the Company or any of its
Affiliates and (F) it is not acting on behalf of any Person who could
not truthfully and completely make the representations contained in
the foregoing clauses (A) through (E).
In addition, all such holders of Registrable Securities shall
otherwise cooperate in the Company's preparations for the Exchange Offer.
Each holder hereby acknowledges and agrees that any broker-dealer and any
such holder using the Exchange Offer to participate in a distribution of
the Exchange Securities to be acquired in the Exchange Offer (1) could not
under Commission policy as in effect on the date of this Agreement rely on
the position of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
May 13, 1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters (which may
include any no-action letter obtained pursuant to clause (i) above), and
(2) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction and
that such a secondary resale transaction should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 or 508, as applicable, of Regulation S-K if the
resales are of Exchange Securities obtained by such holder in exchange for
Securities acquired by such holder directly from the Company or one of its
affiliates (as defined in Rule 405).
(d) In connection with the Company's and the Guarantors' obligations with
respect to the Shelf Registration, if applicable, the Company and the Guarantors
shall, as soon as practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as practicable
but in any case within the time periods specified in Section 2(b), a
Shelf Registration Statement on any form which may be utilized by the
Company and which shall register all of the Registrable Securities for
resale by the holders thereof in accordance with such method or
methods of disposition as may be specified by such of the holders as,
from time to time, may be Electing Holders and use commercially
reasonable efforts to cause such Shelf Registration Statement to
become effective as soon as practicable but in any case within the
time periods specified in Section 2(b);
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(ii) not less than 30 calendar days prior to the Effective Time
of the Shelf Registration Statement, mail the Notice and Questionnaire
to the holders of Registrable Securities; no holder shall be entitled
to be named as a selling securityholder in the Shelf Registration
Statement as of the Effective Time, and no holder shall be entitled to
use the prospectus forming a part thereof for resales of Registrable
Securities at any time, unless such holder has returned a completed
and signed Notice and Questionnaire to the Company by the deadline for
response set forth therein; provided, however, holders of Registrable
Securities shall have at least 28 calendar days from the date on which
the Notice and Questionnaire is first mailed to such holders to return
a completed and signed Notice and Questionnaire to the Company;
(iii) after the Effective Time of the Shelf Registration
Statement, upon the request of any holder of Registrable Securities
that is not then an Electing Holder, promptly send a Notice and
Questionnaire to such holder; provided that the Company shall not be
required to take any action to name such holder as a selling
securityholder in the Shelf Registration Statement or to enable such
holder to use the prospectus forming a part thereof for resales of
Registrable Securities until such holder has returned a completed and
signed Notice and Questionnaire to the Company;
(iv) as soon as practicable prepare and file with the Commission
such amendments and supplements to such Shelf Registration Statement
and the prospectus included therein as may be necessary to effect and
maintain the effectiveness of such Shelf Registration Statement for
the period specified in Section 2(b) hereof and as may be required by
the applicable rules and regulations of the Commission and the
instructions applicable to the form of such Shelf Registration
Statement, and furnish to the Electing Holders copies of any such
supplement or amendment simultaneously with or prior to its being used
or filed with the Commission; provided, however, that notwithstanding
the foregoing, the Company may allow any such Shelf Registration
Statement to cease to become effective and usable for no more than 90
days in any 360 day period if (A) the Board of Directors of the
Company determines in good faith that such action would impede, delay
or otherwise interfere with any proposed or pending material corporate
transaction involving the Company or that such action would require
the disclosure of material non-public information, the disclosure of
which at such time would not be in the best interests of the Company
or its stockholders, and the Company notifies the holders within two
business days after the Board of Directors makes such determination or
(B) the prospectus contained in any such Shelf Registration Statement
contains an untrue statement of the material fact or omits 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,
provided that, the periods referred to in Section 2(b) hereof during
which such Shelf Registration Statement is required to be effective
and usable shall be extended by the number of days during which such
Shelf Registration Statement was not effective or usable pursuant to
the foregoing provisions (but in no event past the second anniversary
of the Closing Date (one year, if it is filed at the request of a
holder));
(v) comply with the provisions of the Securities Act with
respect to the disposition of all of the Registrable Securities
covered by such Shelf Registration
11
Statement in accordance with the intended methods of disposition by
the Electing Holders provided for in such Shelf Registration
Statement;
(vi) provide (A) the Electing Holders, (B) the underwriters
(which term, for purposes of this Exchange and Registration Rights
Agreement, shall include a person deemed to be an underwriter within
the meaning of Section 2(a)(11) of the Securities Act), if any,
thereof, (C) any sales or placement agent therefor, (D) counsel for
any such underwriter or agent and (E) not more than one counsel for
all the Electing Holders the opportunity to participate in the
preparation of such Shelf Registration Statement, each prospectus
included therein or filed with the Commission and each amendment or
supplement thereto;
(vii) for a reasonable period prior to the filing of such Shelf
Registration Statement, and throughout the period specified in Section
2(b), make available at reasonable times at the Company's principal
place of business or such other reasonable place for inspection by the
persons referred to in Section 3(d)(vi) who shall certify to the
Company that they have a current intention to sell the Registrable
Securities pursuant to the Shelf Registration such financial and other
information and books and records of the Company, and cause the
officers, employees, counsel and independent certified public
accountants of the Company to respond to such inquiries, as shall be
reasonably necessary, in the judgment of the respective counsel
referred to in such Section, to conduct a reasonable investigation
within the meaning of Section 11 of the Securities Act; provided,
however, that each such party shall be required to maintain in
confidence and not to disclose to any other person any information or
records reasonably designated by the Company as being confidential,
until such time as (A) such information becomes a matter of public
record (whether by virtue of its inclusion in such registration
statement or otherwise), or (B) such person shall be required so to
disclose such information pursuant to a subpoena or order of any court
or other governmental agency or body having jurisdiction over the
matter (subject to the requirements of such order, and only after such
person shall have given the Company prompt prior written notice of
such requirement), or (C) such information is required to be set forth
in such Shelf Registration Statement or the prospectus included
therein or in an amendment to such Shelf Registration Statement or an
amendment or supplement to such prospectus in order that such Shelf
Registration Statement, prospectus, amendment or supplement, as the
case may be, complies with applicable requirements of the federal
