EXHIBIT 4.1
Registration Rights Agreement
Dated As of July 31, 1998
among
Sonic Automotive, Inc.
TOWN AND COUNTRY FORD INCORPORATED,
MARCUS DAVID CORPORATION,
FRONTIER OLDSMOBILE--CADILLAC, INC.,
SONIC DODGE, LLC,
SONIC CHRYSLER--PLYMOUTH--JEEP--EAGLE, LLC,
FORT MILL FORD, INC.,
TOWN AND COUNTRY CHRYSLER--PLYMOUTH--JEEP OF ROCK HILL, INC.,
FORT MILL CHRYSLER--PLYMOUTH--DODGE INC.,
LONE STAR FORD, INC.,
SONIC AUTOMOTIVE OF NEVADA, INC.,
SONIC AUTOMOTIVE OF TENNESSEE, INC.,
SONIC AUTOMOTIVE - 6025 INTERNATIONAL DRIVE, LLC,
SONIC AUTOMOTIVE OF NASHVILLE, LLC,
SONIC AUTOMOTIVE OF CHATTANOOGA, LLC,
TOWN AND COUNTRY JAGUAR, LLC,
TOWN AND COUNTRY CHRYSLER--PLYMOUTH--JEEP, LLC,
TOWN AND COUNTRY DODGE OF CHATTANOOGA, LLC,
SONIC AUTOMOTIVE - 2490 SOUTH LEE HIGHWAY, LLC,
TOWN AND COUNTRY FORD OF CLEVELAND, LLC,
FREEDOM FORD, INC.,
SONIC AUTOMOTIVE 5260 PEACHTREE INDUSTRIAL BLVD., LLC,
SONIC AUTOMOTIVE OF GEORGIA, INC.,
SONIC PEACHTREE INDUSTRIAL BLVD., L.P.,
SONIC AUTOMOTIVE - CLEARWATER, INC.,
SONIC AUTOMOTIVE 21699 U.S. HWY. 19 N., INC.,
SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER, INC.,
SONIC AUTOMOTIVE - 1400 AUTOMALL DRIVE, COLUMBUS, INC.,
SONIC AUTOMOTIVE - 1455 AUTOMALL DRIVE, COLUMBUS, INC.
SONIC AUTOMOTIVE - 1495 AUTOMALL DRIVE, COLUMBUS, INC.
SONIC AUTOMOTIVE - 1500 AUTOMALL DRIVE, COLUMBUS, INC.
SONIC AUTOMOTIVE - 3700 WEST BROAD STREET, COLUMBUS, INC.
SONIC AUTOMOTIVE - 4000 WEST BROAD STREET, COLUMBUS, INC.
SONIC AUTOMOTIVE 2424 LAURENS RD., GREENVILLE, INC.,
SONIC AUTOMOTIVE 2752 LAURENS RD., GREENVILLE, INC.,
SONIC AUTOMOTIVE - 5585 PEACHTREE INDUSTRIAL BLVD., LLC,
CAPITOL CHEVROLET AND IMPORTS, INC.,
SONIC AUTOMOTIVE - 1919 N. DIXIE HWY., NSB, INC.,
SONIC AUTOMOTIVE - 1307 N. DIXIE HWY., NSB, INC.,
SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC.,
SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO, INC. and
SONIC AUTOMOTIVE -241 RIDGEWOOD AVE., HH, INC..
SONIC AUTOMOTIVE-HWY. 153 at SHALLOWFORD ROAD, CHATTANOOGA, INC.
and
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
NationsBanc Montgomery Securities LLC
and
BancAmerica Robertson Stephens
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into this 31st day of 1998, among Sonic Automotive, Inc., a Delaware
corporation (the "Company"), and Town and Country Ford, Inc., a North Carolina
corporation, Marcus David Corporation, a North Carolina corporation, Frontier
Oldsmobile-Cadillac, Inc., a North Carolina corporation, Sonic Dodge, LLC, a
North Carolina limited liability company, Sonic Chrysler-Plymouth-Jeep-Eagle,
LLC, a North Carolina limited liability company, Fort Mill Ford, Inc., a South
Carolina corporation, Town and Country Chrysler-Plymouth-Jeep of Rock Hill,
Inc., a South Carolina corporation, Fort Mill Chrysler-Plymouth-Dodge, Inc., a
South Carolina corporation, Lone Star Ford, Inc., a Texas corporation, Sonic
Automotive of Nevada, Inc., a Nevada corporation, Sonic Automotive of Tennessee,
Inc., a Tennessee corporation, Sonic Automotive-6025 International Drive, LLC, a
Tennessee limited liability company, Sonic Automotive of Nashville, LLC, a
Tennessee limited liability company, Sonic Automotive of Chattanooga, LLC, a
Tennessee limited liability company, Town and Country Jaguar, LLC, a Tennessee
limited liability company, Town and Country Chrysler-Plymouth-Jeep, LLC, a
Tennessee limited liability company, Town and Country Dodge of Chattanooga, LLC,
a Tennessee limited liability company, Sonic Automotive-2490 South Lee Highway,
LLC, a Tennessee limited liability company, Town and Country Ford of Cleveland,
LLC, an Ohio limited liability company, Freedom Ford, Inc., a Florida
corporation, Sonic Automotive 5260 Peachtree Industrial Blvd, LLC, a Georgia
limited liability company, Sonic Automotive of Georgia, Inc., a Georgia
corporation, Sonic Peachtree Industrial Blvd., L.P., a Georgia limited
partnership, Sonic Automotive - Clearwater, Inc., a Florida corporation, Sonic
Automotive 21699 U.S. Hwy 19 N., Inc., a Florida corporation, Sonic Automotive
Collision Center of Clearwater, Inc., a Florida corporation, Sonic Automotive -
1400 Automall Drive, Columbus, Inc., an Ohio corporation, Sonic Automotive -
1455 Automall Drive, Columbus, Inc., an Ohio corporation, Sonic Automotive -
1495 Automall Drive, Columbus, Inc., an Ohio corporation, Sonic Automotive -
1500 Automall Drive, Columbus, Inc., an Ohio corporation, Sonic Automotive -
3700 West Broad Street, Columbus, Inc., an Ohio corporation, Sonic Automotive -
4000 West Broad Street, Columbus, Inc., an Ohio corporation, Sonic Automotive
2424 Laurens Rd., Greenville, Inc., a South Carolina corporation, Sonic
Automotive 2752 Laurens Rd., Greenville, Inc., a South Carolina corporation,
Sonic Automotive - 5585 Peachtree Industrial Blvd., LLC, a Georgia limited
liability company, Capitol Chevrolet and Imports, Inc., an Alabama corporation,
Sonic Automotive - 1919 N. Dixie Hwy., NSB, Inc., a Florida corporation, Sonic
Automotive - 1307 N. Dixie Hwy., NSB, Inc., a Florida corporation, Sonic
Automotive - 1720 Mason Ave., DB, Inc., Inc., a Florida corporation, Sonic
Automotive - 3741 S. Nova Rd., PO, Inc., a Florida corporation, Sonic Automotive
- - 241 Ridgewood Ave., HH, Inc., a Florida corporation and Sonic Automotive-Hwy.
