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Exhibit 4.2
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REGISTRATION RIGHTS AGREEMENT
Dated as of October 7, 1997
among
Bally Total Fitness Holding Corporation
and
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated,
Chase Securities Inc.,
Societe Generale Securities Corporation
and
Ladenburg ▇▇▇▇▇▇▇▇ & Co. Inc.
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") made and entered into
this 7th day of October, 1997 among Bally Total Fitness Holding Corporation, a
Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, Chase Securities Inc., Societe Generale
Securities Corporation and Ladenburg ▇▇▇▇▇▇▇▇ & Co. Inc. (collectively, the
"Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated
September 29, 1997, (the "Purchase Agreement"), among the Company and the
Initial Purchasers which provides for, among other things, the sale by the
Company to the Initial Purchasers of an aggregate of $225,000,000 aggregate
principal amount of the Company's 9-7/8% Senior Subordinated Notes due 2007 (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 closing condition 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:
"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 ACT" shall mean the United States Securities Exchange Act of
1934, as amended from time to time.
"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
Securities Act effected pursuant to Section 2.1 hereof.
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"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto and
all documents incorporated by reference therein.
"EXCHANGE PERIOD" shall have the meaning set forth in Section 2.1
hereof.
"EXCHANGE SECURITIES" shall mean the 9-7/8% Senior Subordinated Notes
due 2007 issued by the Company 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.
"INDENTURE" shall mean the Indenture dated as of October 7, 1997,
between the Company and First Trust National Association, as trustee, relating
to the Securities 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.
"ISSUE DATE" shall mean the date on which the Securities are originally
issued under the Indenture.
"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, collectively, ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, Chase Securities Inc., Societe Generale
Securities Corporation and Ladenburg ▇▇▇▇▇▇▇▇ & Co. Inc. and any other
broker-dealer which both makes a market in the Securities and exchanges
Registrable Securities in the Exchange Offer for Exchange Securities.
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"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.
"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; PROVIDED, HOWEVER,
that Securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to such Securities shall have been declared effective
under the Securities 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 Securities Act, (iii) such Securities shall have ceased to
be outstanding, (iv) the Securities have been exchanged for Exchange Securities
upon consummation of the Exchange Offer and are thereafter freely tradeable by
the holder thereof or (v) the Securities can be sold by the holders thereof
without limitation as to holding period or volume.
"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, (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 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 disbursements
of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, special counsel representing the Holders of
Registrable Securities and (ix) any fees and disbursements of the underwriters
customarily required to be paid by issuers or sellers of securities and the
reasonable fees and expenses of any special experts retained by the Company
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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 United States Securities and Exchange Commission
or any successor agency or government body performing the functions currently
performed by the United States Securities and Exchange Commission.
"SECURITIES" shall have the meaning set forth in the preamble.
" SECURITIES ACT" shall mean the United States Securities Act of 1933,
as amended from time to time.
"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 on an appropriate form
under Rule 415 under the Securities 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 under
the Indenture.
2. REGISTRATION UNDER THE SECURITIES ACT.
2.1 EXCHANGE OFFER. The Company shall use its best efforts to (A)
prepare and, as soon as practicable but not later than 30 days following the
Closing Date, file with the SEC an Exchange Offer Registration Statement on an
appropriate form under the Securities Act with respect to a proposed Exchange
Offer and the issuance and delivery to the Holders, in exchange for the
Registrable Securities, of a like principal amount of Exchange Securities, (B)
cause the Exchange Offer Registration Statement to be declared effective under
the Securities Act no later than 90 days following 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
120 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 shall promptly commence the Exchange Offer, it being the
objective of
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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
Securities 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) at
the time of the commencement of the Exchange Offer has no arrangements or
understandings with any person to participate in the "distribution" (within the
meaning of the Securities Act) of the Exchange Securities) to transfer such
Exchange Securities from and after their receipt without any volume or holding
period limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of a substantial proportion of the
several states of the United States.
In connection with the Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Exchange Offer open for acceptance for a period
of not less than 30 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 his 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.