securities laws and the rules and regulations of the Commission and
does not contain an untrue statement of a material fact or omit to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing;
(viii) promptly notify each of the Electing Holders, any sales or
placement agent therefor and any underwriter thereof (which
notification may be made through any managing underwriter that is a
representative of such underwriter for such purpose) and confirm such
advice in writing, (A) when such Shelf Registration Statement or the
prospectus included therein or any prospectus amendment or supplement
or post-effective amendment has been filed, and, with respect to such
Shelf Registration Statement or any post-effective amendment, when the
same has become effective, (B) of any comments by the Commission and
by the blue sky or securities commissioner or regulator of any state
with respect thereto or any request
12
by the Commission for amendments or supplements to such Shelf
Registration Statement or prospectus or for additional information,
(C) of the issuance by the Commission of any stop order suspending the
effectiveness of such Shelf Registration Statement or the initiation
or threatening of any proceedings for that purpose, (D) if at any time
the representations and warranties of the Company contemplated by
Section 3(d)(xvii) or Section 5 cease to be true and correct in all
material respects, (E) of the receipt by the Company of any
notification with respect to the suspension of the qualification of
the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, or (F)
if the Company allows any Shelf Registration Statement to cease to
become effective and usable pursuant to Section 3(d)(iv) or if such
Shelf Registration Statement, prospectus, prospectus amendment or
supplement or post-effective amendment does not conform in all
material respects to the applicable requirements of the Securities Act
and the Trust Indenture Act and the rules and regulations of the
Commission thereunder or contains an untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of
the circumstances then existing, at any time when a prospectus is
required to be delivered under the Securities Act;
(ix) subject to Section 3(d)(iv), use its commercially reasonable
efforts to obtain the withdrawal of any order suspending the
effectiveness of such registration statement or any post-effective
amendment thereto at the earliest practicable date;
(x) if reasonably requested by any managing underwriter or
underwriters, any placement or sales agent or any Electing Holder,
promptly incorporate in a prospectus supplement or post-effective
amendment such information as is required by the applicable rules and
regulations of the Commission and as such managing underwriter or
underwriters, such agent or such Electing Holder reasonably specifies
should be included therein relating to the terms of the sale of such
Registrable Securities, including information with respect to the
principal amount of Registrable Securities being sold by such Electing
Holder or agent or to any underwriters, the name and description of
such Electing Holder, agent or underwriter, the offering price of such
Registrable Securities and any discount, commission or other
compensation payable in respect thereof, the purchase price being paid
therefor by such underwriters and with respect to any other terms of
the offering of the Registrable Securities to be sold by such Electing
Holder or agent or to such underwriters; and make all required filings
of such prospectus supplement or post-effective amendment promptly
after notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment;
(xi) furnish to each Electing Holder, each placement or sales
agent, if any, therefor, each underwriter, if any, thereof and the
respective counsel referred to in Section 3(d)(vi) an executed copy
(or, in the case of an Electing Holder, a conformed copy) of such
Shelf Registration Statement, each such amendment and supplement
thereto (in each case including all exhibits thereto (in the case of
an Electing Holder of Registrable Securities, upon request) and
documents incorporated by reference therein) and such number of copies
of such Shelf Registration Statement (excluding exhibits thereto and
documents incorporated by reference therein unless specifically so
requested by such Electing Holder, agent or underwriter, as the case
may be) and of the prospectus included in such Shelf Registration
Statement (including each
13
preliminary prospectus and any summary prospectus), in conformity in
all material respects with the applicable requirements of the
Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder, and such other documents, as
such Electing Holder, agent, if any, and underwriter, if any, may
reasonably request in order to facilitate the offering and disposition
of the Registrable Securities owned by such Electing Holder, offered
or sold by such agent or underwritten by such underwriter and to
permit such Electing Holder, agent and underwriter to satisfy the
prospectus delivery requirements of the Securities Act; and the
Company hereby consents to the use of such prospectus (including such
preliminary and summary prospectus) and any amendment or supplement
thereto by each such Electing Holder and by any such agent and
underwriter, in each case in the form most recently provided to such
person by the Company, in connection with the offering and sale of the
Registrable Securities covered by the prospectus (including such
preliminary and summary prospectus) or any supplement or amendment
thereto;
(xii) use its commercially reasonable efforts to (A) register or
qualify the Registrable Securities to be included in such Shelf
Registration Statement under such securities laws or blue sky laws of
such jurisdictions as any Electing Holder and each placement or sales
agent, if any, therefor and underwriter, if any, thereof shall
reasonably request, (B) subject to Section 3(d)(iv), keep such
registrations or qualifications in effect and comply with such laws so
as to permit the continuance of offers, sales and dealings therein in
such jurisdictions during the period the Shelf Registration is
required to remain effective under Section 2(b) above and for so long
as may be necessary to enable any such Electing Holder, agent or
underwriter to complete its distribution of Securities pursuant to
such Shelf Registration Statement and (C) take any and all other
actions as may be reasonably necessary or advisable to enable each
such Electing Holder, agent, if any, and underwriter, if any, to
consummate the disposition in such jurisdictions of such Registrable
Securities; provided, however, that none of the Company or any of the
Guarantors shall be required for any such purpose to (1) qualify as a
foreign corporation in any jurisdiction wherein it would not otherwise
be required to qualify but for the requirements of this Section
3(d)(xii), (2) consent to general service of process in any such
jurisdiction or (3) make any changes to its certificate of
incorporation or bylaws or any agreement between it and its
stockholders;
(xiii) use its commercially reasonable efforts to obtain the
consent or approval of each governmental agency or authority, whether
federal, state or local, which may be required to effect the Shelf
Registration or the offering or sale in connection therewith or to
enable the selling holder or holders to offer, or to consummate the
disposition of, their Registrable Securities;
(xiv) unless any Registrable Securities shall be in book-entry
only form, cooperate with the Electing Holders and the managing
underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be
sold, which certificates, if so required by any securities exchange
upon which any Registrable Securities are listed, shall be penned,
lithographed or engraved, or produced by any combination of such
methods, on steel engraved borders, and which certificates shall not
bear any restrictive legends; and, in the case of an underwritten
offering, enable such Registrable Securities to be in such
14
denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale
of the Registrable Securities;
(xv) provide a CUSIP number for all Registrable Securities, not
later than the applicable Effective Time;
(xvi) enter into one or more underwriting agreements, engagement