153 at Shallowford Road, Chattanooga, Inc., a Tennessee corporation (each a
"Guarantor" and collectively, the "Guarantors") and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, NationsBanc Montgomery
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Securities LLC and BancAmerica Robertson Stephens (collectively, the "Initial
Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated
July 31, 1998, among the Company, the Guarantors and the Initial Purchasers (the
"Purchase Agreement"), which provides for the sale by the Company to the Initial
Purchasers of an aggregate of $125 million principal amount of the Company's 11%
Senior Subordinated Notes due 2008, Series A, and related guarantees
(collectively, the "Securities"). In order to induce the Initial Purchasers to
enter into the Purchase Agreement, the Company has agreed to provide to the
Initial Purchasers and their direct and indirect transferees the registration
rights set forth in this Agreement. The execution of this Agreement is a
condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from
time to time.
"1934 Act" shall mean the Securities Exchange Act of l934, as
amended from time to time.
"Closing Date" shall mean the Closing Time as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble and shall
also include the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Company, provided, however, that such
depositary must have an address in the Borough of Manhattan, in the City
of New York.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities pursuant to Section 2.1
hereof.
"Exchange Offer Registration" shall mean a registration under the
1933 Act effected pursuant to Section 2.1 hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, including the Prospectus contained therein, all exhibits
thereto and all documents incorporated by reference therein.
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"Exchange Period" shall have the meaning set forth in Section 2.1
hereof.
"Exchange Securities" shall mean (i) the 11% Senior Subordinated
Notes due 2008, Series B issued by the Company and (ii) the related
guarantees issued by the Guarantors, in each case under the Indenture
containing terms identical to the Securities in all material respects
(except for references to certain interest rate provisions, restrictions
on transfers and restrictive legends), to be offered to Holders of
Securities in exchange for Registrable Securities pursuant to the Exchange
Offer.
"Holder" shall mean an Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable
Securities under the Indenture and each Participating Broker-Dealer that
holds Exchange Securities for so long as such Participating Broker-Dealer
is required to deliver a prospectus meeting the requirements of the 1933
Act in connection with any resale of such Exchange Securities.
"Indenture" shall mean the Indenture relating to the Securities, the
Exchange Securities and the Private Exchange Securities, dated as of July
1, 1998, between the Company and U.S. Bank Trust National Association, as
trustee, as the same may be amended, supplemented, waived or otherwise
modified from time to time in accordance with the terms thereof.
"Initial Purchaser" or "Initial Purchasers" shall have the meaning
set forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of Outstanding (as defined in the Indenture)
Registrable Securities; provided that whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company and other obligors
on the Securities or any Affiliate (as defined in the Indenture) of the
Company shall be disregarded in determining whether such consent or
approval was given by the Holders of such required percentage amount.
"Participating Broker-Dealer" shall mean any of Merrill Lynch,
Pierce, Fenner & Smith Incorporated, NationsBanc Montgomery Securities LLC
and BancAmerica Robertson Stephens and any other broker-dealer which makes
a market in the Securities and exchanges Registrable Securities in the
Exchange Offer for Exchange Securities.
"Person" shall mean an individual, partnership (general or limited),
corporation, limited liability company, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2.1
hereof.
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"Private Exchange Securities" shall have the meaning set forth in
Section 2.1 hereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including any
such prospectus supplement with respect to the terms of the offering of
any portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble.
"Registrable Securities" shall mean the Securities and, if issued,
the Private Exchange Securities; provided, however, that the Securities
and, if issued, the Private Exchange Securities, shall cease to be
Registrable Securities when (i) a Registration Statement with respect to
such Securities and, if issued, such Private Exchange Securities, shall
have been declared effective under the 1933 Act and such Securities or
Private Exchange Securities, as the case may be, shall have been disposed
of pursuant to such Registration Statement, (ii) such Securities and, if
issued, such Private Exchange Securities have been sold to the public
pursuant to Rule l44 (or any similar provision then in force, but not Rule
144A) under the 1933 Act, (iii) such Securities or Private Exchange
Securities, as the case may be, shall have ceased to be outstanding or
(iv) the Exchange Offer is consummated (except in the case of Securities
purchased from the Company and continued to be held by the Initial
Purchasers).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. (the "NASD") registration and filing fees,
including, if applicable, the fees and expenses of any "qualified
independent underwriter" (and the reasonable fees and expenses of its
counsel) that is required to be retained by any holder of Registrable
Securities in accordance with the rules and regulations of the NASD, (ii)
all fees and expenses incurred in connection with compliance with state
securities or blue sky laws and compliance with the rules of the NASD
(including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any
of the Exchange Securities or Registrable Securities and any filings with
the NASD), (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv)
all fees and expenses incurred in connection with the listing, if any, of
any of the Registrable Securities on any securities exchange or
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exchanges, (v) all rating agency fees, (vi) the fees and disbursements of
counsel for the Company and of the independent public accountants of the
Company, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, (vii)
the fees and expenses of the Trustee, and any escrow agent or custodian,
(viii) the reasonable fees and expenses of the Initial Purchasers in
connection with the Exchange Offer, including the reasonable fees and
expenses of counsel to the Initial Purchasers in connection therewith,
(ix) the reasonable fees and disbursements of Fried, Frank, Harris,
Shriver & Jacobson, special counsel representing the Holders of
Registrable Securities and (x) any fees and disbursements of the
underwriters customarily required to be paid by issuers or sellers of
securities and the fees and expenses of any special experts retained by
the Company in connection with any Registration Statement, but excluding
underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of
the Company which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency or government body performing the functions currently
performed by the United States Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2.2 hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2.2 of this
Agreement which covers all of the Registrable Securities or all of the
Private Exchange Securities on an appropriate form under Rule 415 under
the 1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Trustee" shall mean the trustee with respect to the Securities, the
Exchange Securities and the Private Exchange Securities under the
Indenture.
