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EXHIBIT 4.2
EXECUTION COPY
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REGISTRATION RIGHTS AGREEMENT
DATED AS OF FEBRUARY 27, 2004
AMONG
AMF BOWLING WORLDWIDE, INC.
(A DELAWARE CORPORATION),
THE GUARANTORS PARTY HERETO
AND
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
AND
CREDIT SUISSE FIRST BOSTON LLC
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into this 27 day of February, 2004, among AMF Bowling Worldwide, Inc., a
Delaware corporation (the "Company"), AMF Bowling Products, Inc., a Virginia
corporation, AMF Bowling Centers Holdings Inc., a Delaware corporation, AMF
Worldwide Bowling Centers Holdings Inc., a Delaware corporation, American
Recreation Centers, Inc., a California corporation, AMF Bowling Centers, Inc., a
Virginia corporation, AMF Beverage Company of Oregon, Inc., an Oregon
corporation, AMF Beverage Company of W. Va., Inc., a West Virginia corporation,
King Louie Lenexa, Inc., a Kansas corporation, 300, Inc., a Texas corporation,
Bush River Corporation, a South Carolina corporation, AMF Bowling Centers (Aust)
International Inc., a Virginia corporation, AMF Bowling Centers International
Inc., a Virginia corporation, AMF Bowling Mexico Holding, Inc., a Delaware
corporation, and Boliches AMF, Inc., a Virginia corporation (collectively, the
"Guarantors") and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit
Suisse First Boston LLC (collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement; dated
February 19, 2004, among Kingpin Merger Sub, Inc. ("Merger Sub"), a Delaware
corporation (which will be merged with and into the Company, upon consumption of
the merger of the Company and Merger Sub), and the Initial Purchasers (the
"Purchase Agreement"), which provides for the sale by the Company to the Initial
Purchasers of an aggregate of $150 million principal amount of the Company's 10%
Senior Subordinated Notes due 2010 (the "Notes"). The obligations of the Company
under the Notes will be fully and unconditionally guaranteed by the Guarantors
(the "Guarantees"). The Notes and the Guarantees are collectively referred to
herein as the "Securities." In order to induce the Initial Purchasers to enter
into the Purchase Agreement, the Company and the Guarantors have 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.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"AGREEMENT" shall have the meaning set forth in the preamble.
"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 and the Guarantors, PROVIDED, HOWEVER,
that such depositary must have an address in the Borough of Manhattan, in
the City of New York.
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"EXCHANGE OFFER" shall mean the exchange offer by the Company and the
Guarantors 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 or on any successor form used for substantially the same
transactions), and all amendments and supplements to such registration
statement, including the Prospectus contained therein, all exhibits thereto
and all documents incorporated by reference therein.
"EXCHANGE PERIOD" shall have the meaning set forth in Section 2.1
hereof.
"EXCHANGE SECURITIES" shall mean, collectively, the 10% Senior
Subordinated Notes due 2010, issued by the Company under the Indenture and
the related guarantees issued by the Guarantors 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.
"GUARANTORS" shall have the meaning set forth in the preamble and
shall also include the Guarantors' successors.
"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, dated
as of February 27, 2004, among the Company, the Guarantors and Wilmington
Trust Company, 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, the Guarantors and
other obligors on the Securities or any Affiliate (as defined in the
Indenture) of the Company or any Guarantor shall be disregarded in
determining whether such consent or approval was given by the Holders of
such required percentage amount.
"NASD" means National Association of Securities Dealers, Inc.
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"PARTICIPATING BROKER-DEALER" shall mean any of Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Credit Suisse First Boston LLC 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.
"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, collectively, the Securities and,
if issued, the Private Exchange Securities; PROVIDED, HOWEVER, that
Securities and, if issued, the Private Exchange Securities, shall cease to
be Registrable Securities when (i) a Registration Statement with respect to
such Securities shall have been declared effective under the 1933 Act and
such Securities shall have been disposed of pursuant to such Registration
Statement, (ii) such Securities have been sold to the public pursuant to
Rule 144 (or any similar provision then in force, but not Rule 144A) under
the 1933 Act, (iii) such Securities shall have ceased to be outstanding or
(iv) the Exchange Offer is consummated (except in the case of Securities
purchased from the Company and the Guarantors and continued to be held by
the Initial Purchasers or Securities which may not be exchanged in the
Exchange Offer).
