Exhibit 10.1
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is dated as of August 6, 1999 by
and among Mattress Discounters Holding Corporation, a Virginia corporation (the
"Company"); Mattress Discounters Holding L.L.C., a Delaware limited liability
company ("Holdings"); ▇▇▇▇▇▇-▇▇▇▇▇▇ Company, a Virginia corporation ("▇▇▇▇▇▇");
and certain other stockholders of the Company who are from time to time a party
hereto.
As of the date hereof, Holdings and ▇▇▇▇▇▇ each own a number of shares
of the Company's Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Definitions. As used herein, the following terms shall have the
following meanings.
"Affiliate" means, when used with reference to a specified Person, any
Person that directly or indirectly controls or is controlled by or is under
common control with the specified Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise). With respect to any Person who is an individual, "Affiliates" shall
also include, without limitation, any member of such individual's Family Group.
Notwithstanding the foregoing, for purposes of this Agreement, no MDLLC Investor
shall be deemed an "Affiliate" of any Bain Fund or any Affiliate of any Bain
Fund, and neither any Bain Fund nor any Affiliate of any Bain Fund shall be
deemed an "Affiliate" of any MDLLC Investor.
"Bain Funds" means ▇▇▇▇ Capital Fund VI, L.P., BCIP Associates II,
BCIP Associates II-B, BCIP Associates II-C, BCIP Trust Associates II, BCIP Trust
Associates II-B, PEP Investment PTY Ltd. and ▇▇▇▇▇▇▇▇ Street Partners II and any
of their respective Affiliates (other than Holdings).
"Bain Funds Registrable securities" means (i) all Common Stock
acquired by, or issued or issuable to, any of the Bain Funds on or after the
date hereof and (ii) all equity securities issued or issuable directly or
indirectly with respect to any Common Stock described in clause (i) above by way
of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. As to
any particular Bain Funds Registrable Securities, such securities shall cease to
be Bain Funds Registrable securities when they
have been distributed to the public pursuant to an offering registered under the
Securities Act or sold to the public in compliance with Rule 144. For purposes
of this Agreement, a Person will be deemed to be a holder of Bain Funds
Registrable Securities whenever such Person has the right to acquire directly or
indirectly such Bain Funds Registrable Securities (upon conversion or exercise
in connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected.
"Class A Common" means the Company's Class A Common Stock, par value
$.01 per share.
"Class B Common" means the Company's Class B Common stock, par value
$.01 per share.
"Class L Common" means the Company's Class L Common Stock, par value
$.01 per share.
"Class M Common" means the Company's Class M Common Stock, par value
$01 per share.
"Common Stock" means, collectively, Class A Common, Class B Common,
Class L Common, Class M Common and any other common stock authorized by the
Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Family Group" means, with respect to any Person who is an individual,
(i) such Person's spouse, former spouse and descendants (whether natural or
adopted), parents and their descendants and any spouse of the foregoing persons
(collectively, "relatives") or (ii) the trustee, fiduciary or personal
representative of such Person and any trust solely for the benefit of such
Person and/or such Person's relatives.
"▇▇▇▇▇▇ Registrable Securities" means (i) all Common Stock acquired
by, or issued or issuable to, ▇▇▇▇▇▇ or any of its Affiliates on or after the
date hereof and (ii) all equity securities issued or issuable directly or
indirectly with respect to any Common Stock described in clause (i) above by way
of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. As to
any particular ▇▇▇▇▇▇ Registrable Securities, such securities shall cease to be
▇▇▇▇▇▇ Registrable Securities when they have been distributed to the public
pursuant to an offering registered under the Securities Act or sold to the
public in compliance with Rule 144. For purposes of this Agreement, a Person
will be deemed to be a holder of ▇▇▇▇▇▇ Registrable Securities whenever such
Person has the right to acquire directly or indirectly such ▇▇▇▇▇▇ Registrable
Securities (upon conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has actually been
effected.
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"Holdings Registrable Securities" means (i) all Common Stock
acquired by, or issued or issuable to, Holdings or any of its Affiliates on or
after the date hereof and (ii) all equity securities issued or issuable directly
or indirectly with respect to any Common Stock described in clause (i) above by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization;
provided that those securities which are otherwise classified in this Agreement
as Bain Funds Registrable Securities shall not be Holdings Registrable
Securities hereunder. As to any particular Holdings Registrable Securities, such
securities shall cease to be Holdings Registrable Securities when they have been
distributed to the public pursuant to an offering registered under the
Securities Act or sold to the public in compliance with Rule 144. For purposes
of this Agreement, a Person will be deemed to be a holder of Holdings
Registrable Securities whenever such Person has the right to acquire directly or
indirectly such Holdings Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected. Upon any distribution of Holdings
Registrable Securities to the members of Holdings (whether by liquidation of
Holdings or otherwise), those securities distributed to the Bain Funds shall be
Bain Funds Registrable Securities and those securities distributed to all other
members of Holdings shall remain Holdings Registrable Securities.