As soon as practicable after the close of the Exchange Offer, the
Company 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
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Exchange Offer Registration Statement and the letter of transmittal
which shall be an exhibit thereto;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities so accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver
Exchange Securities 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 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 Issue Date. The Exchange Offer shall not be subject to any conditions, other
than (i) that the Exchange Offer, or the making of any exchange by a Holder,
does not violate applicable law or any applicable interpretation of the staff of
the SEC, (ii) the due tendering of Registrable Securities in accordance with the
Exchange Offer, and (iii) that each Holder of Registrable Securities exchanged
in the Exchange Offer shall have made certain customary representations,
including representations that such Holder is not an affiliate of the Company
within the meaning of Rule 405 under the Securities Act, 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 Securities Act) of the Exchange
Securities, and any 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 from under the Securities Act available. To the
extent permitted by law, the Company shall inform the Initial Purchasers of the
names and addresses of the Holders to whom the Exchange Offer is made, and the
Initial Purchasers shall have the right to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
2.2 SHELF REGISTRATION. In the event that (i) any changes in law, SEC
rules or regulations or applicable interpretations thereof by the staff of the
SEC do not permit the Company 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 90 days following the original issue
of the Registrable Securities or the Exchange Offer is not consummated within
120 days after the original issue of the Registrable Securities, (iii) upon the
request of the Initial Purchasers acquiring a majority of the initial aggregate
principal amount of the Securities with respect to any Registrable Securities
which it acquired directly from the Company and, with respect to other
Registrable Securities held by it, if such Initial Purchaser is not permitted,
in the reasonable opinion of counsel to such Initial Purchaser, pursuant to
applicable law or applicable interpretations of the staff of the SEC, to
participate in the Exchange Offer or otherwise receive securities that are
freely tradeable without restriction or limitation as
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to holding period or volume under the Securities Act and applicable blue sky or
state securities laws or (iv) if a Holder is not permitted by applicable law to
participate in the Exchange Offer based upon advice of counsel to the effect
that such Holder may not be legally able to participate in the Exchange Offer or
does not receive Exchange Securities pursuant to the Exchange Offer which are
fully tradeable by the Holder without restriction or limitation as to holding
period or volume under the Securities Act and under applicable blue sky or state
securities laws, then in case of each of clauses (i) through (iv) the Company
shall, at its cost:
(a) As promptly as practicable, file with the SEC, and
thereafter shall use its best efforts to cause to be declared effective
as promptly as practicable but no later than 120 days after the Issue
Date (or, in the case of a request by the Initial Purchasers acquiring
a majority of the initial aggregate principal amount of the Securities,
within 30 days of such request), 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) Subject to Section 2.4(b), use its 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 after its effective date (or one year after its
effective date in the case of a request solely by an Initial Purchaser)
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.
(c) Notwithstanding any other provisions hereof, use its 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
Securities Act and the rules and regulations thereunder, (ii) any Shelf
Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any
supplement to such Prospectus (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 further agrees, 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.
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The Company shall not be required to include any Registrable Securities
of a Holder in any Shelf Registration Statement pursuant to this Agreement
unless such Holder furnishes to the Company, within 5 business days after
receipt by such Holder of a request therefor, such information as the Company
may reasonably request for use in connection with such Shelf Registration
Statement.
2.3 EXPENSES. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2.1 or 2.2 hereof. Except
as provided herein, each Holder shall pay all expenses of its counsel,
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 will be deemed not to 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 voluntarily takes any affirmative
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 (i) such action is reasonably believed by the
Company to be required by applicable law or (ii) with respect to the
effectiveness of a Shelf Registration Statement, such action or omission is
taken or made by the Company in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, so long as the Company complies with the
requirements of Section 3(k) hereof, if applicable.
(b) The Company may suspend the availability of the Shelf Registration
Statement and the use of any Prospectus which is a part thereof (i) for one
period not to exceed 60 days in any six month period or (ii) for up to four
periods not to exceed an aggregate of 90 days in any 12 month period, if such
suspension is effected in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, so long as the Company promptly complies
with the requirements of Section 3(k) hereof, if applicable.
(c) 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 a 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.