letters, agency agreements, "best efforts" underwriting agreements or
similar agreements, as appropriate, including customary provisions
relating to indemnification and contribution, and take such other
actions in connection therewith as any Electing Holders aggregating at
least 20% in aggregate principal amount of the Registrable Securities
at the time outstanding shall request in order to expedite or
facilitate the disposition of such Registrable Securities;
(xvii) whether or not an agreement of the type referred to in
Section 3(d)(xvi) hereof is entered into and whether or not any
portion of the offering contemplated by the Shelf Registration is an
underwritten offering or is made through a placement or sales agent or
any other entity, (A) make such representations and warranties to the
Electing Holders and the placement or sales agent, if any, therefor
and the underwriters, if any, thereof in form, substance and scope as
are customarily made in connection with an offering of debt securities
pursuant to any appropriate agreement or to a registration statement
filed on the form applicable to the Shelf Registration; (B) obtain an
opinion of counsel to the Company in customary form and covering such
matters, of the type customarily covered by such an opinion, as the
managing underwriters, if any, or as any Electing Holders of at least
20% in aggregate principal amount of the Registrable Securities at the
time outstanding may reasonably request, addressed to such Electing
Holder or Electing Holders and the placement or sales agent, if any,
therefor and the underwriters, if any, thereof and dated the effective
date of such Shelf Registration Statement (and if such Shelf
Registration Statement contemplates an underwritten offering of a part
or all of the Registrable Securities, dated the date of the closing
under the underwriting agreement relating thereto) (it being agreed
that the matters to be covered by such opinion shall include the due
incorporation and good standing of the Company and its subsidiaries;
the qualification of the Company and its subsidiaries to transact
business as foreign corporations; the due authorization, execution and
delivery of the relevant agreement of the type referred to in Section
3(d)(xvi) hereof; the due authorization, execution, authentication and
issuance, and the validity and enforceability, of the Securities; the
absence of material legal or governmental proceedings involving the
Company; the absence of a breach by the Company or any of its
subsidiaries of, or a default under, material agreements binding upon
the Company or any subsidiary of the Company; the absence of
governmental approvals required to be obtained in connection with the
Shelf Registration, the offering and sale of the Registrable
Securities, this Exchange and Registration Rights Agreement or any
agreement of the type referred to in Section 3(d)(xvi) hereof, except
such approvals as may be required under state securities or blue sky
laws; the material compliance as to form of such Shelf Registration
Statement and any documents incorporated by reference therein and of
the Indenture with the requirements of the Securities Act and the
Trust Indenture Act and the rules and regulations of the Commission
thereunder, respectively; and, as of the date of the opinion and of
the Shelf Registration Statement or most recent post-effective
amendment thereto, as
15
the case may be, the absence from such Shelf Registration Statement
and the prospectus included therein, as then amended or supplemented,
and from the documents incorporated by reference therein (in each case
other than the financial statements and other financial information
contained therein) of an untrue statement of a material fact or the
omission to state therein a material fact necessary to make the
statements therein not misleading (in the case of such documents, in
the light of the circumstances existing at the time that such
documents were filed with the Commission under the Exchange Act)); (C)
obtain a "cold comfort" letter or letters from the independent
certified public accountants of the Company addressed to the selling
Electing Holders, the placement or sales agent, if any, therefor or
the underwriters, if any, thereof, dated (i) the effective date of
such Shelf Registration Statement and (ii) the effective date of any
prospectus supplement to the prospectus included in such Shelf
Registration Statement or post-effective amendment to such Shelf
Registration Statement which includes unaudited or audited financial
statements as of a date or for a period subsequent to that of the
latest such statements included in such prospectus (and, if such Shelf
Registration Statement contemplates an underwritten offering pursuant
to any prospectus supplement to the prospectus included in such Shelf
Registration Statement or post-effective amendment to such Shelf
Registration Statement which includes unaudited or audited financial
statements as of a date or for a period subsequent to that of the
latest such statements included in such prospectus, dated the date of
the closing under the underwriting agreement relating thereto), such
letter or letters to be in customary form and covering such matters of
the type customarily covered by letters of such type; (D) deliver such
documents and certificates, including officers' certificates, as may
be reasonably requested by any Electing Holders of at least 20% in
aggregate principal amount of the Registrable Securities at the time
outstanding or the placement or sales agent, if any, therefor and the
managing underwriters, if any, thereof to evidence the accuracy of the
representations and warranties made pursuant to clause (A) above or
those contained in Section 5(a) hereof and the compliance with or
satisfaction of any agreements or conditions contained in the
underwriting agreement or other agreement entered into by the Company
or the Guarantors; and (E) undertake such obligations relating to
expense reimbursement, indemnification and contribution as are
provided in Section 6 hereof;
(xviii) notify in writing each holder of Registrable Securities
of any proposal by the Company to amend or waive any provision of this
Exchange and Registration Rights Agreement pursuant to Section 9(h)
hereof and of any amendment or waiver effected pursuant thereto, each
of which notices shall contain the text of the amendment or waiver
proposed or effected, as the case may be;
(xix) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or
participate as a member of an underwriting syndicate or selling group
or "assist in the distribution" (within the meaning of the Conduct
Rules (the "Conduct Rules) of the National Association of Securities
Dealers, Inc. ("NASD") or any successor thereto, as amended from time
to time) thereof, whether as a holder of such Registrable Securities
or as an underwriter, a placement or sales agent or a broker or dealer
in respect thereof, or otherwise, assist such broker-dealer in
complying with the requirements of such Conduct Rules, including by
(A) if such Conduct Rules shall so require, engaging a "qualified
independent underwriter" (as defined in such Conduct Rules) to
participate in the
16
preparation of the Shelf Registration Statement relating to such
Registrable Securities, to exercise usual standards of due diligence
in respect thereto and, if any portion of the offering contemplated by
such Shelf Registration Statement is an underwritten offering or is
made through a placement or sales agent, to recommend the yield of
such Registrable Securities, (B) indemnifying any such qualified
independent underwriter to the extent of the indemnification of
underwriters provided in Section 6 hereof (or to such other customary
extent as may be requested by such underwriter), and (C) providing
such information to such broker-dealer as may be required in order for
such broker-dealer to comply with the requirements of the Conduct
Rules; and
(xx) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as
soon as practicable but in any event not later than eighteen months
after the effective date of such Shelf Registration Statement, an
earning statement of the Company and its subsidiaries complying with
Section 11(a) of the Securities Act (including, at the option of the
Company, Rule 158 thereunder).