"MDLLC Investors" means Mattress Discounters Investors 1, LLC,
Mattress Discounters Investors 2, LLC and Mattress Discounters Investors 3, LLC.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Registrable Securities" means, collectively, the Bain Funds
Registrable Securities, the Holdings Registrable Securities and the ▇▇▇▇▇▇
Registrable Securities. Solely for purposes of Sections 3(b)(ii) and 3(c)(i) of
this Agreement, "Registrable Securities" shall be deemed to include Registrable
Securities as defined in that certain Common Stock Registration Rights
Agreement, dated as of August 6, 1999 among the Company, Holdings and the
Initial Purchasers (as defined therein).
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing and distributing expenses, messenger and
delivery expenses, fees and expenses of custodians, internal expenses (including
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed or on the NASD automated
quotation system, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company.
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"Rule 144" means Rule 144 under the Securities Act (or any similar
rule then in force).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors thereof is at the time owned or controlled, directly
or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company, association or other business entity, a majority of the partnership or
other similar ownership interests thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a partnership, limited
liability company, association or other business entity if such Person or
Persons shall be allocated a majority of partnership, limited liability company,
association or other business entity gains or losses or shall be or control the
managing director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business entity.
2. Demand Registrations.
(a) Requests for Registration. At any time after the date hereof,
the holder(s) of a majority of the Bain Funds Registrable Securities may request
registration under the Securities Act of all or any portion of their Registrable
Securities on Form S-1 or any similar long-form registration (a "Long-Form
Registration"), or on Form S-2 or S-3 or any similar short-form registration (a
"Short-Form Registration") if such a short form is available. All registrations
requested pursuant to this Section 2(a) are referred to herein as "Demand
Registrations". Each request for a Demand Registration shall specify the
approximate number of Registrable Securities requested to be registered, the
anticipated method or methods of distribution and the anticipated per share
price range for such offering. Within ten days after receipt of any such
request, the Company will give written notice of such requested registration
(which shall specify the intended method of disposition of such Registrable
Securities) to all other holders of Registrable Securities (a "Company Notice")
and the Company will include (subject to the provisions of this Agreement) in
such registration, all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within 20 days after the
delivery of such Company Notice.
(b) Long-Form Registrations. The holders of Bain Funds Registrable
Securities will be entitled to only three Long-Form Registrations. A
registration will not count as one of the permitted Long-Form Registrations
unless and until it has become effective and no Long-Form Registration will
count as a Long-Form Registration unless the applicable Bain Funds and the
holders of Registrable Securities joining therein are able to register and sell
at least 75% of the
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Registrable Securities requested to be included by them in such registration;
provided that in any event the Company will pay all Registration Expenses in
connection with any registration initiated as a Long-Form Registration whether
or not it has become effective, and whether or not such registration has counted
as one of the permitted Long-Form Registrations.
(c) Short-Form Registrations. The holders of Bain Funds Registrable
Securities will be entitled to unlimited Short-Form Registrations. Demand
Registrations will be Short-Form Registrations whenever the Company is permitted
to use any applicable short form. After the Company has become subject to the
reporting requirements of the Exchange Act, the Company will use its best
efforts to make Short-Form Registrations on Form S-3 available for the sale of
Bain Funds Registrable Securities. The Company will pay all Registration
Expenses in connection with any registration initiated hereunder as a Short-Form
Registration, whether or not such Short-Form Registration has become effective.
(d) Priority on Demand Registrations.
(i) The Company will not include in any Demand Registration
any securities which are not Registrable Securities unless holder(s) of a
majority of the Bain Funds Registrable Securities otherwise consent.
(ii) If a Demand Registration is an underwritten offering and
the managing underwriters advise the Company in writing that in their opinion
the number of Registrable Securities and, if permitted hereunder, other
securities, requested to be included in such offering exceeds the number of
Registrable Securities and other securities, if any, which can be sold in an
orderly manner in such offering within a price range acceptable to holder(s) of
a majority of the Bain Funds Registrable Securities and without adversely
affecting the marketability of the offering, then the Company will include in
such registration (A) first, the number of Registrable Securities requested to
be included in such registration, pro rata from among the holders of such
Registrable Securities according to the number of Registrable Securities
requested by them to be so included, and (B) second, any other securities of the
Company requested to be included in such registration, in such manner as the
Company may determine.