2. Registration Under the 1933 Act.
2.1 Exchange Offer. The Company and the Guarantors shall, for the
benefit of the Holders, at the Company's and the Guarantors' cost, use their
reasonable best efforts to (A) prepare and, as soon as practicable but not later
than 60 days following
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the Closing Date, file with the SEC an Exchange Offer Registration Statement on
an appropriate form under the 1933 Act with respect to a proposed Exchange Offer
and the issuance and delivery to the Holders, in exchange for the Registrable
Securities (other than Private Exchange Securities), of a like principal amount
of Exchange Securities, (B) to cause the Exchange Offer Registration Statement
to be declared effective under the 1933 Act within 135 days of the Closing Date,
(C) keep the Exchange Offer Registration Statement effective until the closing
of the Exchange Offer and (D) cause the Exchange Offer to be consummated not
later than 165 days following the Closing Date. The Exchange Securities will be
issued under the Indenture. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company and the Guarantors shall promptly commence
the Exchange Offer, it being the objective of such Exchange Offer to enable each
Holder eligible and electing to exchange Registrable Securities for Exchange
Securities (assuming that such Holder (a) is not an affiliate of the Company
within the meaning of Rule 405 under the 1933 Act, (b) is not a broker-dealer
tendering Registrable Securities acquired directly from the Company for its own
account, (c) acquired the Exchange Securities in the ordinary course of such
Holder's business and (d) has no arrangements or understandings with any Person
to participate in the Exchange Offer for the purpose of distributing the
Exchange Securities) to transfer such Exchange Securities from and after their
receipt without any limitations or restrictions under the 1933 Act and under
state securities or blue sky laws.
In connection with the Exchange Offer, the Company and the
Guarantors shall:
(a) mail as promptly as practicable to each Holder a copy of
the Prospectus forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and related documents;
(b) keep the Exchange Offer open for acceptance for a period
of not less than 30 calendar days after the date notice thereof is mailed to the
Holders (or longer if required by applicable law) (such period referred to
herein as the "Exchange Period");
(c) utilize the services of the Depositary for the Exchange
Offer;
(d) permit Holders to withdraw tendered Registrable Securities
at any time prior to 5:00 p.m. (Eastern Standard Time), on the last business day
of the Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Securities delivered for exchange,
and a statement that such Holder is withdrawing such Holder's election to have
such Securities exchanged;
(e) notify each Holder that any Registrable Security not
tendered will remain outstanding and continue to accrue interest, but will not
retain any rights under this Agreement (except in the case of the Initial
Purchasers and Participating Broker-Dealers as provided herein); and
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(f) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Securities acquired by them and having the status of an
unsold allotment in the initial distribution, the Company and the Guarantors
upon the request of any Initial Purchaser shall, simultaneously with the
delivery of the Exchange Securities in the Exchange Offer, issue and deliver to
such Initial Purchaser in exchange (the "Private Exchange") for the Securities
held by such Initial Purchaser, a like principal amount of debt securities of
the Company, guaranteed by the Guarantors on a senior basis, that are identical
(except that such securities shall bear appropriate transfer restrictions) to
the Exchange Securities (the "Private Exchange Securities").
The Exchange Securities and the Private Exchange Securities shall be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture and which, in either case, has been qualified under
the Trust Indenture Act of 1939, as amended (the "TIA"), or is exempt from such
qualification and shall provide that the Exchange Securities shall not be
subject to the transfer restrictions set forth in the Indenture but that the
Private Exchange Securities shall be subject to such transfer restrictions. The
Indenture or such indenture shall provide that the Exchange Securities, the
Private Exchange Securities and the Securities shall vote and consent together
on all matters as one class and that none of the Exchange Securities, the
Private Exchange Securities or the Securities will have the right to vote or
consent as a separate class on any matter. The Private Exchange Securities shall
be of the same series as and the Company and the Guarantors shall use all
commercially reasonable efforts to have the Private Exchange Securities bear the
same CUSIP number as the Exchange Securities. Neither the Company nor any of the
Guarantors shall have any liability under this Agreement solely as a result of
such Private Exchange Securities not bearing the same CUSIP number as the
Exchange Securities.
As soon as practicable after the close of the Exchange Offer and/or
the Private Exchange, the Company and the Guarantors shall:
(i) accept for exchange all Registrable Securities duly
tendered and not validly withdrawn pursuant to the Exchange Offer in
accordance with the terms of the Exchange Offer Registration
Statement and the letter of transmittal which shall be an exhibit
thereto;
(ii) accept for exchange all Securities properly tendered
pursuant to the Private Exchange;
(iii)deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities so accepted for exchange;
and
(iv) cause the Trustee promptly to authenticate and deliver
Exchange Securities or Private Exchange Securities, as the case may
be, to each Holder of Registrable Securities so accepted for
exchange in a
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principal amount equal to the principal amount of the Registrable
Securities of such Holder so accepted for exchange.
Interest on each Exchange Security and Private Exchange Security
will accrue from the last date on which interest was paid on the Registrable
Securities surrendered in exchange therefor or, if no interest has been paid on
the Registrable Securities, from the date of original issuance. The Exchange
Offer and the Private Exchange shall not be subject to any conditions, other
than (i) that the Exchange Offer or the Private Exchange, or the making of any
exchange by a Holder, does not violate applicable law or any applicable
interpretation of the staff of the SEC, (ii) the due tendering of Registrable
Securities in accordance with the Exchange Offer and the Private Exchange, (iii)
that each Holder of Registrable Securities exchanged in the Exchange Offer shall
have represented that all Exchange Securities to be received by it shall be
acquired in the ordinary course of its business and that at the time of the
consummation of the Exchange Offer it shall have no arrangement or understanding
with any person to participate in the distribution (within the meaning of the
1933 Act) of the Exchange Securities and shall have made such other
representations as may be reasonably necessary under applicable SEC rules,
regulations or interpretations to render the use of Form S-4 or other
appropriate form under the 1933 Act available and (iv) that no action or
proceeding shall have been instituted or threatened in any court or by or before
any governmental agency with respect to the Exchange Offer or the Private
Exchange which, in the Company's and the Guarantors' judgment, would reasonably
be expected to impair the ability of the Company and the Guarantors to proceed
with the Exchange Offer or the Private Exchange. The Company and the Guarantors
shall inform the Initial Purchasers of the names and addresses of the Holders to
whom the Exchange Offer is made, and the Initial Purchasers shall have the right
to contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.
2.2 Shelf Registration. (i) If, because of any changes in law, SEC
rules or regulations or applicable interpretations thereof by the staff of the
SEC, the Company and the Guarantors are not permitted to effect the Exchange
Offer as contemplated by Section 2.1 hereof, (ii) if for any other reason the
Exchange Offer Registration Statement is not declared effective within 135 days
following the original issue of the Registrable Securities or the Exchange Offer
is not consummated within 165 days after the original issue of the Registrable
Securities, (iii) upon the request of any of the Initial Purchasers or (iv) if a
Holder is not permitted by applicable law to participate in the Exchange Offer
or elects to participate in the Exchange Offer but does not receive fully
tradeable Exchange Securities pursuant to the Exchange Offer, then in case of
each of clauses (i) through (iv) the Company and the Guarantors shall, at their
cost:
(a) As promptly as practicable, file with the SEC, and
thereafter shall use their reasonable best efforts to cause to be
declared effective within 165 days after the original issue of the
Registrable Securities, a Shelf Registration Statement relating to
the offer and sale of the Registrable Securities by the Holders from
time to time in accordance with the methods
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of distribution elected by the Majority Holders participating in the
Shelf Registration and set forth in such Shelf Registration
Statement.