"REGISTRATION DEFAULT" shall have the meaning set forth in Section 2.5
hereof.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company and the Guarantors with this
Agreement, including without limitation: (i) all SEC, stock exchange or
NASD registration and filing fees, including, if applicable, the fees and
expenses of any "qualified independent underwriter" (and its counsel) that
is required to be retained by any holder of Registrable Securities in
accordance with the rules and regulations of the NASD, (ii) all fees and
expenses incurred in connection with compliance with state securities or
blue sky laws 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 exchanges, (v) all
rating agency fees, (vi) the fees and
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disbursements of counsel for the Company and the Guarantors and of the
independent public accountants of the Company and the Guarantors, 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 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 and the
Guarantors in connection with any Registration Statement, but excluding
underwriting discounts and commissions and transfer taxes, if any, relating
to the sale or disposition of Registrable Securities by a Holder.
"REGISTRATION STATEMENT" shall mean any registration statement of the
Company and the Guarantors 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 and the Guarantors 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 successor or 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.
"TIA" has the meaning set forth in Section 3(a) of this Agreement.
"TRUSTEE" shall mean the trustee with respect to the 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 cost, (A) prepare and, as soon as
practicable but not later than 150 days following 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) use their reasonable best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the 1933 Act within 210 days of the
Closing Date, (C) use their reasonable best efforts to keep the Exchange Offer
Registration Statement effective until the closing of the Exchange Offer and (D)
use their reasonable best efforts to cause the Exchange Offer to be consummated
not later than 240 days following the Closing Date. The Exchange Securities will
be issued under the Indenture. Upon the effectiveness of
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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 or any of the Guarantors within the meaning of Rule 405
under the 1933 Act, (b) is not a broker-dealer tendering Registrable Securities
acquired directly from the Company or any of the Guarantors for its own account,
(c) acquired or will acquire 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 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
(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 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 on a senior
basis, guaranteed by the Guarantors, 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
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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.
As soon as practicable after the close of the Exchange Offer and/or
the Private Exchange, as the case may be, 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 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 judgment, would reasonably be expected to
impair the ability of the Company 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 or the Guarantors
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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 210 days following the original issue of the
Registrable Securities or the Exchange Offer is not consummated within 240 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 to
participate in the Exchange Offer or 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 as promptly as practicable but no later than 240 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 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 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.
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2.4. EFFECTIVENESS. (a) The Company and the Guarantors will be deemed
not have used its best efforts to cause the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, to become, or
to remain, effective during the requisite period if the Company or any Guarantor
voluntarily takes any action that would, or omits to take any action which
omission would, result in any such Registration Statement not being declared or
remaining 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 SEC on or prior to the 150th 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 210th
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 240th 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 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 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 will be
increased by 0.25% per annum of the principal amount of the 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 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 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 shall notify the Trustee within three 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,
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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 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 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 of
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
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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 the Company and the Guarantors shall not
be required to (i) qualify as a foreign corporation or as a dealer in securities
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), 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 a Registration Statement and the closing of any
sale of Registrable Securities covered thereby, the representations and
warranties of the Company or any Guarantor 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 or any Guarantor 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 or any Guarantor 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 under the Exchange 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 and the Guarantors 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,
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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 (or any other provision requested by Merrill Lynch on behalf of the
Participating Broker-Dealers with respect to similar matters):
"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 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) to the extent any Participating Broker Dealer participates in
any Exchange Offer, the Company agrees to deliver to the Initial Purchasers on
behalf of the Participating Broker-Dealers upon the effectiveness of the
Exchange Offer Registration Statement if the Initial Purchasers reasonably
request (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
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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;
(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 reasonable 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 and the Guarantors agree 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, 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) 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 its 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 to the extent an underwriting agreement is
entered into or the registration is an underwritten registration or to the
extent that any Participating Broker Dealers hold Registrable Securities:
(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;
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(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 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, if reasonably requested, 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; 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.
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;
(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
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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, 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, 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 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 on
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 its 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 reasonably
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 its reasonable efforts to
cause the Registrable Securities to be rated by the appropriate rating agencies,
if so reasonably requested by the Majority Holders, or if reasonably 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 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
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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 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 Private Exchange, and which
includes an opinion that (i) the Company and the Guarantors have duly
authorized, executed and delivered the Exchange Securities and/or Private
Exchange Securities, as applicable, and the related indenture, and (ii) each of
the Exchange Securities and related indenture constitute a legal, valid and
binding obligation of the Company and the Guarantors, enforceable against the
Company and the Guarantors in accordance with its respective terms (with
customary exceptions).