(e) Subject to Section 3(d)(iv), in the event that the Company would be
required, pursuant to Section 3(d)(viii)(F) above, to notify the Electing
Holders, the placement or sales agent, if any, therefor and the managing
underwriters, if any, thereof, the Company shall without delay prepare and
furnish to each of the Electing Holders, to each placement or sales agent,
if any, and to each such underwriter, if any, a reasonable number of copies
of a prospectus supplemented or amended so that, as thereafter delivered to
purchasers of Registrable Securities, such prospectus shall conform in all
material respects to the applicable requirements of the Securities Act and
the Trust Indenture Act and the rules and regulations of the Commission
thereunder and shall not 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 in light of the circumstances
then existing. Each Electing Holder agrees that upon receipt of any notice
from the Company pursuant to Section 3(d)(viii)(F) hereof, such Electing
Holder shall forthwith discontinue the disposition of Registrable
Securities pursuant to the Shelf Registration Statement applicable to such
Registrable Securities until such Electing Holder shall have received
copies of such amended or supplemented prospectus, and if so directed by
the Company, such Electing Holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in
such Electing Holder's possession of the prospectus covering such
Registrable Securities at the time of receipt of such notice.
(f) In the event of a Shelf Registration, in addition to the information
required to be provided by each Electing Holder in its Notice
Questionnaire, the Company may require such Electing Holder to furnish to
the Company such additional information regarding such Electing Holder and
such Electing Holder's intended method of distribution of Registrable
Securities as may be required in order to comply with the Securities Act.
Each such Electing Holder agrees to notify the Company as promptly as
practicable of any inaccuracy or change in information previously furnished
by such Electing Holder to the Company or of the occurrence of any event in
either case as a result of which any prospectus relating to such Shelf
Registration contains or would contain an untrue statement of a material
fact regarding such Electing Holder or such Electing Holder's intended
method of disposition of such Registrable Securities or omits to state any
material fact regarding such Electing Holder or such Electing Holder's
intended method of disposition of such Registrable Securities
17
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and promptly to
furnish to the Company any additional information required to correct and
update any previously furnished information or required so that such
prospectus shall not contain, with respect to such Electing Holder or the
disposition of such Registrable Securities, 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 in light
of the circumstances then existing.
(g) Until the expiration of two years after the Closing Date, the
Company will not, and will not permit any of its "affiliates" (as defined
in Rule 144) to, resell any of the Securities that have been reacquired by
any of them except pursuant to an effective registration statement under
the Securities Act.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly
all expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses including fees and
disbursements of not more than one counsel for the placement or sales agent or
underwriters in connection with such registration, filing and review, (b) all
fees and expenses in connection with the qualification of the Securities for
offering and sale under the State securities and blue sky laws referred to in
Section 3(d)(xii) hereof and determination of their eligibility for investment
under the laws of such jurisdictions as any managing underwriters or the
Electing Holders may designate, including any fees and disbursements of not more
than one counsel for the Electing Holders or underwriters in connection with
such qualification and determination, (c) all expenses relating to the
preparation, printing, production, distribution and reproduction of each
registration statement required to be filed hereunder, each prospectus included
therein or prepared for distribution pursuant hereto, each amendment or
supplement to the foregoing, the expenses of preparing the Securities for
delivery and the expenses of printing or producing any underwriting agreements,
agreements among underwriters, selling agreements and blue sky or legal
investment memoranda and all other documents in connection with the offering,
sale or delivery of Securities to be disposed of (including certificates
representing the Securities), (d) messenger, telephone and delivery expenses
relating to the offering, sale or delivery of Securities and the preparation of
documents referred in clause (c) above, (e) fees and expenses of the Trustee
under the Indenture, any agent of the Trustee and any counsel for the Trustee
and of any collateral agent or custodian, (f) internal expenses (including all
salaries and expenses of the Company's officers and employees performing legal
or accounting duties), (g) fees, disbursements and expenses of counsel and
independent certified public accountants of the Company (including the expenses
of any opinions or "cold comfort" letters required by or incident to such
performance and compliance), (h) fees, disbursements and expenses of any
"qualified independent underwriter" engaged pursuant to Section 3(d)(xix)
hereof, (i) fees, disbursements and expenses of one counsel for the Electing
Holders retained in connection with a Shelf Registration, as selected by the
Electing Holders of at least a majority in aggregate principal amount of the
Registrable Securities held by Electing Holders (which counsel shall be
reasonably satisfactory to the Company), (j) any fees charged by securities
rating services for rating the Securities, and (k) fees, expenses and
disbursements of any other persons, including special experts, retained by the
Company in connection with such registration (collectively, the "Registration
Expenses"). To the extent that any Registration Expenses are incurred, assumed
or paid by any holder of Registrable Securities or any placement or sales agent
therefor or
18
underwriter thereof, the Company shall reimburse such person for the full amount
of the Registration Expenses so incurred, assumed or paid promptly after receipt
of a request therefor. Notwithstanding the foregoing, the holders of the
Registrable Securities being registered shall pay all agency fees and
commissions and underwriting discounts and commissions attributable to the sale
of such Registrable Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or jointly), other
than the counsel and experts specifically referred to above.