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2.5 INTEREST. In the event that (a) the Exchange Offer Registration
Statement is not filed with the SEC on or prior to the 30th day following the
Issue Date, (b) the Exchange Offer Registration Statement has not been declared
effective on or prior to the 90th day following the Issue Date, or (c) the
Exchange Offer is not consummated on or prior to the 120th day following the
Issue Date or a Shelf Registration Statement is not declared effective on or
prior to the 120th day following the Issue Date (or, if a Shelf Registration
Statement is required to be filed because of the request of the Initial
Purchasers acquiring a majority of the initial aggregate principal amount of the
Securities, 30 days following such request by such Initial Purchasers that the
Company file the Shelf Registration Statement) (each such event referred to in
clauses (a) through (c) above, a "Registration Default"), the interest rate
borne by the Securities (except in the case of clause (c), in which case only
the Securities which have not been exchanged in the Exchange Offer) shall be
increased by an amount equal to one-quarter of one percent (0.25 %) per annum
upon the occurrence of any Registration Default, which rate (as increased as
aforesaid) will increase by an additional one quarter of one percent (0.25%)
each 90-day period that such additional interest continues to accrue under any
such circumstance, with an aggregate maximum increase in the interest rate equal
to 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. Upon (w) the filing of the Exchange Offer Registration
Statement after the 30-day period described in clause (a) above, (x) the
effectiveness of the Exchange Offer Registration Statement after the 90-day
period described in clause (b) above, or (y) the consummation of the Exchange
Offer after the 120-day period or the effectiveness of a Shelf Registration
Statement after the 120-day period (or the 30-day period), as the case may be,
described in clause (c) above, and provided that none of the conditions set
forth in clauses (a), (b) and (c) above continues to exist, a Registration
Default will be deemed to be cured.
2.6 SPECIFIC ENFORCEMENT. Without limiting the remedies available to
the Initial Purchasers and the Holders, the Company acknowledges that any
failure by the Company to comply with its obligations under Section 2.1 and
Section 2.2 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
obligations under Section 2.1 and Section 2.2 hereof.
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3. REGISTRATION PROCEDURES.
In connection with the obligations of the Company with respect to
Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Company
shall:
(a) prepare and file with the SEC a Registration Statement,
within the relevant time period specified in Section 2, on an
appropriate form under the Securities Act, which form (i) shall be
selected by the Company, (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 applicable requirements
of Regulation S-T under the Securities Act, and use its 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 the 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
provisions then in effect) under the Securities Act and comply with the
provisions of the Securities Act applicable to it with respect to the
disposition of such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by
the selling Holders thereof described in this Agreement (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 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) subject to the last paragraph of this Section 3, 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;
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(d) use its 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 the Company 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 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
notice 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 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 and (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;
(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 the Initial Purchasers acquiring a majority of
the initial aggregate principal amount of the Securities, and which
shall contain a
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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 the Initial
Purchasers 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 Securities 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) subject to the last paragraph of this Section 3, hereby consent
to the use of the Prospectus forming part of the Exchange Offer
Registration Statement or any amendment or supplement thereto, by any
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, (iv) use its best efforts to keep the
Exchange Offer Registration Statement effective and to amend and
supplement the Prospectus contained therein in order to permit such
Prospectus to be lawfully delivered by all Persons subject to the
prospectus delivery requirements of the Securities Act for such period
of time as such Persons must comply with such requirements in order to
resell the Exchange Securities and (v) include in the transmittal
letter or similar documentation to be executed by an exchange offeree
in order to participate in the Exchange Offer (x) the following
provision:
"If the 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 Securities 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 Securities Act; and
(B) in the case of any Exchange Offer Registration
Statement, the Company agrees to deliver to the Initial Purchasers
on behalf of the Participating Broker-
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Dealers upon the effectiveness of the Exchange Offer Registration
Statement (i) an opinion of Benesch, Friedlander, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
substantially in the form attached hereto as Exhibit A, (ii) an
officers' certificate substantially in the form customarily delivered
in a public offering of debt securities and (iii) a comfort letter or
comfort letters in customary form if 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) 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
selling 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 two 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)(ii), 3(e)(iii), 3(e)(v) and 3(e)(vi) hereof, use its 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;
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(l) obtain a CUSIP number for all Exchange Securities not
later than the effective date of a Registration Statement, and provide
the Trustee with printed certificates for the Exchange Securities in a
form eligible for deposit with the Depositary;
(m) (i) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange 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, as necessary, in accordance with the