If following the date hereof there has been a change in SEC policy
with respect to exchange offers such as the Exchange Offer, such that in the
opinion of counsel to the Company or the Holders there is a substantial question
as to whether the Exchange Offer is permitted by applicable federal law, the
Company and the Guarantors hereby agree to seek a no-action letter or other
favorable decision from the SEC allowing the Company and the Guarantors to
consummate an Exchange Offer for the Notes. The Company and the Guarantors
hereby agree to pursue the issuance of such a decision to the SEC staff level.
In connection with the foregoing, the Company and the Guarantors hereby agree to
take all such other actions as are requested by the SEC or otherwise required in
connection with the issuance of such decision, including without limitation (A)
participating in telephonic conferences with the SEC, (B) delivering to the SEC
staff an analysis prepared by counsel to the Company and the Guarantors, setting
forth the legal basis, if any, upon which such counsel has concluded that such
an Exchange Offer shall be permitted and (C) diligently pursuing a resolution
(which need not be favorable) by the SEC staff of such submission.
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) 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. The Company may notify the
Holders of its suspension of any Shelf Registration Statement (and, upon receipt
of such notice, the Holders shall not be authorized to resell and shall not
resell Registrable Securities pursuant to such Shelf Registration Statement
during such period of suspension) if the Board of Directors of the Company
determines in good faith that there is a valid purpose for the suspension (which
notice may be given twice during any 365-day, period and no such suspension may
exceed 45 days), and such suspensions shall not give rise to any right to
receive additional interest pursuant to Section 2.5 hereof.
In the event that the Company falls to effect the Exchange Offer or
file any Shelf Registration Statement and maintain the effectiveness of any
Shelf Registration Statement as provided
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herein, the Company 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 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 agree, jointly and severally, 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:
(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
(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
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or the Guarantors by the Holder 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, any
of 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 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 or the Guarantors 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 losses, liabilities, claims,
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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 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 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, 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 pf
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 or any Guarantor,
and each Person, if any, who controls the Company or any Guarantor 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 or such Guarantor. The Initial
Purchasers' respective obligations to contribute pursuant to this Section 7 are
several in proportion to the 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 or any
Guarantor is subject to the reporting requirements of Section 13 or 15 of the
1934 Act, the Company and each Guarantor covenants that they will file the
reports required to be filed by them under the 1933 Act and Section l3(a) or
15(d) of the 1934 Act and the rules and regulations adopted by the SEC
thereunder. If the Company and the Guarantors cease 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
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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 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 each Guarantor have
not entered into and the Company and each Guarantor 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 of otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not and will not for the term of this Agreement in any way conflict
with the rights granted to the holders of the Company's and each Guarantors'
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 Purchasers; and (b) if to
the Company or any Guarantor, initially at the Company's or such Guarantor'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
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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 hereunder 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 required to
specifically enforce the Company's and the Guarantors' 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, the Company and the Guarantors will
not, and will cause their "affiliates" (as such term is defined in Rule
144(a)(l) under the 1933 Act) not to, resell any Securities 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 submit such Securities 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.
AMF BOWLING WORLDWIDE, INC.
By: /s/ Christopher F. Caesar
----------------------------------------------------
Name: Christopher F. Caesar
Title: Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
AMF BOWLING PRODUCTS, INC.
AMF BOWLING CENTERS HOLDINGS INC.
AMF WORLDWIDE BOWLING CENTERS HOLDINGS INC.
AMERICAN RECREATION CENTERS, INC.
AMF BOWLING CENTERS, INC.
AMF BEVERAGE COMPANY OF OREGON
AMF BEVERAGE COMPANY OF W.VA., INC.
KING LOUIE LENEXA, INC.
BUSH RIVER CORPORATION
AMF BOWLING CENTERS (AUST) INTERNATIONAL INC.
AMF BOWLING CENTERS INTERNATIONAL INC.
AMF BOWLING MEXICO HOLDING, INC.
BOLICHES AMF, INC.