(b) Use their reasonable best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period
of two years from the date the Shelf Registration Statement is
declared effective by the SEC, or for such shorter period that will
terminate when all Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding or otherwise to be
Registrable Securities (the "Effectiveness Period"); provided,
however, that the Effectiveness Period in respect of the Shelf
Registration Statement shall be extended to the extent required to
permit dealers to comply with the applicable prospectus delivery
requirements of Rule 174 under the 1933 Act and as otherwise
provided herein.
(c) Notwithstanding any other provisions hereof, use their
reasonable best efforts to ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming part
thereof and any supplement thereto complies in all material respects
with the 1933 Act and the rules and regulations thereunder, (ii) any
Shelf Registration Statement and any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading and (iii)
any Prospectus forming part of any Shelf Registration Statement, and
any supplement to such Prospectus (as amended or supplemented from
time to time), does not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements, in light of the circumstances under which they were
made, not misleading.
The Company and the Guarantors shall not permit any securities other
than Registrable Securities to be included in the Shelf Registration Statement.
The Company and the Guarantors further agree, if necessary, to supplement or
amend the Shelf Registration Statement, as required by Section 3(b) below, and
to furnish to the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
2.3 Expenses. The Company and the Guarantors shall pay all
Registration Expenses in connection with the registration pursuant to Section
2.1 or 2.2. Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.
2.4. Effectiveness. (a) The Company and the Guarantors will be
deemed not have used their reasonable best efforts to cause the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
to become, or to
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remain, effective during the requisite period if the Company or any of the
Guarantors voluntarily takes any action that would, or omits to take any action
which omission would, result in any such Registration Statement not being
declared effective or in the Holders of Registrable Securities covered thereby
not being able to exchange or offer and sell such Registrable Securities during
that period as and to the extent contemplated hereby, unless such action is
required by applicable law.
(b) An Exchange Offer Registration Statement pursuant to
Section 2.1 hereof or a Shelf Registration Statement pursuant to Section 2.2
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that if, after it has been declared
effective, the offering of Registrable Securities pursuant to an Exchange Offer
Registration Statement or a Shelf Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be deemed not to
have become effective during the period of such interference, until the offering
of Registrable Securities pursuant to such Registration Statement may legally
resume.
2.5 Interest. The Indenture executed in connection with the
Securities will provide that in the event that either (a) the Exchange Offer
Registration Statement is not filed with the Commission on or prior to the 60th
calendar day following the date of original issue of the Securities, (b) the
Exchange Offer Registration Statement has not been declared effective on or
prior to the 135th calendar day following the date of original issue of the
Securities or (c) the Exchange Offer is not consummated or a Shelf Registration
Statement is not declared effective, in either case, on or prior to the 165th
calendar day following the date of original issue of the Securities (each such
event referred to in clauses (a) through (c) above, a "Registration Default"),
the interest rate borne by the Securities and the Private Exchange Securities
shall be increased ("Additional Interest") by one-quarter of one percent per
annum upon the occurrence of each Registration Default, which rate will increase
by one quarter of one percent each 90-day period that such Additional Interest
continues to accrue under any such circumstance, provided that the maximum
aggregate increase in the interest rate will in no event exceed one percent (1%)
per annum. Following the cure of all Registration Defaults the accrual of
Additional Interest will cease and the interest rate will revert to the original
rate.
If the Shelf Registration Statement is declared effective but shall
thereafter become unusable by the Holders for any reason, and the aggregate
number of days in any consecutive twelve-month period for which the Shelf
Registration Statement shall not be usable exceeds 30 days in the aggregate,
then the interest rate borne by the Securities and the Private Exchange
Securities (so long as the Private Exchange Securities have the status of an
unsold
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allotment at the time of the Exchange Offer) will be increased by 0.25% per
annum of the principal amount of the Securities and the Private Exchange
Securities for the first 90-day period (or portion thereof) beginning on the
31st such date that such Shelf Registration Statement ceases to be usable, which
rate shall be increased by an additional 0.25% per annum of the principal amount
of the Securities and the Private Exchange (so long as the Private Exchange
Securities have the status of an unsold allotment at the time of the Exchange
Offer) at the beginning of each subsequent 90-day period, provided that the
maximum aggregate increase in the interest rate will in no event exceed one
percent (1%) per annum. Any amounts payable under this paragraph shall also be
deemed "Additional Interest" for purposes of this Agreement. Upon the Shelf
Registration Statement once again becoming usable, the interest rate borne by
the Securities and the Private Exchange Securities will be reduced to the
original interest rate if the Company is otherwise in compliance with this
Agreement at such time. Additional Interest shall be computed based on the
actual number of days elapsed in each 90-day period in which the Shelf
Registration Statement is unusable.
The Company and the Guarantors shall notify the Trustee within five
business days after each and every date on which an event occurs in respect of
which Additional Interest is required to be paid (an "Event Date"). Additional
Interest shall be paid by depositing with the Trustee, in trust, for the benefit
of the Holders of Registrable Securities, on or before the applicable semiannual
interest payment date, immediately available funds in sums sufficient to pay the
Additional Interest then due. The Additional Interest due shall be payable on
each interest payment date to the record Holder of Securities and Private
Exchange Securities entitled to receive the interest payment to be paid on such
date as set forth in the Indenture. Each obligation to pay Additional Interest
shall be deemed to accrue from and including the day following the applicable
Event Date.