(e) Restrictions on Demand Registrations.
(i) The Company will not be obligated to file any registration
statement with respect to any Long-Form Registration within 180 days after the
effective date of a previous Long-Form Registration or a previous registration
in which the holders of Registrable Securities were given piggyback rights
pursuant to Section 3 and in which there were included not less than 80% of the
number of Registrable Securities requested to be included.
(ii) The Company may postpone for up to 90 days the filing or
the effectiveness of a registration statement for a Demand Registration if the
Company determines that such Demand Registration would reasonably be expected to
have a material adverse effect on any proposal or plan by the Company or any of
its Subsidiaries to engage in any acquisition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer,
reorganiza-
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tion or similar transaction; provided that in such event the holders of Bain
Funds Registrable Securities initially requesting such Demand Registration will
be entitled to withdraw such request and, if such request is withdrawn, such
Demand Registration will not count as one of the permitted Demand Registrations
hereunder and the Company will pay all Registration Expenses in connection with
such requested registration. The Company may delay a Demand Registration under
this clause (ii) only once during any twelve-month period.
(f) Selection of Underwriters. In the case of a Demand Registration
for an underwritten offering, the holders of a majority of the Bain Funds
Registrable Securities to be included in such Demand Registration will have the
right to select the investment banker(s) and manager(s) to administer the
offering (which investment banker(s) and manager(s) will be nationally
recognized) subject to the Company's approval which will not be unreasonably
withheld. In the case of any other registration for an underwritten offering,
the Board of Directors of the Company will have the right to select the
investment banker(s) and manager(s) to administer the offering (which investment
banker(s) and manager(s) will be nationally recognized).
(g) Other Registration Rights. Except as provided in this Agreement,
the Company (i) will not grant to any Persons the right to request the Company
to register any equity or similar securities of the Company, or any securities
convertible or exchangeable into or exercisable for such securities, without the
prior written consent of the holders of a majority of the Bain Funds Registrable
Securities and (ii) will not grant to any Persons any such rights to the extent
such rights conflict with, or are adverse to, the rights of the holders of
Registrable Securities without the consent of holders of at least two-thirds of
the Registrable Securities (other than the Bain Funds Registrable Securities)
and a majority of the holders of the Bain Funds Registrable Securities.
3. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register
any of its Common Stock under the Securities Act for its own account or for the
account of any holder of Common Stock (other than pursuant to a Demand
Registration (in which case the rights of the holders of Registrable Securities
shall be governed by Section 2), and other than pursuant to a registration
statement on Form S-8 or S-4 or any similar or successor form or in connection
with a registration the primary purpose of which is to register debt securities
(i.e., in connection with a so-called "equity kicker")) (a "Piggyback
Registration"), the Company will give prompt written notice to all holders of
Registrable Securities of its intention to effect such a registration. Upon the
written request of any holder of Registrable Securities (which request shall
specify the Registrable Securities intended to be disposed of by such holder and
the intended method of disposition thereof), the Company shall include in such
registration (subject to the provisions of this Agreement) all Registrable
Securities requested to be registered pursuant to this Section 3(a), subject to
Section 3(b) below, with respect to which the Company has received written
requests for inclusion therein within 20 days after the receipt of the Company's
notice.
(b) Priority on Primary Registrations. If a Piggyback Registration
is in part an underwritten primary registration on behalf of the Company and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in
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such registration exceeds the number which can be sold in an orderly manner in
such offering within a price range acceptable to the Company and without
adversely affecting the marketability of the offering, then the Company will
include in such registration (i) first, the securities the Company proposes to
sell, (ii) second, the Registrable Securities requested to be included in such
registration, pro rata from among the holders of such Registrable Securities
according to the number of Registrable Securities requested by them to be so
included, and (iii) third, any other securities requested to be included in such
registration, in such manner as the Company may determine.
(c) Priority on Secondary Registrations. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in an orderly manner in such
offering within a price range acceptable to the holders initially requesting
such registration and without adversely affecting the marketability of the
offering, then the Company will include in such registration (i) first, the
securities requested to be included therein by the holders requesting such
registration and the Registrable Securities requested to be included in such
registration, pro rata from among such holders and the holders of such
Registrable Securities according to the number of Registrable Securities
requested by them to be so included, and (ii) second, any other securities
requested to be included in such registration, in such manner as the Company may
determine.