terms of the TIA and (iii) execute, and use its 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, as necessary, in a
timely manner;
(n) in the case of a Shelf Registration, enter into agreements
(including customary 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:
(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
updates thereof (which opinions (in form, scope and substance)
and counsel 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 independent certified public
accountants addressed to the underwriters, if any, and use
reasonable efforts to have such letters 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 and such
other matters as reasonably requested by such selling Holders
and any underwriters;
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(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;
(o) in the case of a (i) Shelf Registration, or (ii)
Prospectus contained in an Exchange Offer pursuant to Section 2.1 which
is required to be delivered under the Securities Act by a Participating
Broker-Dealer who seeks to sell Exchange Securities, make available for
inspection by representatives of the Holders of the Registrable
Securities and any such Participating Broker-Dealer, as the case may
be, and any underwriters participating in any disposition pursuant to a
Shelf Registration Statement and any counsel or accountant retained by
such Holders, Participating Broker Dealers or underwriters, all
pertinent financial and other records, pertinent corporate documents
and properties of the Company reasonably requested by any such persons,
and cause the respective officers, directors, employees, and any other
agents of the Company to supply all information reasonably requested by
any such representative, underwriter, counsel or accountant in
connection with a Registration Statement or Prospectus, and make such
representatives of the Company available for discussion of such
documents as shall be reasonably requested by the Initial Purchasers;
PROVIDED, that any such records, documents, properties and such
information that is designated in writing by the Company, in good
faith, as confidential at the time of delivery of such records,
documents, properties or information shall be kept confidential by any
such representative, underwriter, counsel or accountant and shall be
used only in connection with such Registration Statement or Prospectus,
unless such information has become available (not in violation of this
Agreement) to the public generally or through a third party without an
accompanying obligation of confidentiality, and except that such
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representative, underwriter, counsel or accountant shall have no
liability, and shall not be in breach of this provision, if disclosure
of such confidential information required by law or pursuant to a
subpoena, court order or regulatory or agency requirement, and the
Company shall be entitled to request that such representative,
underwriter, counsel or accountant sign a confidentiality agreement to
the foregoing effect;
(p) (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 make such changes in any such document prior to
the filing thereof as the Initial Purchasers may reasonably request
within five business days after receipt of such document, and make the
representatives of the Company available for discussion of such
document 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 who are then
to be a seller of Registrable Securities thereunder, to the Initial
Purchasers, to counsel on behalf of 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 within 5 business days
after receipt of such document and make the representatives of the
Company 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, or any underwriter;
(q) 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 requested by the Majority Holders; or if requested by
the underwriter or underwriters of an underwritten offering of
Registrable Securities, if any;
(r) in the case of a Shelf Registration, use its best efforts
to cause the Registrable Securities to be rerated 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;
(s) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering at least 12 months which shall satisfy the
provisions of Section 11 (a) of the Securities Act and Rule 158
thereunder;
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(t) 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
(u) upon consummation of an Exchange Offer, obtain a customary
opinion of counsel to the Company addressed to the Trustee for the
benefit of all Holders of Registrable Securities participating in the
Exchange Offer, and which includes an opinion that (i) the Company has
duly authorized, executed and delivered the Exchange Securities and the
related indenture, and (ii) each of the Exchange Securities and related
indenture constitute a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
respective terms (with customary exceptions).
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Securities to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably request
in writing.
For so long as the Company fails to timely effect the Exchange Offer or
file any Shelf Registration Statement and maintain the effectiveness of any
Shelf Registration Statement as provided herein, the Company shall not file any
Registration Statement with respect to any securities (within the meaning of
Section 2(l) of the Securities 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. 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.
In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any notice from the Company of the happening of any event or the
discovery of any facts, each of the kind described in Sections 3(e)(ii),
3(e)(iii), 3(e)(v) or 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, such
Holder will deliver to the Company (at its expense) all copies in such Holder's
possession, other than permanent file copies
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then in such Holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. If the Company shall
give any such notice to suspend the disposition of Registrable Securities
pursuant to a Shelf Registration Statement as a result of the happening of any
event or the discovery of any facts, each of the kind described in Sections
3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, the Company shall be deemed to
have used its best efforts to keep the Shelf Registration Statement effective
during such period of suspension provided that the Company shall use its best
efforts to file and have declared effective (if an amendment) as soon as
practicable an amendment or supplement to the Shelf Registration Statement and
shall extend the period during which the Shelf Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date when the Holders shall have received copies of the supplemented or
amended Prospectus necessary to resume such dispositions.