3. Registration Procedures.
In connection with the obligations of the Company and the Guarantors
with respect to Registration Statements pursuant to Sections 2.1 and 2.2 hereof,
the Company and the Guarantors shall:
(a) prepare and file with the SEC a Registration Statement, within
the relevant time period specified in Section 2, on the appropriate form under
the 1933 Act, which form (i) shall be selected by the Company and the
Guarantors, (ii) shall, in the case of a Shelf Registration, be available for
the sale of the Registrable Securities by the selling Holders thereof, (iii)
shall comply as to form in all material respects with the requirements of the
applicable form and include or incorporate by reference all financial statements
required by the SEC to be filed therewith or incorporated by reference therein,
and (iv) shall comply in all respects with the requirements of Regulation S-T
under the 1933 Act, and use their reasonable best efforts to cause such
Registration Statement to become effective and remain effective in accordance
with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary under applicable
law to keep such Registration Statement effective for the applicable period; and
cause each Prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 (or any similar
provision then in force) under the 1933 Act and comply with the provisions of
the 1933 Act, the 1934 Act and the rules and regulations thereunder applicable
to them with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in
-11-
accordance with the intended method or methods of distribution by the selling
Holders thereof (including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities, at least five business days prior to filing, that a
Shelf Registration Statement with respect to the Registrable Securities is being
filed and advising such Holders that the distribution of Registrable Securities
will be made in accordance with the method selected by the Majority Holders
participating in the Shelf Registration; (ii) furnish to each Holder of
Registrable Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the
Holder so requests, all exhibits, in order to facilitate the public sale or
other disposition of the Registrable Securities; and (iii) hereby consent to the
use of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities in connection with the offering and
sale of the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(d) use their reasonable best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue sky" laws
of such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement and each underwriter of an underwritten offering of
Registrable Securities shall reasonably request by the time the applicable
Registration Statement is declared effective by the SEC, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
each such Holder and underwriter to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder; provided,
however, that none of the Company and the Guarantors shall be required to (i)
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), or (ii) take any action which would subject it to general service
of process or taxation in any such jurisdiction where it is not then so subject;
(e) notify promptly each Holder of Registrable Securities under a
Shelf Registration or any Participating Broker-Dealer who has notified the
Company and the Guarantors that it is utilizing the Exchange Offer Registration
Statement as provided in paragraph (f) below and, if requested by such Holder or
Participating Broker-Dealer, confirm such advice in writing promptly (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by the
SEC or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) in the case of a Shelf Registration, if,
between the effective date of such Registration Statement and the closing of any
sale of Registrable Securities covered
-12-
thereby, the representations and warranties of the Company and the Guarantors
contained in any underwriting agreement, securities sales agreement or other
similar agreement, if any, relating to the offering cease to be true and correct
in all material respects, (v) of the happening of any event or the discovery of
any facts during the period a Shelf Registration Statement is effective which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which requires the making of any
changes in such Registration Statement or Prospectus in order to make the
statements therein not misleading, (vi) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities or the Exchange Securities, as the case may be, for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (vii) of any determination by the Company that a post-effective
amendment to such Registration Statement would be appropriate;
(f) (A) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled "Plan of
Distribution" which section shall be reasonably acceptable to Merrill Lynch on
behalf of the Participating Broker-Dealers, and which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that holds
Registrable Securities acquired for its own account as a result of market-making
activities or other trading activities and that will be the beneficial owner (as
defined in Rule 13d-3 promulgated under the 1934 Act) of Exchange Securities to
be received by such broker-dealer in the Exchange Offer, whether such positions
or policies have been publicly disseminated by the staff of the SEC or such
positions or policies, in the reasonable judgment of Merrill Lynch on behalf of
the Participating Broker-Dealers and its counsel, represent the prevailing views
of the staff of the SEC, including a statement that any such broker-dealer who
receives Exchange Securities for Registrable Securities pursuant to the Exchange
Offer may be deemed a statutory underwriter and must deliver a prospectus
meeting the requirements of the 1933 Act in connection with any resale of such
Exchange Securities, (ii) furnish to each Participating Broker-Dealer who has
delivered to the Company the notice referred to in Section 3(e), without charge,
as many copies of each Prospectus included in the Exchange Offer Registration
Statement, including any preliminary prospectus, and any amendment or supplement
thereto, as such Participating Broker-Dealer may reasonably request, (iii)
hereby consent to the use of the Prospectus forming part of the Exchange Offer
Registration Statement or any amendment or supplement thereto, by any Person
subject to the prospectus delivery requirements of the SEC, including all
Participating Broker- Dealers, in connection with the sale or transfer of the
Exchange Securities covered by the Prospectus or any amendment or supplement
thereto, and (iv) include in the transmittal letter or similar documentation to
be executed by an exchange offeree in order to participate in the Exchange Offer
(x) the following provision:
"If the exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of market-making
activities or other trading activities, it will deliver a prospectus
meeting the requirements of the 1933 Act in connection with any
resale of Exchange Securities received
-13-
in respect of such Registrable Securities pursuant to the Exchange
Offer;" and
(y) a statement to the effect that by a broker-dealer making the acknowledgment
described in clause (x) and by delivering a Prospectus in connection with the
exchange of Registrable Securities, the broker-dealer will not be deemed to
admit that it is an underwriter within the meaning of the 1933 Act; and
(B) in the case of any Exchange Offer Registration
Statement, the Company and the Guarantors agree to deliver to the Initial
Purchasers on behalf of the Participating Broker-Dealers upon the effectiveness
of the Exchange Offer Registration Statement (i) an opinion of counsel or
opinions of counsel substantially in the form attached hereto as Exhibit A, (ii)
officers' certificates substantially in the form customarily delivered in a
public offering of debt securities and (iii) a comfort letter or comfort letters
in customary form to the extent permitted by Statement on Auditing Standards No.