5. Representations and Warranties.
Each of the Company and the Guarantors represent and warrant to,
and agree with, each Purchaser and each of the holders from time to time of
Registrable Securities that:
(a) Each registration statement covering Registrable Securities and each
prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to Section 3(d) or Section 3(c) hereof and
any further amendments or supplements to any such registration statement or
prospectus, when it becomes effective or is filed with the Commission, as
the case may be, and, in the case of an underwritten offering of
Registrable Securities, at the time of the closing under the underwriting
agreement relating thereto, will conform in all material respects to the
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder and will not 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 at all times subsequent to the Effective Time when a
prospectus would be required to be delivered under the Securities Act,
other than from (i) such time as a notice has been given to holders of
Registrable Securities pursuant to Section 3(d)(viii)(F) or Section
3(c)(iii)(F) hereof until (ii) such time as the Company furnishes an
amended or supplemented prospectus pursuant to Section 3(e) or Section
3(c)(iv) hereof, each such registration statement, and each prospectus
(including any summary prospectus) contained therein or furnished pursuant
to Section 3(d) or Section 3(c) hereof, as then amended or supplemented,
will conform in all material respects to the requirements of the Securities
Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and will not 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 in the
light of the circumstances then existing; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by a holder of Registrable Securities expressly for
use therein.
(b) Any documents incorporated by reference in any prospectus referred to
in Section 5(a) hereof, when they become or became effective or are or were
filed with the Commission, as the case may be, will conform or conformed in
all material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and none of such documents will contain or
contained an untrue statement of a material fact or will omit or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by a holder of Registrable Securities expressly for
use therein.
19
(c) The compliance by the Company with all of the provisions of this
Exchange and Registration Rights Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any subsidiary of the Company is a
party or by which the Company or any subsidiary of the Company is bound or
to which any of the property or assets of the Company or any subsidiary of
the Company is subject, nor will such action result in any violation of the
provisions of the certificate of incorporation, as amended, or the bylaws
of the Company or any Guarantor or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any subsidiary of the Company or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the consummation by the Company and the Guarantors of the
transactions contemplated by this Exchange and Registration Rights
Agreement, except the registration under the Securities Act of the
Securities, qualification of the Indenture under the Trust Indenture Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under State securities or blue sky laws
in connection with the offering and distribution of the Securities.
(d) This Exchange and Registration Rights Agreement has been duly
authorized, executed and delivered by the Company.
6. Indemnification.
(a) Indemnification by the Company and the Guarantors. The Company and
the Guarantors, jointly and severally, will indemnify and hold harmless
each of the holders of Registrable Securities included in an Exchange
Registration Statement, each of the Electing Holders of Registrable
Securities included in a Shelf Registration Statement and each person who
participates as a placement or sales agent or as an underwriter in any
offering or sale of such Registrable Securities against any losses, claims,
damages or liabilities, joint or several, to which such holder, agent or
underwriter may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Exchange
Registration Statement or Shelf Registration Statement, as the case may be,
under which such Registrable Securities were registered under the
Securities Act, or any preliminary, final or summary prospectus contained
therein or furnished by the Company to any such holder, Electing Holder,
agent or underwriter, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such holder, such
Electing Holder, such agent and such underwriter for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that none of the Company or any of the Guarantors shall be liable
to any such person in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission (i)
made in any preliminary prospectus to the extent that the Company shall
sustain the burden of proving that any such loss, liability, claim, damage
or expense resulted from the fact that such holder (in its capacity as
holder), or underwriter, as the case may be, sold Registrable Securities to
a Person to whom such holder (in its capacity as holder) or underwriter, as
the case may be,
20
failed to send or give (if legally required to be sent or given), at or
prior to the written confirmation of sale of such Registrable Securities a
copy of the final prospectus (as amended or supplemented) if the Company
has previously furnished copies thereof (sufficiently in advance of the
closing of such sale to allow for distribution of the final prospectus in a
timely manner) to such holder (in its capacity as holder) or underwriter,
as the case may be, and the loss, liability, claim, damage or expense of
such holder (in its capacity as holder) or underwriter, as the case may be,
resulted solely from an untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in or omitted
from such preliminary prospectus which was corrected in the final
prospectus or (ii) made in such registration statement, or preliminary,
final or summary prospectus, or amendment or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Company by such person expressly for use therein.
(b) Indemnification by the Holders and any Agents and Underwriters. The
Company may require, as a condition to including any Registrable Securities
in any registration statement filed pursuant to Section 2(b) hereof and to
entering into any underwriting agreement with respect thereto, that the
Company shall have received an undertaking reasonably satisfactory to it
from the Electing Holder of such Registrable Securities and from each
underwriter named in any such underwriting agreement, severally and not
jointly, to (i) indemnify and hold harmless the Company, the Guarantors,
and all other holders of Registrable Securities, against any losses,
claims, damages or liabilities to which the Company, the Guarantors or such
other holders of Registrable Securities may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in such registration statement, or any preliminary, final or
summary prospectus contained therein or furnished by the Company to any
such Electing Holder, agent or underwriter, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such
Electing Holder or underwriter expressly for use therein, and (ii)
reimburse the Company and the Guarantors for any legal or other expenses
reasonably incurred by the Company and the Guarantors in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that no such Electing Holder shall be required
to undertake liability to any person under this Section 6(b) for any
amounts in excess of the dollar amount of the proceeds to be received by
such Electing Holder from the sale of such Electing Holder's Registrable
Securities pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the
commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party pursuant to the
indemnification provisions of or contemplated by this Section 6, notify
such indemnifying party in writing of the commencement of such action; but
the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under the indemnification provisions of or contemplated by Section 6(a) or
6(b) hereof. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the
commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish,
21
jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, such indemnifying party
shall not be liable to such indemnified party for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred
by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall,
without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect
of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action 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) Contribution. If for any reason the indemnification
provisions contemplated by Section 6(a) or Section 6(b) are unavailable
to or insufficient to hold harmless an indemnified party in respect of
any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof),
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 the 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 by such indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties hereto agree
that it would not be just and equitable if contributions pursuant to
this Section 6(d) were determined by pro rata allocation (even if the
holders or any agents or underwriters or all of them were treated as
one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to in
this Section 6(d). The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, or liabilities (or actions
in respect thereof) referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 6(d), no holder
shall be required to contribute any amount in excess of the amount by
which the dollar amount of the proceeds received by such holder from
the sale of any Registrable Securities (after deducting any fees,
discounts and commissions applicable thereto) exceeds the amount of any
damages which such holder has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission, and no underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the
Registrable Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution
22
from any person who was not guilty of such fraudulent
misrepresentation. The holders' and any underwriters' obligations in
this Section 6(d) to contribute shall be several in proportion to the
principal amount of Registrable Securities registered or underwritten,
as the case may be, by them and not joint.