4. INDEMNIFICATION, CONTRIBUTION.
(a) The Company agrees 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'), their
respective affiliates, and each Person, if any, who controls any of such parties
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act and each of their respective directors, officers, employees and
agents, 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 Securities 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
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(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by any
indemnified party, except to the extent otherwise expressly provided in
Section 4(c) hereof), 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 whatsoever 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 by the Initial Purchasers, such Holder, Participating Broker-Dealer or
Underwriter (or any person controlling such Initial Purchaser, Holder,
Participating Broker-Dealer or Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) expressly for use in a
Registration Statement (or any amendment or supplement thereto) or any
Prospectus (or any amendment or supplement thereto); PROVIDED, FURTHER, that
such indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Initial Purchaser, Holder, Participating Broker-Dealer or
Underwriter (or any persons controlling such Initial Purchaser, Participating
Broker-Dealer, Holder or Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) (i) from whom the person
asserting such loss, claim, damage or liability purchased the Securities which
are the subject thereof if such person did not receive a copy of the final
Prospectus (or the final Prospectus as amended or supplemented) at or prior to
the confirmation of the sale of such Securities to such person in any case where
the Company complied with its obligations under Sections 3(c) and 3(f)(A)(ii)
hereof and any such untrue statement or omission or alleged untrue statement or
omission of a material fact contained in such preliminary prospectus (or any
amendment or supplement thereto) was corrected in the final Prospectus (or the
final Prospectus as amended or supplemented) or (ii) if it resulted from the use
of the Prospectus during a period when the use of the Prospectus has been
suspended in accordance with Section 2.4(b) or Sections 3(e)(ii), 3(e)(iii),
3(e)(v) and 3(e)(vi) hereof; PROVIDED, in each case, that Holders received prior
notice of such suspension.
(b) Each Holder severally, but not jointly, agrees to indemnify and
hold harmless the Company, the Initial Purchasers, each Underwriter and the
other selling Holders, and each of their respective directors, officers,
employees and agents, and each Person, if any, who controls the Company, the
Initial Purchasers, any Underwriter or any other selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange 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 furnished to the Company
expressly for use in
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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.
Notwithstanding the foregoing, if it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such
action with counsel chosen by it and approved by the indemnified parties
defendant in such action (which approval shall not be unreasonably withheld),
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them which are different
from or in addition to those available to such indemnifying party. If an
indemnifying party assumes the defense of such action, the indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action. 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
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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, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand, the
Holders on another hand, and the Initial Purchasers on another hand, from the
offering of the Securities, the Exchange Securities and the Registrable
Securities (taken together) included in such offering or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand, the
Holders on another hand and the Initial Purchasers on another 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 benefits received by the Company from the offering of the
Securities, the Exchange Securities and the Registrable Securities (taken
together) included in such offering shall in each case be deemed to include the
proceeds received by the Company in connection with the offering of the
Securities pursuant to the Purchase Agreement. The parties hereto agree that any
underwriting discount or commission or reimbursement of fees paid to the Initial
Purchasers pursuant to the Purchase Agreement shall not be deemed to be a
benefit received by the Initial Purchasers in connection with the offering of
the Exchange Securities or Registrable Securities included in such offering.
The relative fault of the Company on the one hand, the Holders on
another hand, and the Initial Purchasers on another 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 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 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.
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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 1 l(f) of the Securities 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 Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such Initial Purchaser or Holder, and each director of the Company, each
officer of the Company who signed the Registration Statement and each Person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange 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 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 Exchange Act, the Company
covenants that it will file the reports required to be filed by it under the
Securities Act and Section 13(a) or 15(d) of the Exchange 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 covenants that it 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
Securities Act, (b) deliver such information to a prospective purchaser as is
necessary to permit sales pursuant to Rule 144A under the Securities 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
Securities Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such rule may be amended from time to time, (ii)
Rule 144A under the Securities 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 will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
5.2 NO INCONSISTENT AGREEMENTS. The Company has not entered into and
the Company 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
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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 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 has 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, facsimile, telecopier, or any courier guaranteeing
overnight delivery (a) if to a Holder, at the most current address given by such
Holder to the Company 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, 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 or facsimiled; 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. 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.