By: /s/ Christopher F. Caesar
----------------------------------------------------
Name: Christopher F. Caesar
Title: Acting in the capacities identified on
APPENDIX I hereto with respect to each of
the Guarantors
531279
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300, Inc.
By: /s/ William C. Dufour
----------------------------------------------------
Name: William C. Dufour
Title: President
531279
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APPENDIX I
<Table>
<Caption>
GUARANTOR POSITION OF CHRISTOPHER F. CAESAR
- -------------------------------------------------------------------------------------------
AMF Bowling Products, Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
AMF Bowling Centers Holdings Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
AMF Worldwide Bowling Centers Holdings Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
American Recreation Centers, Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
AMF Bowling Centers, Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
AMF Beverage Company of Oregon, Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
AMF Beverage Company of W. Va., Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
King Louie Lenexa, Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
Bush River Corporation Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
AMF Bowling Centers (Aust) International Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
AMF Bowling Centers International Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
AMF Bowling Mexico Holding, Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
Boliches AMF, Inc. Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
</Table>
<Page>
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CREDIT SUISSE FIRST BOSTON LLC
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ [ILLEGIBLE]
-------------------------------------------
Authorized Signatory
<Page>
EXHIBIT A
FORM OF OPINION OF COUNSEL
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Credit Suisse First Boston LLC
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
We have acted as counsel for AMF Bowling Worldwide, Inc., a Delaware
corporation (the "Company"), in connection with the sale by the Company to the
Initial Purchasers (as defined below) of $150,000,000 aggregate principal amount
of 10% Senior Subordinated Notes due 2010 (the "Notes") of the Company pursuant
to the Purchase Agreement dated February 19, 2004 (the "Purchase Agreement")
among the Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Credit Suisse First Boston LLC (collectively, the "Initial Purchasers") and the
filing by the Company of an Exchange Offer Registration Statement (the
"Registration Statement") in connection with an Exchange Offer to be effected
pursuant to the Registration Rights Agreement (the "Registration Rights
Agreement"), dated February 27, 2004 among the Company, the Guarantors and the
Initial Purchasers. This opinion is furnished to you pursuant to Section 3(f)(B)
of the Registration Rights Agreement. Unless otherwise defined herein,
capitalized terms used in this opinion that are defined in the Registration
Rights Agreement are used herein as so defined.
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. In rendering this opinion, as to
all matters of fact relevant to this opinion, we have assumed the completeness
and accuracy of, and are relying solely upon, the representations and warranties
of the Company and the Guarantors set forth in the Purchase Agreement and the
statements set forth in certificates of public officials and officers of the
Company, without making any independent investigation or inquiry with respect to
the completeness or accuracy of such representations, warranties or statements,
other than a review of the certificate of incorporation, by-laws and relevant
minute books of the Company and the Guarantors.
Based on and subject to the foregoing, we are of the opinion that:
1. The Exchange Offer Registration Statement and the Prospectus (other
than the financial statements, notes or schedules thereto and other financial
data and supplemental schedules included or incorporated by reference therein or
omitted therefrom and the Form T-l, as to which such counsel need express no
opinion), comply as to form in all material respects with the requirements of
the 1933 Act and the applicable rules and regulations promulgated under the 1933
Act.
2. We have participated in the preparation of the Registration
Statement and the Prospectus and in the course thereof have had discussions with
representatives of the Underwriters, officers and other representatives of the
Company and KPMG LLP, the Company's and the Guarantors'
<Page>
independent public accountants, during which the contents of the Registration
Statement and the Prospectus were discussed. We have not, however, independently
verified and are not passing upon, and do not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus. Based on our participation as
described above, nothing has come to our attention that would lead us to believe
that the Registration Statement (except for financial statements and schedules
and other financial data included therein as to which we make no statement)
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus or any amendment or supplement thereto
(except for financial statements and schedules and other financial data included
therein, as to which such counsel need make no statement), at the time the
Prospectus was issued, at the time any such amended or supplemented Prospectus
was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
This opinion is being furnished to you solely for your benefit in
connection with the transactions contemplated by the Registration Rights
Agreement, and may not be used for any other purpose or relied upon by any
person other than you. Except with our prior written consent, the opinions
herein expressed are not to be used, circulated, quoted or otherwise referred to
in connection with any transactions other than those contemplated by the
Registration Rights Agreement by or to any other person.
Very truly yours,