72 of the American Institute of Certified Public Accountants (or if such a
comfort letter is not permitted, an agreed upon procedures letter in customary
form) from the Company's independent certified public accountants (and, if
necessary, any other independent certified public accountants of any subsidiary
of the Company or of any business acquired by the Company for which financial
statements are, or are required to be, included in the Registration Statement)
at least as broad in scope and coverage as the comfort letter or comfort letters
delivered to the Initial Purchasers in connection with the initial sale of the
Securities to the Initial Purchasers;
(g) (i) in the case of an Exchange Offer, furnish counsel for the
Initial Purchasers and (ii) in the case of a Shelf Registration, furnish counsel
for the Holders of Registrable Securities copies of any comment letters received
from the SEC or any other request by the SEC or any state securities authority
for amendments or supplements to a Registration Statement and Prospectus or for
additional information;
(h) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, and each underwriter, if any, without charge, at least
one conformed copy of each Registration Statement and any post-effective
amendment thereto, including financial statements and schedules (without
documents incorporated therein by reference and all exhibits thereto, unless
requested);
(j) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the underwriters, if any, may
reasonably request at least three business days prior to the closing of any sale
of Registrable Securities;
-14-
(k) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Sections 3(e)(v)
and 3(e)(vi) hereof, as promptly as practicable after the occurrence of such an
event, use their best efforts to prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable Securities
or Participating Broker-Dealers, such Prospectus will not contain at the time of
such delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or will remain so
qualified. At such time as such public disclosure is otherwise made or the
Company determines that such disclosure is not necessary, in each case to
correct any misstatement of a material fact or to include any omitted material
fact, the Company agrees promptly to notify each Holder of such determination
and to furnish each Holder such number of copies of the Prospectus as amended or
supplemented, as such Holder may reasonably request;
(l) in the case of a Shelf Registration, within a reasonable time
prior to the filing of any Registration Statement, any Prospectus, any amendment
to a Registration Statement or amendment or supplement to a Prospectus or any
document which is to be incorporated by reference into a Registration Statement
or a Prospectus after initial filing of a Registration Statement, provide copies
of such document to the Initial Purchasers on behalf of such Holders; and make
representatives of the Company and the Guarantors as shall be reasonably
requested by the Holders of Registrable Securities, or the Initial Purchasers on
behalf of such Holders, available for discussion of such document;
(m) use their reasonable best efforts to obtain a CUSIP number for
all Exchange Securities, Private Exchange Securities or Registrable Securities,
as the case may be, not later than the effective date of a Registration
Statement, and provide the Trustee with printed certificates for the Exchange
Securities, Private Exchange Securities or the Registrable Securities, as the
case may be, in a form eligible for deposit with the Depositary;
(n) (i) cause the Indenture to be qualified under the TIA in
connection with the registration of the Exchange Securities or Registrable
Securities, as the case may be, (ii) cooperate with the Trustee and the Holders
to effect such changes to the Indenture as may be required for the Indenture to
be so qualified in accordance with the terms of the TIA and (iii) execute, and
use their reasonable best efforts to cause the Trustee to execute, all documents
as may be required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable the Indenture to be so qualified in
a timely manner;
(o) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and appropriate
actions in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration:
-15-
(i) make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to
underwriters in similar underwritten offerings as may be reasonably
requested by them;
(ii) obtain opinions of counsel to the Company and the
Guarantors and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority in
principal amount of the Registrable Securities being sold) addressed
to each selling Holder and the underwriters, if any, covering the
matters customarily covered in opinions requested in sales of
securities or underwritten offerings and such other matters as may
be reasonably requested by such Holders and underwriters;
(iii) obtain "cold comfort" letters and updates thereof from
the Company's and the Guarantors' independent certified public
accountants (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements are,
or are required to be, included in the Registration Statement)
addressed to the underwriters, if any, and use reasonable efforts to
have such letter addressed to the selling Holders of Registrable
Securities (to the extent consistent with Statement on Auditing
Standards No. 72 of the American Institute of Certified Public
Accounts), such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters to
underwriters in connection with similar underwritten offerings;
(iv) enter into a securities sales agreement with the Holders
and an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose of
soliciting purchases of Registrable Securities, which agreement
shall be in form, substance and scope customary for similar
offerings;
(v) if an underwriting agreement is entered into, cause the
same to set forth indemnification provisions and procedures
substantially equivalent to the indemnification provisions and
procedures set forth in Section 4 hereof with respect to the
underwriters and all other parties to be indemnified pursuant to
said Section or, at the request of any underwriters, in the form
customarily provided to such underwriters in similar types of
transactions; provided such underwriting agreement shall contain
customary provisions regarding indemnification of the Company and
the Guarantors with the respect to information provided by the
underwriters; and
(vi) deliver such documents and certificates as may be
reasonably requested and as are customarily delivered in similar
offerings to the Holders of a majority in principal amount of the
Registrable Securities being sold and the managing underwriters, if
any.
-16-
The above shall be done at (i) the effectiveness of such Registration Statement
(and each post-effective amendment thereto) and (ii) each closing under any
underwriting or similar agreement as and to the extent required thereunder. In
the case of any underwritten offering, the Company and the Guarantors shall
provide written notice to the Holders of all Registrable Securities of such
underwritten offering at least 15 days prior to the filing of a prospectus
supplement for such underwritten offering. Such notice shall (x) offer each such
Holder the right to participate in such underwritten offering, (y) specify a
date, which shall be no earlier than 10 days following the date of such notice,
by which such Holder must inform the Company of its intent to participate in
such underwritten offering and (z) include the instructions such Holder must
follow in order to participate in such underwritten offering;
(p) in the case of a Shelf Registration or if a Prospectus is
required to be delivered by any Participating Broker-Dealer in the case of an
Exchange Offer, make available for inspection by representatives of the Holders
of the Registrable Securities, any underwriters participating in any disposition
pursuant to a Shelf Registration Statement, any Participating Broker-Dealer and
any counsel or accountant retained by any of the foregoing, all financial and
other records, pertinent corporate documents and properties of the Company and
the Guarantors reasonably requested by any such persons, and cause the
respective officers, directors, employees, and any other agents of the Company
and the Guarantors to supply all information reasonably requested by any such
representative, underwriter, special counsel or accountant in connection with a
Registration Statement, and make such representatives of the Company and the
Guarantors available for discussion of such documents as shall be reasonably
requested by the Initial Purchasers;
(q) (i) in the case of an Exchange Offer Registration Statement,
within a reasonable time prior to the filing of any Exchange Offer Registration
Statement, any Prospectus forming a part thereof, any amendment to an Exchange
Offer Registration Statement or amendment or supplement to such Prospectus,
provide copies of such document to the Initial Purchasers and to counsel to the
Holders of Registrable Securities and make such changes in any such document
prior to the filing thereof as the Initial Purchasers or counsel to the Holders
of Registrable Securities may reasonably request and, except as otherwise
required by applicable law, not file any such document in a form to which the
Initial Purchasers on behalf of the Holders of Registrable Securities and
counsel to the Holders of Registrable Securities shall not have previously been
advised and furnished a copy of or to which the Initial Purchasers on behalf of
the Holders of Registrable Securities or counsel to the Holders of Registrable
Securities shall reasonably object, and make the representatives of the Company
and the Guarantors available for discussion of such documents as shall be
reasonably requested by the Initial Purchasers; and
(ii) in the case of a Shelf Registration, within a reasonable
time prior to filing any Shelf Registration Statement, any Prospectus forming a
part thereof, any amendment to such Shelf Registration Statement or amendment or
supplement to such Prospectus, provide copies of such document to the Holders of
Registrable
-17-
Securities, to the Initial Purchasers, to counsel for the Holders and to the
underwriter or underwriters of an underwritten offering of Registrable
Securities, if any, make such changes in any such document prior to the filing
thereof as the Initial Purchasers, the counsel to the Holders or the underwriter
or underwriters reasonably request and not file any such document in a form to
which the Majority Holders, the Initial Purchasers on behalf of the Holders of
Registrable Securities, counsel for the Holders of Registrable Securities or any
underwriter shall not have previously been advised and furnished a copy of or to
which the Majority Holders, the Initial Purchasers of behalf of the Holders of
Registrable Securities, counsel to the Holders of Registrable Securities or any
underwriter shall reasonably object, and make the representatives of the Company
and the Guarantors available for discussion of such document as shall be
reasonably requested by the Holders of Registrable Securities, the Initial
Purchasers on behalf of such Holders, counsel for the Holders of Registrable
Securities or any underwriter.
(r) in the case of a Shelf Registration, use their reasonable best
efforts to cause all Registrable Securities to be listed on any securities
exchange on which similar debt securities issued by the Company are then listed
if requested by the Majority Holders, or if requested by the underwriter or
underwriters of an underwritten offering of Registrable Securities, if any;
(s) in the case of a Shelf Registration, use their reasonable best
efforts to cause the Registrable Securities to be rated by the appropriate
rating agencies, if so requested by the Majority Holders, or if requested by the
underwriter or underwriters of an underwritten offering of Registrable
Securities, if any;
(t) otherwise comply with all applicable rules and regulations of
the SEC and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering at least 12 months which shall
satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 promulgated
thereunder;
(u) cooperate and assist in any filings required to be made with the
NASD and, in the case of a Shelf Registration, in the performance of any due
diligence investigation by any underwriter and its counsel (including any
"qualified independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD); and
(v) upon consummation of an Exchange Offer or a Private Exchange,
obtain (i) a customary opinion of counsel to the Company and the Guarantors
addressed to the Trustee for the benefit of all Holders of Registrable
Securities participating in the Exchange Offer or a Private Exchange, and which
includes an opinion that (A) each of the Company and the Guarantors has duly
authorized, executed and delivered the Exchange Securities and/or Private
Exchange Securities, as applicable, and the related indenture, and (B) each of
the Exchange Securities and related indenture constitute legal, valid and
binding obligations of each of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance with its respective terms
(with customary exceptions) and (ii) an officers' certificate containing the
certifications substantially similar to those set forth in Section 5(c) of the
Purchase Agreement.
-18-
In the case of a Shelf Registration Statement, the Company and the
Guarantors may (as a condition to such Holder's participation in the Shelf
Registration) require each Holder of Registrable Securities to furnish to the
Company and the Guarantors such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company and the Guarantors may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company and the Guarantors of the
happening of any event or the discovery of any facts, each of the kind described
in Section 3(e)(v) and 3(e)(vi) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(k) hereof, and, if so directed by the Company and the
Guarantors, such Holder will deliver to the Company and the Guarantors (at their
expense) all copies in such Holder's possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
In the event that the Company and the Guarantors fail to effect the
Exchange Offer or file any Shelf Registration Statement and maintain the
effectiveness of any Shelf Registration Statement as provided herein, the
Company and the Guarantors shall not file any Registration Statement with
respect to any securities (within the meaning of Section 2(1) of the 1933 Act)
of the Company and the Guarantors other than Registrable Securities.
If any of the Registrable Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage such
offering will be selected by the Majority Holders of such Registrable Securities
included in such offering and shall be acceptable to the Company and the
Guarantors. No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) 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 (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
4. Indemnification; Contribution.
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless the Initial Purchasers, each Holder, each
Participating Broker-Dealer, each Person who participates as an underwriter (any
such Person being an "Underwriter") and each Person, if any, who controls any
Holder or Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
-19-
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment or supplement thereto)
pursuant to which Exchange Securities or Registrable Securities were
registered under the 1933 Act, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to
make the statements therein not misleading, or arising out of any
untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (or any amendment or supplement thereto)
or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 4(d) below) any such
settlement is effected with the written consent of the Company and
the Guarantors; and
(iii)against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by any
indemnified party), reasonably incurred in investigating, preparing
or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company and the
Guarantors by the Holder, Participating Broker-Dealer or Underwriter expressly
for use in a Registration Statement (or any amendment thereto) or any Prospectus
(or any amendment or supplement thereto).
(b) Each Holder severally, but not jointly, agrees to indemnify and
hold harmless the Company, the Guarantors, the Initial Purchasers, each
Underwriter and the other selling Holders, and each of their respective
directors and officers, and each Person, if any, who controls the Company, the
Guarantors, the Initial Purchasers, any Underwriter or any other selling Holder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 4(a) hereof, as incurred, but only
-20-
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Shelf Registration Statement (or any amendment thereto)
or any Prospectus included therein (or any amendment or supplement thereto) in
reliance upon and in conformity with written information with respect to such
Holder furnished to the Company by such Holder expressly for use in the Shelf
Registration Statement (or any amendment thereto) or such Prospectus (or any
amendment or supplement thereto); provided, however, that no such Holder shall
be liable for any claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Registrable Securities pursuant to such
Shelf Registration Statement.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action or proceeding commenced
against it in respect of which indemnity may be sought hereunder, but failure so
to notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 4 (whether or
not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 4(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 4 is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any
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losses, liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, in such proportion as is appropriate to reflect the relative fault of
the Company and the Guarantors on the one hand and the Holders and the Initial
Purchasers each on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative fault of the Company and the Guarantors on the one hand and
the Holders and the Initial Purchasers each on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company and the
Guarantors, the Holders or the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, the Guarantors the Holders and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to this Section
4 were determined by pro rata allocation (even if the Initial Purchasers 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 above in
this Section 4. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
4 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 4, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities sold by it were offered exceeds the amount
of any damages which such Initial Purchaser 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 1933 Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4, each Person, if any, who controls an
Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Initial Purchaser or Holder, and each director of the Company and such
Guarantor, as the case may be, and each Person, if any, who controls the Company
and such Guarantor, as the case may be, within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company. The Initial Purchasers' respective obligations to
contribute pursuant to this Section 4 are several in proportion to the
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principal amount of Securities set forth opposite their respective names in
Schedule A to the Purchase Agreement and not joint.
5. Miscellaneous.
5.1 Rule 144 and Rule 144A. For so long as the Company is subject to
the reporting requirements of Section 13 or 15 of the 1934 Act, the Company and
the Guarantors covenant that they will file the reports required to be filed by
them under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules
and regulations adopted by the SEC thereunder. If the Company ceases to be so
required to file such reports, the Company and the Guarantors covenant that they
will upon the request of any Holder of Registrable Securities (a) make publicly
available such information as is necessary to permit sales pursuant to Rule 144
under the 1933 Act, (b) deliver such information to a prospective purchaser as
is necessary to permit sales pursuant to Rule 144A under the 1933 Act and it
will take such further action as any Holder of Registrable Securities may
reasonably request, and (c) take such further action that is reasonable in the
circumstances, in each case, to the extent required from time to time to enable
such Holder to sell its Registrable Securities without registration under the
1933 Act within the limitation of the exemptions provided by (i) Rule 144 under
the 1933 Act, as such Rule may be amended from time to time, (ii) Rule 144A
under the 1933 Act, as such Rule may be amended from time to time, or (iii) any
similar rules or regulations hereafter adopted by the SEC. Upon the request of
any Holder of Registrable Securities, the Company and the Guarantors will
deliver to such Holder a written statement as to whether they have complied with
such requirements.