(e) The obligations of the Company and the Guarantors under
this Section 6 shall be in addition to any liability which the Company
or the Guarantors may otherwise have and shall extend, upon the same
terms and conditions, to each officer, director and partner of each
holder, agent and underwriter and each person, if any, who controls any
holder, agent or underwriter within the meaning of the Securities Act;
and the obligations of the holders and any agents or underwriters
contemplated by this Section 6 shall be in addition to any liability
which the respective holder, agent or underwriter may otherwise have
and shall extend, upon the same terms and conditions, to each officer
and director of the Company or the Guarantors (including any person
who, with his consent, is named in any registration statement as about
to become a director of the Company or the Guarantors) and to each
person, if any, who controls the Company within the meaning of the
Securities Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable
Securities covered by the Shelf Registration are to be sold pursuant to
an underwritten offering, the managing underwriter or underwriters
thereof shall be designated by Electing Holders holding at least a
majority in aggregate principal amount of the Registrable Securities to
be included in such offering, provided that such designated managing
underwriter or underwriters is or are reasonably acceptable to the
Company.
(b) Participation by Holders. Each holder of Registrable
Securities hereby agrees with each other such holder that no such
holder may participate in any underwritten offering hereunder unless
such holder (i) agrees to sell such holder's Registrable Securities on
the basis 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.
8. Rule 144.
The Company covenants to the holders of Registrable
Securities that to the extent it shall be required to do so under the Exchange
Act, the Company shall timely file the reports required to be filed by it under
the Exchange Act or the Securities Act (including the reports under Section 13
and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144
adopted by the Commission under the Securities Act) and the rules and
regulations adopted by the Commission thereunder, and shall take such further
action as any holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitations
of the exemption provided by Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission.
23
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents,
warrants, covenants and agrees that it has not granted, and shall not
grant, registration rights with respect to Registrable Securities or
any other securities which would be inconsistent with the terms
contained in this Exchange and Registration Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if the Company fails to
perform any of its obligations hereunder and that the Purchasers and
the holders from time to time of the Registrable Securities may be
irreparably harmed by any such failure, and accordingly agree that the
Purchasers and such holders, in addition to any other remedy to which
they may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of the Company under this
Exchange and Registration Rights Agreement in accordance with the terms
and conditions of this Exchange and Registration Rights Agreement, in
any court of the United States or any State thereof having
jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers
and other communications hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, if delivered
personally or by courier, or three days after being deposited in the
mail (registered or certified mail, postage prepaid, return receipt
requested) as follows: If to the Company, to it at 3231 S.E. 6th
Avenue, Topeka, Kansas 66607, with a copy to Wachtell, Lipton, Rosen &
Katz, 51 West 52nd Street, New York, NY 10019, Attention: Edward D.
Herlihy and if to a holder, to the address of such holder set forth in
the security register or other records of the Company, or to such other
address as the Company or any such holder may have furnished to the
other in writing in accordance herewith, except that notices of change
of address shall be effective only upon receipt. Copies of 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.
(d) Parties in Interest. All the terms and provisions of this
Exchange and Registration Rights Agreement shall be binding upon, shall
inure to the benefit of and shall be enforceable by the parties hereto
and the holders from time to time of the Registrable Securities and the
respective successors and assigns of the parties hereto and such
holders. In the event that any transferee of any holder of Registrable
Securities shall acquire Registrable Securities, in any manner, whether
by gift, bequest, purchase, operation of law or otherwise from a holder
of Registrable Securities, such transferee shall, without any further
writing or action of any kind, be deemed a beneficiary hereof for all
purposes and such Registrable Securities shall be held subject to all
of the terms of this Exchange and Registration Rights Agreement, and by
taking and holding such Registrable Securities such transferee shall be
entitled to receive the benefits of, and be conclusively deemed to have
agreed to be bound by all of the applicable terms and provisions of
this Exchange and Registration Rights Agreement. If the Company shall
so request, any such successor, assign or transferee shall agree in
writing to acquire and hold the Registrable Securities subject to all
of the applicable terms hereof.
(e) Survival. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this
Exchange and Registration Rights Agreement or made pursuant hereto
shall remain in full force and effect regardless of any investigation
(or statement as to the results thereof) made by or on behalf of any
holder of Registrable
24
Securities, any director, officer or partner of such holder, any agent
or underwriter or any director, officer or partner thereof, or any
controlling person of any of the foregoing, and shall survive delivery
of and payment for the Registrable Securities pursuant to the Purchase
Agreement and the transfer and registration of Registrable Securities
by such holder and the consummation of an Exchange Offer.
(f) GOVERNING LAW. THIS EXCHANGE AND REGISTRATION RIGHTS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
(g) Headings. The descriptive headings of the several Sections
and paragraphs of this Exchange and Registration Rights Agreement are
inserted for convenience only, do not constitute a part of this
Exchange and Registration Rights Agreement and shall not affect in any
way the meaning or interpretation of this Exchange and Registration
Rights Agreement.
(h) Entire Agreement; Amendments. This Exchange and
Registration Rights Agreement and the other writings referred to herein
(including the Indenture and the form of Securities) or delivered
pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter. This
Exchange and Registration Rights Agreement supersedes all prior
agreements and understandings between the parties with respect to its
subject matter. This Exchange and Registration Rights Agreement may be
amended and the observance of any term of this Exchange and
Registration Rights Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by
a written instrument duly executed by the Company and the holders of at
least a majority in aggregate principal amount of the Registrable
Securities at the time outstanding. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any
amendment or waiver effected pursuant to this Section 9(h), whether or
not any notice, writing or marking indicating such amendment or waiver
appears on such Registrable Securities or is delivered to such holder.