(d) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
Section 2 or pursuant to this Section 3, and if such previous registration has
not been withdrawn or abandoned, then all the parties hereto agree that the
Company shall not be required to effect any other registration of any of its
equity or similar securities or securities convertible or exchangeable into or
exercisable for its equity or similar securities under the Securities Act
(except on Forms S-4 or S-8 or any successor or similar form or in connection
with a Demand Registration), whether on its own behalf or at the request of any
holder or holders of such securities, until a period of at least 180 days has
elapsed from the effective date of such previous registration.
4. Holdback Agreements.
(a) Each holder of Registrable Securities hereby agrees not to
effect any sale or distribution of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and the 180-day period beginning on the effective
date of any underwritten Demand Registration or any underwritten Piggyback
Registration (except as part of such underwritten registration), unless the
underwriters managing such underwritten registration otherwise agree (which
agreement shall be equally applicable to all holders of Registrable Securities).
(b) The Company (i) will not effect any sale or distribution of its
equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and during the
180-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of such
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underwritten registration or pursuant to registrations on Forms S-4 or S-8 or
any successor or similar form or in connection with a registration the primary
purpose of which is to register debt securities (i.e., in connection with a
so-called "equity kicker")), unless the underwriters managing such underwritten
registration otherwise agree (which agreement shall be equally applicable to all
holders of Registrable Securities), and (ii) will cause each holder of at least
2% (on a fully diluted basis) of Common Stock, or any securities convertible
into or exchangeable or exercisable for Common Stock, purchased from the Company
at any time after the date of this Agreement (other than in a registered public
offering) to agree not to effect any sale or distribution of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing such underwritten
registration otherwise agree.
5. Registration Procedures. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof, and pursuant thereto the Company will as expeditiously
as possible:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish to the counsel selected pursuant to Section 6(b) below
copies of all such documents proposed to be filed, which documents will be
subject to the prompt review and reasonable comment of such counsel), and upon
filing such documents, the Company shall promptly notify in writing such counsel
of the receipt by the Company of any written comments by the SEC with respect to
such registration statement or prospectus or any amendment or supplement thereto
or any written request by the SEC for the amending or supplementing thereof or
for additional information with respect thereto;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period of
not less than 180 days and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement and
cause the prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the Securities
Act;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any
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and all other acts and things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller (provided that the Company will not
be required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subsection, (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process (i.e., service of process which is not limited solely to securities
law violations) in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading in light of the circumstances under which they were made, and, at
the request of any such seller, the Company will, as soon as reasonably
practicable, file and furnish to all sellers a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any fact necessary to make the statements
therein not misleading in light of the circumstances under which they were made;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the Nasdaq National Market System
("Nasdaq Market") and, if listed on the Nasdaq Market, use its best efforts to
secure designation of all such Registrable Securities covered by such
registration statement as a Nasdaq "National Market System security" within the
meaning of Rule 11Aa2-1 under the Exchange Act or, failing that, to secure
Nasdaq Market authorization for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register as such with respect to such Registrable Securities with the
National Association of Securities Dealers;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including, without limitation, effecting a split or a
combination of stock or units);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information and participate in due diligence sessions reasonably requested by
any such seller, underwriter, attorney, accountant or agent in connection with
such registration statement;
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(j) 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 the period of at
least twelve months beginning with the first day of the Company's first full
calendar quarter after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company will use its best efforts promptly to obtain the
withdrawal of such order;
(l) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such Registrable Securities,
and cooperate and assist with any filings to be made with the NASD;
(m) obtain one or more "cold comfort" letters, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), signed by the Company's independent public accountants
in customary form and covering such matters of the type customarily covered by
"cold comfort" letters as the holders of a majority of the Registrable
Securities being sold reasonably request;
(n) provide a legal opinion of the Company's outside counsel, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), with respect to the registration statement, each
amendment and supplement thereto, the prospectus included therein (including the
preliminary prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions
of such nature; and
(o) use its best efforts to cause its officers to support the
marketing of the Registrable Securities being sold (including, without
limitation, their participation in "road shows" as may be reasonably requested
by the underwriters administering the offering and sale of such Registrable
Securities) to the extent reasonably possible taking into account such officers'
responsibilities to manage the Company's business.