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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, 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, 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. Other than the foregoing
sentences, nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any person, firm or corporation, other than the Initial
Purchasers, the Holders, including Participating Broker-Dealers, each
underwriter who participates in an offering of Registrable Securities, their
respective affiliates, and the Company and their respective successors and the
controlling persons, directors, officers, employees, and agents referred to in
Section 4 and their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole benefit of the Initial Purchasers, the Holders and
the Company and the other persons referenced by the preceding sentences and
their heirs and legal representatives, and for the benefit of no other person,
firm or corporation.
5.7 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.
5.8 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
5.9 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.
5.10 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.
5.11 ENTIRE AGREEMENT. This Agreement constitutes the entire contract
between the parties hereto relative to the subject matter hereof. Any previous
agreement among the parties hereto relative to the subject matter hereof is
superseded by this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BALLY TOTAL FITNESS HOLDING CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title:
Confirmed and accepted as
of the date first above
written:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
CHASE SECURITIES INC.
SOCIETE GENERALE SECURITIES CORPORATION
LADENBURG ▇▇▇▇▇▇▇▇ & CO. INC.
BY: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
27
Exhibit A to
Registration Rights Agreement
-----------------------------
FORM OF OPINION OF COUNSEL
--------------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Chase Securities Inc.,
Societe Generale Securities Corporation
Ladenburg ▇▇▇▇▇▇▇▇ & Co. Inc.
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
RE: Bally Total Fitness Holding Corporation 9-7/8% Senior
Subordinated Notes due 2007
Ladies and Gentlemen:
We have acted as counsel for Bally Total Fitness Holding Corporation, a
Delaware corporation (the "Company"), in connection with the sale by the Company
to the Initial Purchasers (as defined below) of $225,000,000 aggregate principal
amount of 9-7/8% Senior Subordinated Notes due 2007 (the "Notes") of the Company
pursuant to the Purchase Agreement dated September 29, 1997 (the "Purchase
Agreement") among the Company and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated and Chase Securities Inc., Societe Generale Securities Corporation
and Ladenburg ▇▇▇▇▇▇▇▇ & Co. Inc. (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, dated October 7, 1997 (the
"Registration Rights Agreement") between the Company 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, warranties
and agreements of the Company and the Initial Purchasers 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
28
to the completeness or accuracy of such representations, warranties, agreements
or statements. This opinion is limited to the laws of the United States of
America and the laws of the State of Delaware.
Based on and subject to the foregoing, we are of the opinion that 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 therein or omitted therefrom and the Form T-1,
as to which we need express no opinion), comply as to form in all material
respects with the requirements of the Securities Act and the applicable rules
and regulations promulgated under the Securities Act.
In addition, although we have not undertaken to determine
independently, and do not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement and the Prospectus,
we have participated in conferences with officers and other representatives of
the Company and representatives of the independent public accountants of the
Company at which the contents of the Registration Statement and Prospectus were
discussed and we have reviewed certain other documents. Because the primary
purpose of our professional engagement was not to establish or confirm factual
matters or financial, accounting or statistical matters and because of the
wholly or partially non-legal character of many of the matters and statements
contained in the Registration Statement and the Prospectus, we are not passing
upon and do not assume any responsibility for the accuracy, completeness or
fairness of such statements contained in the Registration Statement and the
Prospectus, and we make no representation that we have independently verified
the accuracy, completeness or fairness of such statements. Without limiting the
foregoing, we assume no responsibility for, and have not independently verified,
the accuracy, completeness or fairness of the financial and statistical data
included in or excluded from the Registration Statement and the Prospectus, and
we have not examined the accounting, financial or statistical records from which
such financial statements, schedules and data are derived. Although certain
portions of the Registration Statement and the Prospectus (including financial
statements) have been included therein on the authority of "experts" within the
meaning of the Securities Act, we are not such experts with respect to any
portion of the Registration Statement and the Prospectus, including, without
limitation, such financial statements or schedules or the other financial or
statistical data included therein.
On the basis of the foregoing, we confirm to you that no information
has come to our attention that would cause us to believe that the Registration
Statement, at the time it became effective or as of the date hereof, 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, at the
time the Prospectus was issued, at the time any such amended or supplemented
Prospectus was issued or upon consummation of the Exchange Offer, 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.
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This opinion is being furnished to you solely for your benefit in
connection with the transaction 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,