(i) Inspection. For so long as this Exchange and Registration
Rights Agreement shall be in effect, this Exchange and Registration
Rights Agreement and a complete list of the names and addresses of all
the holders of Registrable Securities shall be made available for
inspection and copying on any business day by any holder of Registrable
Securities for proper purposes only (which shall include any purpose
related to the rights of the holders of Registrable Securities under
the Securities, the Indenture and this Agreement) at the offices of the
Company at the address thereof set forth in Section 9(c) above and at
the office of the Trustee under the Indenture.
(j) Counterparts. This agreement may be executed by the
parties in counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together
constitute one and the same instrument.
Accepted as of the date hereof:
Goldman, Sachs & Co.
/s/ Goldman, Sachs & Co.
---------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
REGISTRATION RIGHTS AGREEMENT
If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Purchasers, the
Guarantors and the Company. It is understood that your acceptance of this letter
on behalf of each of the Purchasers is pursuant to the authority set forth in a
form of Agreement among Purchasers, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
Payless ShoeSource, Inc.
By: /s/ Ullrich E. Porzig
------------------------------------------
Name: Ullrich E. Porzig
Title: Senior Vice President - Chief
Financial Officer and Treasurer
Payless ShoeSource, Inc.
Payless ShoeSource Worldwide, Inc.
By: /s/ Ullrich E. Porzig
------------------------------------------
Name: Ullrich E. Porzig
Title: Senior Vice President - Chief
Financial Officer and Treasurer
Payless ShoeSource Distribution, Inc.
By: /s/ Ullrich E. Porzig
------------------------------------------
Name: Ullrich E. Porzig
Title: Vice President and Treasurer
Payless ShoeSource Merchandising, Inc.
By: /s/ Ullrich E. Porzig
------------------------------------------
Name: Ullrich E. Porzig
Title: Senior Vice President and
Treasurer
REGISTRATION RIGHTS AGREEMENT
Shoe Sourcing, Inc.
Eastborough, Inc.
Dyelights Inc.
PSS Delaware Company 2, Inc.
PSS Delaware Company 3, Inc.
PSS Delaware Company 4, Inc.
By: /s/ Ullrich E. Porzig
------------------------------------------
Name: Ullrich E. Porzig
Title: Vice President
Payless ShoeSource Finance, Inc.
Payless ShoeSource Gold Value, Inc.
Payless Purchasing Services, Inc.
PSS Labor Leasing, Inc.
PSS Investment I, Inc.
PSS Investment III, Inc.
PSS Canada, Inc.
By: /s/ Ullrich E. Porzig
------------------------------------------
Name: Ullrich E. Porzig
Title: President
REGISTRATION RIGHTS AGREEMENT
SCHEDULE 1
Payless ShoeSource Finance, Inc.
Dyelights Inc.
PSS Delaware Company 2, Inc.
PSS Delaware Company 3, Inc.
PSS Delaware Company 4, Inc.
Payless ShoeSource, Inc.
Payless ShoeSource Gold Value, Inc.
Shoe Sourcing, Inc.
Payless Purchasing Services, Inc.
Eastborough, Inc.
Payless ShoeSource Worldwide, Inc.
PSS Labor Leasing, Inc.
PSS Investment I, Inc.
PSS Investment III, Inc.
Payless ShoeSource Distribution, Inc.
Payless ShoeSource Merchandising, Inc.
PSS Canada, Inc.
REGISTRATION RIGHTS AGREEMENT
EXHIBIT A
Payless ShoeSource, Inc.
INSTRUCTION TO DTC PARTICIPANTS
(Date of Mailing)
URGENT IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE] *
The Depository Trust Company ("DTC") has identified you as a DTC Participant
through which beneficial interests in the Payless ShoeSource, Inc. (the
"Company") 8.25% Senior Subordinated Notes due 2013 (the "Securities") are held.
The Company is in the process of registering the Securities under the Securities
Act of 1933 for resale by the beneficial owners thereof. In order to have their
Securities included in the registration statement, beneficial owners must
complete and return the enclosed Notice of Registration Statement and Selling
Securityholder Questionnaire.
It is important that beneficial owners of the Securities receive a copy of the
enclosed materials as soon as possible as their rights to have the Securities
included in the registration statement depend upon their returning the Notice
and Questionnaire by [Deadline For Response]. Please forward a copy of the
enclosed documents to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions pertaining to this matter, please contact Payless ShoeSource,
Inc., 3231 S.E. 6th Avenue, Topeka, Kansas 66607. Tel: (785) 233-5171.
- ---------------
* Not less than 28 calendar days from date of mailing.
A1
Payless ShoeSource, Inc.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
(Date)
Reference is hereby made to the Exchange and Registration Rights Agreement (the
"Exchange and Registration Rights Agreement") among Payless ShoeSource, Inc., a
Delaware corporation (the "Company"), the Guarantors named therein and the
Purchasers named therein. Pursuant to the Exchange and Registration Rights
Agreement, the Company has filed with the United States Securities and Exchange
Commission (the "Commission") a registration statement on Form [__] (the "Shelf
Registration Statement") for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the "Securities Act"), of the Company's
8.25% Senior Subordinated Notes due 2013 (the "Securities"). A copy of the
Exchange and Registration Rights Agreement is attached hereto. All capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in
the Exchange and Registration Rights Agreement.
Each beneficial owner of Registrable Securities (as defined below) is entitled
to have the Registrable Securities beneficially owned by it included in the
Shelf Registration Statement. In order to have Registrable Securities included
in the Shelf Registration Statement, this Notice of Registration Statement and
Selling Securityholder Questionnaire ("Notice and Questionnaire") must be
completed, executed and delivered to the Company's counsel at the address set
forth herein for receipt ON OR BEFORE [Deadline for Response]. Beneficial owners
of Registrable Securities who do not complete, execute and return this Notice
and Questionnaire by such date (i) will not be named as selling securityholders
in the Shelf Registration Statement and (ii) may not use the Prospectus forming
a part thereof for resales of Registrable Securities.
Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and related Prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Shelf Registration Statement and
related Prospectus.
The term "Registrable Securities" is defined in the Exchange and Registration
Rights Agreement.
A2
ELECTION
The undersigned holder (the "Selling Securityholder") of Registrable Securities
hereby elects to include in the Shelf Registration Statement the Registrable
Securities beneficially owned by it and listed below in Item (3). The
undersigned, by signing and returning this Notice and Questionnaire, agrees to
be bound with respect to such Registrable Securities by the terms and conditions
of this Notice and Questionnaire and the Exchange and Registration Rights
Agreement, including, without limitation, Section 6 of the Exchange and
Registration Rights Agreement, as if the undersigned Selling Securityholder were
an original party thereto.
Upon any sale of Registrable Securities pursuant to the Shelf Registration
Statement, the Selling Securityholder will be required to deliver to the Company
and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and
as Exhibit B to the Exchange and Registration Rights Agreement.
The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
A3
QUESTIONNAIRE
(1) (a) Full Legal Name of Selling Securityholder:
(b) Full Legal Name of Registered Holder (if not the same as in (a) above)
of Registrable Securities Listed in Item (3) below:
(c) Full Legal Name of DTC Participant (if applicable and if not the
same as (b) above) Through Which Registrable Securities Listed in Item
(3) below are Held:
(2) Address for Notices to Selling Securityholder:
_________________________
_________________________
_________________________
Telephone: _________________________
Fax: _________________________
Contact Person: _________________________
(3) Beneficial Ownership of Securities:
Except as set forth below in this Item (3), the undersigned does not
beneficially own any Securities.
(a) Principal amount of Registrable Securities beneficially owned: ________
CUSIP No(s). of such Registrable Securities: __________________________
(b) Principal amount of Securities other than Registrable Securities
beneficially owned:
_______________________________________________________________________
CUSIP No(s). of such other Securities: ________________________________
(c) Principal amount of Registrable Securities which the undersigned
wishes to be included in the Shelf Registration Statement: ____________
CUSIP No(s). of such Registrable Securities to be included in the Shelf
Registration Statement: _______________________________________________
(4) Beneficial Ownership of Other Securities of the Company:
Except as set forth below in this Item (4), the undersigned Selling
Securityholder is not the beneficial or registered owner of any other
securities of the Company, other than the Securities listed above in
Item (3).
State any exceptions here:
A4
(5) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any
of its affiliates, officers, directors or principal equity holders (5%
or more) has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates)
during the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder
intends to distribute the Registrable Securities listed above in Item
(3) only as follows (if at all): Such Registrable Securities may be
sold from time to time directly by the undersigned Selling
Securityholder or, alternatively, through underwriters, broker-dealers
or agents. Such Registrable Securities may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time
of sale, at varying prices determined at the time of sale, or at
negotiated prices. Such sales may be effected in transactions (which
may involve crosses or block transactions) (i) on any national
securities exchange or quotation service on which the Registered
Securities may be listed or quoted at the time of sale, (ii) in the
over-the-counter market, (iii) in transactions otherwise than on such
exchanges or services or in the over-the-counter market, or (iv)
through the writing of options. In connection with sales of the
Registrable Securities or otherwise, the Selling Securityholder may
enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the Registrable Securities in the course of
hedging the positions they assume. The Selling Securityholder may also
sell Registrable Securities short and deliver Registrable Securities to
close out such short positions, or loan or pledge Registrable
Securities to broker-dealers that in turn may sell such securities.
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the Exchange Act and the rules and regulations thereunder, particularly
Regulation M.
In the event that the Selling Securityholder transfers all or any portion of the
Registrable Securities listed in Item (3) above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the disclosure of the
information contained herein in its answers to Items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company in connection with the preparation of the
Shelf Registration Statement and related Prospectus.
A5
In accordance with the Selling Securityholder's obligation under Section 3(d) of
the Exchange and Registration Rights Agreement to provide such information as
may be required by law for inclusion in the Shelf Registration Statement, the
Selling Securityholder agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder and pursuant to the Exchange and Registration
Rights Agreement shall be made in writing, by hand-delivery, first-class mail,
or air courier guaranteeing overnight delivery as follows:
(i) To the Company:
Payless ShoeSource, Inc.
3231 S.E. 6th Avenue
Topeka, Kansas 66607
Attn: Michael Massey
(ii) With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Edward D. Herlihy
Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the Company's counsel, the terms of this Notice and Questionnaire,
and the representations and warranties contained herein, shall be binding on,
shall inure to the benefit of and shall be enforceable by the respective
successors, heirs, personal representatives, and assigns of the Company and the
Selling Securityholder (with respect to the Registrable Securities beneficially
owned by such Selling Securityholder and listed in Item (3) above. This
Agreement shall be governed in all respects by the laws of the State of New
York.
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IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.
Dated: ____________________
_______________________________________________________________________
Selling Securityholder
(Print/type full legal name of beneficial owner of Registrable
Securities)
By: ___________________________________________________________________
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
Payless ShoeSource, Inc.
3231 S.E. 6th Avenue
Topeka, Kansas 66607
Attn: Michael Massey
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Edward D. Herlihy
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EXHIBIT B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
Wells Fargo Bank Minnesota, National Association
213 Court Street, Suite 703
Middletown, Connecticut 06457
Attention: Trust Officer
Re: Payless ShoeSource, Inc. (the "Company")
8.25% Senior Subordinated Notes due 2013
Dear Sirs:
Please be advised that ______________________________has transferred
$_____________________________aggregate principal amount of the above-referenced
Notes pursuant to an effective Registration Statement on Form [____] (File No.
333_____) filed by the Company.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus
dated [date] or in supplements thereto, and that the aggregate principal amount
of the Notes transferred are the Notes listed in such Prospectus opposite such
owner's name.
Dated:
Very truly yours,
____________________________
(Name)
By: ____________________________
(Authorized Signature)
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