If any such registration or comparable statement refers to any holder by name or
otherwise as the holder of any securities of the Company and if in such holder's
sole and exclusive judgment, such holder is or might be deemed to be an
underwriter or a controlling person of the Company, such holder shall have the
right to require (i) the insertion therein of language, in form and substance
satisfactory to such holder and presented to the Company in writing, to the
effect that the holding by such holder of such securities is not to be construed
as a recommendation by such holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply
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that such holder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such holder by name or
otherwise is not required by the Securities Act or any similar Federal statute
then in force, the deletion of the reference to such holder; provided, that with
respect to this clause (ii) such holder shall furnish to the Company an opinion
of counsel to such effect, which opinion and counsel shall be reasonably
satisfactory to the Company.
6. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all Registration
Expenses, will be borne by the Company.
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company will pay for the reasonable fees and disbursements of
one counsel chosen by the holders of a majority of the Registrable Securities
initially requesting such registration (which counsel shall be retained to
represent all such holders).
7. Indemnification.
(a) By the Company. The Company agrees to, and will cause each of
its Subsidiaries to agree to, indemnify, to the fullest extent permitted by law,
each holder of Registrable Securities, its officers, directors, members,
trustees, employees, agents, stockholders and general and limited partners and
each Person who controls such holder (within the meaning of the Securities Act
and Exchange Act) against any and all losses, claims, damages, liabilities and
expenses (or actions or proceedings, whether commenced or threatened, in respect
thereof), joint or several, arising out of or based upon any untrue or alleged
untrue statement of material fact contained in any registration statement,
reports required and other documents filed under the Exchange Act, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto, together
with any documents incorporated therein by reference, or any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation or alleged violation by
the Company or any of its Subsidiaries of any federal, state, foreign or common
law rule or regulation and relating to action or inaction in connection with any
such registration, disclosure document or other document and shall reimburse
such holder, officer, director, member, trustee, employee, agent, stockholder,
partner or controlling Person for any legal or other expenses, including any
amounts paid in any settlement effected with the consent of the Company, which
consent will not be unreasonably withheld or delayed, incurred by such holder,
officer, director, member, trustee, employee, agent, stockholder, partner or
controlling Person in connection with the investigation or defense of such loss,
claim, damage, liability or expense (or actions or proceedings, whether
commenced or threatened, in respect thereof), except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
such holder expressly for use therein. In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
-11-
(b) By the Holders. In connection with any registration statement in
which a holder of Registrable Securities is participating, each such holder will
furnish to the Company in writing such information and affidavits about such
holder as the Company reasonably requests for use in connection with any such
registration statement or prospectus and, to the extent permitted by law, will
indemnify the Company, its directors and officers and each Person who controls
the Company (within the meaning of the Securities Act) and the other holders of
Registrable Securities against any losses, claims, damages, liabilities and
expenses resulting from any untrue or alleged untrue statement of material fact
contained in the registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so furnished
in writing by such holder; provided, that the obligation to indemnify will be
individual, not joint and several, for each holder and will be limited to the
net amount of proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement.
(c) Claim Procedures. Any Person entitled to indemnification
hereunder will (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification (provided that the failure
to give prompt notice will not impair any Person's right to indemnification
hereunder to the extent such failure has not prejudiced the indemnifying party)
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit the indemnifying party to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent it may wish, with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, the indemnifying party will not be subject to
any liability for any settlement made by the indemnified party without its
consent (but such consent will not be unreasonably withheld or delayed) and the
indemnifying party shall not, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof, a release from all liability in
respect of such claim or litigation provided by the claimant or plaintiff to
such indemnified party. An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay (i) the fees
and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim or (ii) any settlement made by any indemnified party without such
indemnifying party's consent (but such consent will not be unreasonably
withheld).
(d) Survival; Contribution. The indemnification provided for under
this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director, agent or employee and each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person, if
any, who controls such indemnified party (within the meaning of the Securities
Act), and will survive the transfer of securities. The Company also agrees to
make such provisions, as are reasonably requested by any indemnified party, for
contribution to such party in the event the Company's indemnification is
unavailable for any reason.
-12-
8. Participation in Underwritten Registrations. No Person may participate
in any registration hereunder which is underwritten unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements (with terms customary in underwriting agreements for
secondary distributions) approved by the Person or Persons entitled hereunder to
approve such arrangements (including, without limitation, pursuant to the terms
of any over-allotment or "green shoe" option requested by the managing
underwriter(s), provided that no holder of Registrable Securities will be
required to sell more than the number of Registrable Securities that such holder
has requested the Company to include in any registration) and (b) completes and
executes all customary questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements; provided, that no holder of Registrable Securities
included in any underwritten registration shall be required to make any
representations or warranties to the Company or the underwriters (other than
representations and warranties regarding such holder and such holder's intended
method of distribution) or to undertake any indemnification or contribution
obligations to the Company or the underwriters with respect thereto, except as
otherwise provided in Section 7.