5.2 No Inconsistent Agreements. The Company and the Guarantors have
not entered into and the Company and the Guarantors will not after the date of
this Agreement enter into any agreement which is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with the rights granted to the holders of
the Company's and the Guarantor's other issued and outstanding securities under
any such agreements.
5.3 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company and the Guarantors have obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure.
5.4 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (a) if to a Holder, at the most current address given by such Holder to
the Company and the Guarantors by means of a notice given in accordance with the
provisions of this Section 5.4, which address initially is the address set forth
in the Purchase Agreement with respect to the Initial
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Purchasers; and (b) if to the Company and the Guarantors, initially at the
Company's address set forth in the Purchase Agreement, and thereafter at such
other address of which notice is given in accordance with the provisions of this
Section 5.4.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; two business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the person giving the same to the Trustee under the
Indenture, at the address specified in such Indenture.
5.5 Successor and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement, including the restrictions on resale set forth in this Agreement and,
if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof.
5.6 Third Party Beneficiaries. The Initial Purchasers (even if the
Initial Purchasers are not Holders of Registrable Securities) shall be third
party beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, and shall have
the right to enforce such agreements directly to the extent they deem such
enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder. Each Holder of Registrable Securities shall be a third party
beneficiary to the agreements made under this Registration Rights Agreement
between the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other hand, and shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights hereunder.
5.7. Specific Enforcement. Without limiting the remedies available
to the Initial Purchasers and the Holders, the Company and the Guarantors
acknowledge that any failure by the Company and the Guarantors to comply with
their obligations under Sections 2.1 through 2.4 hereof may result in material
irreparable injury to the Initial Purchasers or the Holders for which there is
no adequate remedy at law, that it would not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be
-24-
required to specifically enforce the Company's and the Guarantor's obligations
under Sections 2.1 through 2.4 hereof.
5.8. Restriction on Resales. Until the expiration of two years after
the original issuance of the Securities and the Guarantees, the Company and the
Guarantors will not, and will cause their "affiliates" (as such term is defined
in Rule 144(a)(1) under the 1933 Act) not to, resell any Securities and
Guarantees which are "restricted securities" (as such term is defined under Rule
144(a)(3) under the 1933 Act) that have been reacquired by any of them and shall
immediately upon any purchase of any such Securities and Guarantees submit such
Securities and Guarantees to the Trustee for cancellation.
5.9 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
5.10 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
5.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
5.12 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
SONIC AUTOMOTIVE, INC.
By: /s/ B. Scott Smith
----------------------------
Name: B. Scott Smith
Title: President and Chief
Operating Officer
TOWN AND COUNTRY FORD
INCORPORATED
MARCUS DAVID CORPORATION
FRONTIER
OLDSMOBILE--CADILLAC, INC.
SONIC DODGE, LLC
SONIC
CHRYSLER--PLYMOUTH--JEEP--
EAGLE,
LLC
FORT MILL FORD, INC.
TOWN AND COUNTRY
CHRYSLER--PLYMOUTH--JEEP
OF ROCK HILL, INC.
FORT MILL
CHRYSLER--PLYMOUTH--DODGE
INC.
LONE STAR FORD, INC.
SONIC AUTOMOTIVE OF
NEVADA, INC.
SONIC AUTOMOTIVE OF
TENNESSEE, INC.
SONIC AUTOMOTIVE - 6025
INTERNATIONAL
DRIVE, LLC
SONIC AUTOMOTIVE OF
NASHVILLE, LLC
SONIC AUTOMOTIVE OF
CHATTANOOGA, LLC
TOWN AND COUNTRY JAGUAR,
LLC
TOWN AND COUNTRY CHRYSLER
--PLYMOUTH--JEEP, LLC
TOWN AND COUNTRY DODGE OF
CHATTANOOGA, LLC
SONIC AUTOMOTIVE - 2490 SOUTH LEE
HIGHWAY, LLC,
TOWN AND COUNTRY FORD OF CLEVELAND,
LLC
FREEDOM FORD, INC.
SONIC AUTOMOTIVE 5260
PEACHTREE
INDUSTRIAL BLVD., LLC
SONIC AUTOMOTIVE OF
GEORGIA, INC.
SONIC PEACHTREE INDUSTRIAL
BLVD., L.P.
SONIC AUTOMOTIVE -
CLEARWATER, INC.
SONIC AUTOMOTIVE 21699 U.S.
HWY. 19 N., INC.
SONIC AUTOMOTIVE COLLISION
CENTER OF
CLEARWATER, INC.
SONIC AUTOMOTIVE - 1400
AUTOMALL DRIVE,
COLUMBUS, INC.
SONIC AUTOMOTIVE - 1455
AUTOMALL DRIVE,
COLUMBUS, INC.
SONIC AUTOMOTIVE - 1495
AUTOMALL DRIVE,
COLUMBUS, INC.
SONIC AUTOMOTIVE - 1500 AUTOMALL DRIVE,
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COLUMBUS, INC.
SONIC AUTOMOTIVE - 3700 WEST BROAD
STREET, COLUMBUS, INC.
SONIC AUTOMOTIVE - 4000 WEST BROAD
STREET, COLUMBUS, INC.
SONIC AUTOMOTIVE 2424 LAURENS RD.,
GREENVILLE, INC.
SONIC AUTOMOTIVE 2752 LAURENS RD.,
GREENVILLE, INC.
SONIC AUTOMOTIVE - 5585 PEACHTREE
INDUSTRIAL BLVD., LLC
CAPITOL CHEVROLET AND IMPORTS, INC.,
SONIC AUTOMOTIVE - 1919 N.
DIXIE HWY., NSB, INC.
SONIC AUTOMOTIVE - 1307 N.
DIXIE HWY., NSB, INC.
SONIC AUTOMOTIVE - 1720 MASON AVE.,
DB, INC.
SONIC AUTOMOTIVE -3741 S. NOVA RD.,
PO, INC.
SONIC AUTOMOTIVE - 241 RIDGEWOOD
AVE., HH, INC.
SONIC AUTOMOTIVE-HWY. 153 at
SHALLOWFORD ROAD, CHATTANOOGA, INC.
By: /s/ B. Scott Smith
---------------------------
Name: B. Scott Smith
Title: Authorized Officer
-27-
Confirmed and accepted as
of the date first above
written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
NATIONSBANC MONTGOMERY SECURITIES LLC
BANCAMERICA ROBERTSON STEPHENS
BY: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Barry S. Price
-----------------------------
Name:
Title:
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