9. Rule 144 Reporting. With a view to making available to the holders of
Registrable Securities the benefits of certain rules and regulations of the SEC
which may permit the sale of the Registrable Securities to the public without
registration, the Company agrees at its expense to use its best efforts to:
(a) make and keep current public information available, within the
meaning of Rule 144 or any similar or analogous rule promulgated under the
Securities Act, at all times after it has become subject to the reporting
requirements of the Exchange Act;
(b) file with the SEC, in a timely manner, all reports and other
documents required of the Company under the Securities Act and Exchange Act
(after it has become subject to such reporting requirements); and
(c) so long as any Person owns any Registrable Securities, furnish
to such Person forthwith upon request, a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
commencing 90 days after the effective date of the first registration filed by
the Company for an offering of its securities to the general public), the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); a copy of the most recent annual or quarterly
report of the Company; and such other reports and documents as such Person may
reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration.
10. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered if delivered
personally, sent via a nationally recognized overnight courier, or sent via
facsimile to the recipient, or if sent by certified or registered mail, return
receipt requested, will be deemed to have been given two business days
thereafter. Such notices, demands and other communications will be sent to the
address indicated below:
-13-
To the Company:
Mattress Discounters Holding Corporation
c/o Bain Capital, Inc.
Two ▇▇▇▇▇▇ Place
Boston, MA 02116
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy, which shall not constitute notice, to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To any Bain Fund:
▇▇▇▇ Capital, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy, which shall not constitute notice, to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-14-
To ▇▇▇▇▇▇:
▇▇▇▇▇▇-▇▇▇▇▇▇ Company
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy, which shall not constitute notice, to:
McGuire, Woods, Battle & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
To Holdings:
Mattress Discounters Holding L.L.C.
c/o Bain Capital, Inc.
Two ▇▇▇▇▇▇ Place
Boston, MA 02116
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy, which shall not constitute notice, to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
11. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not enter into any
agreement which is inconsistent with or violates the rights granted to the
holders of Registrable Securities in this Agreement.
(b) Remedies. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach
-15-
of any provision of this Agreement and to exercise all other rights granted by
law. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that any
party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may be
amended or waived only upon the prior written consent of the Company and holders
of at least 75% of the Registrable Securities; provided, that no amendment shall
be effective without the consent of a holder of Registrable Securities to the
extent that such amendment would adversely affect the rights or obligations of
such holder of Registrable Securities hereunder in any material respect, and any
amendment to which such written consent is obtained will be binding upon the
Company and all holders of Registrable Securities. For avoidance of doubt, an
amendment to add another party to this Agreement is not an action which, in and
of itself, affects any holder of Registrable Securities materially adversely.
The failure of any party to enforce any of the provisions of this Agreement
shall in no way be construed as a waiver of such provisions and shall not affect
the right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
(d) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(e) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of New York, without giving
effect to any choice
-16-
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
(i) Third Party Beneficiaries. Each of the parties hereto
acknowledges and agrees that, even though the Bain Funds are not a party hereto,
the Bain Funds shall have the rights granted to them as intended hereby and for
the purposes of exercising such rights shall be a third party beneficiary hereof
and entitled to enforce such rights whether or not the Bain Funds or the Bain
Funds' transferor is then a party to this Agreement. Each of the parties hereto
further acknowledges and agrees that any Person who is a holder of Registrable
Securities as defined herein and who is not a party hereto shall have the rights
granted to holders of Registrable Securities as intended hereby and for the
purposes of exercising such rights shall be a third party beneficiary hereof and
entitled to enforce such rights whether or not such Person or such Persons'
transferor is then a party to this Agreement.
* * * * *
-17-
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first above written.
MATTRESS DISCOUNTERS HOLDING
CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By:_____________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
MATTRESS DISCOUNTERS HOLDING L.L.C.
By: ▇▇▇▇ Capital Fund VI, L.P.
Its: Member
By: ▇▇▇▇ Capital Partners VI, L.P.
Its: General Partner
By: ▇▇▇▇ Capital Investors, Inc.
Its: General Partner
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By:_____________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇-▇▇▇▇▇▇ COMPANY
/s/ ▇. ▇. ▇▇▇▇▇▇▇
By:_____________________________________
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer