Exhibit 2
CONFORMED COPY
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REGISTRATION RIGHTS AGREEMENT
among
FAMILY BARGAIN CORPORATION,
THREE CITIES FUND II, L.P.,
THREE CITIES OFFSHORE II C.V.
and
TERFIN INTERNATIONAL LTD.
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Dated as of January 10, 1997
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Page 17 of 38 Pages
TABLE OF CONTENTS
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1. Definitions.............................................................1
2. Securities Subject to this Agreement....................................3
(a) Registrable Securities.........................................3
(b) Holders of Registrable Securities..............................3
3. Demand Registration.....................................................4
(a) Request for Demand Registration................................4
(b) Effective Demand Registration..................................4
(c) Expenses.......................................................5
(d) Underwriting Procedures........................................5
(e) Selection of Underwriters......................................5
4. Piggy-Back Registration.................................................6
(a) Piggy-Back Rights..............................................6
(b) Priority of Registrations......................................7
(c) Expenses.......................................................7
5. Registration Procedures.................................................7
(a) Obligations of the Company.....................................7
(b) Seller Information............................................10
(c) Notice to Discontinue.........................................11
(d) Sale to Underwriter...........................................11
6. Registration Expenses..................................................11
7. Indemnification; Contribution..........................................12
(a) Indemnification by the Company................................12
(b) Indemnification by Holders....................................12
(c) Conduct of Indemnification Proceedings........................13
(d) Contribution..................................................14
8. Rule 144; Other Exemptions.............................................14
9. Certain Limitations on Registration Rights.............................15
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Page 18 of 38 Pages
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10. Miscellaneous...........................................................15
(a) Recapitalizations, Exchanges, etc..............................15
(b) No Inconsistent Agreements; Other Registration Rights..........15
(c) Remedies.......................................................15
(d) Amendments and Waivers.........................................16
(e) Notices........................................................16
(f) Successors and Assigns.........................................17
(g) Counterparts...................................................17
(h) Headings.......................................................17
(i) Governing Law..................................................17
(j) Jurisdiction...................................................17
(k) Severability...................................................18
(l) Rules of Construction..........................................18
(m) Entire Agreement...............................................18
(n) Further Assurances.............................................18
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Page 19 of 38 Pages
REGISTRATION RIGHTS AGREEMENT
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REGISTRATION RIGHTS AGREEMENT, dated as of January ___, 1997,
among FAMILY BARGAIN CORPORATION, a Delaware corporation (the "COMPANY"), THREE
CITIES FUND II, L.P., a Delaware limited partnership ("FUND II"), THREE CITIES
OFFSHORE II C.V., a Netherland Antilles limited partnership ("OFFSHORE II") and
TERFIN INTERNATIONAL LTD., a British Virgin Islands corporation ("TERFIN").
This Agreement is made in connection with (i) the Securities
Purchase Agreement, dated as of December 30, 1996, among the Company, Fund II,
Offshore II and Terfin, relating to the acquisition by Fund II, Offshore II and
Terfin of an aggregate of 27,000 shares of Series B Convertible Exchangeable
Preferred Stock, $.01 par value per share, of the Company (the "CONVERTIBLE
PREFERRED STOCK"), for an aggregate purchase price of $27,000,000.00. In order
to induce Fund II, Offshore II and Terfin to acquire the Convertible Preferred
Stock, the Company has agreed to provide registration rights with respect to the
Registrable Securities (as hereinafter defined) as set forth in this Agreement.
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated hereunder.
"Approved Underwriter" has the meaning assigned such term
in Section 3(e).
"Approved Underwriter Amount" has the meaning assigned such
term in Section 3(d).
"Business Day" means any day other than a Saturday, Sunday
or other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"Common Stock" means the Common Stock, $0.01 par value, of
the Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"Company Underwriter" has the meaning assigned such term in
Section 4(a).
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"Convertible Preferred Stock" has the meaning assigned such
term in the second paragraph of this Agreement.
"Cumulative Convertible Preferred Stock" means the
Cumulative Convertible Preferred Stock, $.01 par value per share, of the
Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"Demand Registration" has the meaning assigned such term in
Section 3(a).
"Designated Holder" means Fund II, Offshore II and Terfin
and any of their respective transferees to whom Registrable Securities have been
transferred other than the transferee to whom such securities have been
transferred pursuant to a registration statement under the Act or Rule 144 under
the Act.
"Exchange Act" means the Securities and Exchange Act of
1934, as amended, and the rules and regulations of the SEC thereunder.
"Holder" has the meaning assigned such term in Section
2(b).
"Holders' Counsel" means (a) with respect to any Demand
Registration that has been requested pursuant to Section 3, the one counsel
selected by the Initiating Holders holding a majority of the Registrable
Securities held by all Initiating Holders being registered in such registration,
and (b) with respect to a request for registration of Registrable Securities
pursuant to Section 4, the one counsel selected by the Holders holding a
majority of the Registrable Securities being registered in such registration.
"Indemnified Party" has the meaning assigned such term in
Section 7(c).
"Indemnifying Party" has the meaning assigned such term in
Section 7(c).
"Initiating Holders" has the meaning assigned to such term
in Section 3(a).
"Inspector" has the meaning assigned such term in Section
5(a)(viii).
"NASD" has the meaning assigned such term in Section
5(a)(xv).
"Other Investors" means holders of the Common Stock of the
Company not entitled to distribute such shares of Common Stock to the public
pursuant to Rule 144(k) (or any successor provision then in effect) under the
Act.
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"Person" means any individual, firm, corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, government (or an agency or political subdivision thereof)
or other entity of any kind, and shall include any successor (by merger or
otherwise) of any such entity.
"Registrable Securities" means, subject to Section 2(a),
each of the following: (a) any shares of Common Stock issued or issuable upon
conversion of or in exchange for shares of the Convertible Preferred Stock and
(b) any shares of Common Stock issued or issuable in respect of shares of Common
Stock issued, issuable or held pursuant to clause (a) above by way of a stock
dividend or stock split or in connection with a combina tion of shares,
recapitalization, merger, consolidation or other reorganization or otherwise.
"Registration Expenses" has the meaning assigned such term
in Section 6.
"SEC" means the Securities and Exchange Commission.
"Shares" means the Common Stock, the Convertible Preferred
Stock, the Cumulative Convertible Preferred Stock, any class of common stock of
the Company authorized after the date of this Agreement, or any other class of
stock resulting from successive changes or reclassifications of the Shares.
"Total Securities" has the meaning assigned such term in
Section 4(a).
"Underwriters" has the meaning assigned such term in
Section 5(d).
"Valid Business Reason" has the meaning assigned such term
in Section 3(f).
2. Securities Subject to this Agreement.
(a) Registrable Securities. For the purposes of this
Agreement, Registrable Securities will cease to be Registrable Securities when
(i) a registration statement covering such Registrable Securities has been
declared effective under the Act by the SEC and such Registrable Securities have
been disposed of pursuant to such effective registration statement or (ii) the
entire amount of Registrable Securities proposed to be sold in a single sale are
or, in the opinion of counsel satisfactory to the Company and the Holder, each
in their reasonable judgment, may, be distributed to the public pursuant to Rule
144 in compliance with the requirements of paragraphs (c), (e), (f) and (g) of
Rule 144 (notwithstanding the provisions of paragraph (k) of such Rule) (or any
successor provision then in effect) under the Act.
(b) Holders of Registrable Securities. A Person is deemed
to be a holder of Registrable Securities (a "HOLDER") whenever such Person (i)
is a party to this Agreement (or a permitted transferee thereof) and (ii) owns
of record Registrable Securities,
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or holds a security convertible into or exercisable or exchangeable for,
Registrable Securities, whether or not such purchase or conversion has actually
been effected and disregarding any legal restrictions upon the exercise of such
rights. If the Company receives conflicting instructions, notices or elections
from two or more persons with respect to the same Registrable Securities, the
Company may act upon the basis of the instructions, notice or election received
from the registered owner of such Registrable Securities. Registrable Securities
issuable upon conversion of another security shall be deemed outstanding for the
purposes of this Agreement.
3. Demand Registration.
(a) Request for Demand Registration. Subject to Section
3(f) below, at any time the Designated Holders holding at least 25% of the
Registrable Securities held by all of the Designated Holders (the "INITIATING
HOLDERS") may request in writing the registration of Registrable Securities
under the Act, and under the securities or blue sky laws of any jurisdiction
designated by such holder or holders (each such registration under this Section
3(a) that satisfies the requirements set forth in Section 3(b) is referred to
herein as a "DEMAND REGISTRATION"). Notwithstanding the foregoing, in no event
shall the Company be required to effect more than three Demand Registrations.
Two or more registrations filed in response to one demand shall be counted as
one registration statement. Each request for a Demand Registration by the
Initiating Holders in respect thereof shall specify the amount of the
Registrable Securities proposed to be sold, the intended method of disposition
thereof and the jurisdictions in which registration is desired. Upon a request
for a Demand Registration, the Company shall promptly take such steps as are
necessary or appropriate to prepare for the registration of the Registrable
Securities to be registered. Within fifteen (15) days after the receipt of such
request, the Company shall give written notice thereof to all other Designated
Holders and include in such registration all Registrable Securities held by a
Designated Holder from whom the Company has received a written request for
inclusion therein at least ten (10) days prior to the filing of the registration
statement. Each such request will also specify the number of Registrable
Securities to be registered, the intended method of disposition thereof and the
jurisdictions in which registration is desired. Subject to Section 3(d), the
Company shall be entitled to include in any registration statement and offering
made pursuant to a Demand Registration, authorized but unissued shares of Common
Stock, shares of Common Stock held by the Company as treasury shares or shares
of Common Stock held by Stockholders other than the Holders; provided, that such
inclusion shall be permitted only to the extent that it is pursuant to and
subject to the terms of the underwriting agreement or arrangements, if any,
entered into by the Initiating Holders exercising the Demand Registration
rights.
(b) Effective Demand Registration. The Company shall use
its best efforts to cause any such Demand Registration to become effective not
later than ninety (90) days after it receives a request under Section 3(a). A
registration requested pursuant to Section 3(a) hereof shall not count as one of
the three demands to which the Designated Holders are entitled thereunder unless
such registration statement is declared effective and remains effective for at
least ninety (90) days.
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(c) Expenses. In any registration initiated as a Demand
Registration, the Company shall pay all Registration Expenses in connection
therewith, whether or not such requested Demand Registration becomes effective.
(d) Underwriting Procedures. If the Initiating Holders
holding a majority of the Registrable Securities held by all Initiating Holders
to which the requested Demand Registration relates so elect, the offering of
such Registrable Securities pursuant to such requested Demand Registration shall
be in the form of a firm commitment underwritten offering and the managing
underwriter or underwriters selected for such offering shall be the Approved
Underwriter selected in accordance with Section 3(e). In such event, if the
Approved Underwriter advises the Company in writing that, in its opinion, the
aggregate amount of such Registrable Securities requested to be included in such
offering (including those securities requested by the Company to be included in
such registration) is sufficiently large to have an adverse effect on the
success of such offering, then the Company shall include in such registration
only the aggregate amount of Registrable Securities that in the opinion of the
Approved Underwriter may be sold without any such effect on the success of such
offering (the "APPROVED UNDERWRITER AMOUNT"), and (i) each Designated Holder
shall be entitled to have included in such registration Registrable Securities
equal to its pro rata portion of the Approved Underwriter Amount, as based on
the amounts of Registrable Securities sought to be registered by the Designated
Holders in their requests for participation in the requested Demand Registration
and (ii) to the extent that the number of Registrable Securities to be included
by the Designated Holders is less than the Approved Underwriter Amount,
securities that the Company proposes to register shall also be included.
If, as a result of the proration provision of this Section
3(d), any Designated Holder shall not be entitled to include all Registrable
Securities in a registration that such Designated Holder has requested to be
included, such Designated Holder may elect to withdraw his request to include
Registrable Securities in such registration or may reduce the number requested
to be included; provided, however, that (x) such request must be made in writing
prior to the earlier of the execution of the underwriting agreement or the
execution of the custody agreement with respect to such registration and (y)
such withdrawal or reduction shall be irrevocable.
(e) Selection of Underwriters. If any requested Demand
Registration is in the form of an underwritten offering, the Initiating Holders
holding a majority of the Registrable Securities held by all Initiating Holders
to be included in the requested Demand Registration shall select and obtain an
investment banking firm of national reputation to act as the managing
underwriter of the offering (the "APPROVED UNDERWRITER"); provided, that such
underwriter shall be reasonably satisfactory to the Company.
(f) Limitations on Demand Registrations. The Demand
Registration rights granted to the Holders in Section 3(a) are subject to the
following limitations: (i) the Company shall not be required to cause a
registration pursuant to Section 3(a) to be declared effective within a period
of 90 days after the effective date of any registration statement of
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the Company effected in connection with a Demand Registration; and (ii) if the
Board of Directors of the Company, in its good faith judgment, determines that
any registration of Registrable Securities should not be made or continued
because it would materially interfere with any material financing, acquisition,
corporate reorganization or merger or other transaction involving the Company or
any of its subsidiaries (a "VALID BUSINESS REASON"), the Company may postpone
filing a registration statement relating to a Demand Registration until such
Valid Business Reason no longer exists, but in no event for more than ninety
(90) days.
Each Holder of Registrable Securities agrees that, upon
receipt of any notice from the Company that the Company has determined to
withdraw any registration statement pursuant to clause (ii) above, such Holder
will discontinue its disposition of Registrable Securities pursuant to such
registration statement and, if so directed by the Company, will deliver to the
Company (at the Company's expenses) all copies, other than permanent file
copies, then in such Holder's possession, of the prospectus covering such
Registrable Securities that was in effect at the time of receipt of such notice.
If the Company shall give any notice of postponement or withdrawal of a
registration statement, the Company shall, at such time as the Valid Business
Reason that caused such postponement or withdrawal no longer exists (but in no
event later than ninety (90) days after the date of the postponement), use its
best efforts to promptly effect the registration under the Act of the
Registrable Securities covered by the postponed or withdrawn registration
statement in accordance with this Section 3 (unless the Holder(s) delivering the
Demand Registration request shall have withdrawn such request, in which case the
Company shall not be considered to have effected an effective registration for
the purposes of this Agreement), and such registration shall not be postponed or
withdrawn pursuant to clause (ii) above.
4. Piggy-Back Registration.
(a) Piggy-Back Rights. If the Company proposes to file a
registration statement under the Act with respect to an offering by the Company
for its own account of any class of security (other than a registration
statement on Form S-4 or S-8 (or any successor form thereto)) under the Act,
then the Company shall give written notice of such proposed filing to each of
the Holders at least twenty (20) days before the anticipated filing date, and
such notice shall describe in detail the proposed registration and distribution
(including those jurisdictions where registration under the securities or blue
sky laws is intended) and offer such Holders the opportunity to register the
number of Registrable Securities as each such Holder may request. The Company
shall use its best efforts (within ten (10) days of the notice provided for in
the preceding sentence) to permit the Holders who have requested to participate
in the registration for such offering to include such Registrable Securities in
such offering on the same terms and conditions as the securities of the Company
included therein. Notwithstanding the foregoing, if such registration involves
an underwritten offering and the managing underwriters or underwriters (the
"COMPANY UNDERWRITER") shall advise the Holders of Registrable Securities in
writing that, in its opinion, the total amount of securities requested to be
included in such offering (the "TOTAL SECURITIES") is sufficiently large so as
to have an adverse effect on the success of the
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distribution of the Total Securities, then the Company shall include in such
registration, to the extent of the number of Registrable Securities which the
Company is so advised can be sold in (or during the time of) such offering,
first, all Common Stock or securities convertible into, or exchangeable or
exercisable for, Common Stock that the Company proposed to register for its own
account, second, all securities proposed to be registered by all Designated
Holders and Other Investors, pro rata among such Designated Holders and Other
Investors, and third, all other securities proposed to be registered.
Notwithstanding anything in this Section 4 to the contrary, the Company shall
not be required to include any Registrable Securities in its Initial Public
Offering.
(b) Priority of Registrations. Subject to the provisions of
Section 3(f)(ii), if the Company proposes to register securities pursuant to
Section 4(a) hereof on the same day that the Designated Holders request a
registration pursuant to Section 3(a) hereof, then the Demand Registration
requested pursuant to Section 3(a) hereof shall be given priority.
(c) Expenses. The Company shall bear all Registration
Expenses in connection with any registration pursuant to this Section 4.
(d) Conditions and Limitations on Piggyback Registrations.
If, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to all Holders of record
of Registrable Securities and (i) in the case of a determination not to
register, shall be relieved of its obligation to register the Registrable
Securities in connection with such abandoned registration, without prejudice,
however, to the rights of Holders under Section 3, and (ii) in the case of a
determination to delay the registration of its securities, shall be permitted to
delay the registration of such Registrable Securities for the same period as the
delay in registering such other equity securities.
Any Holder shall have the right to withdraw its request for
inclusion of its Registrable Securities in any registration statement pursuant
to this Section 4 by giving written notice to the Company of its request to
withdraw; provided, however, that (i) such request must be made in writing prior
to the earlier of the execution of the underwriting agreement or the execution
of the custody agreement with respect to such registration and (ii) such
withdrawal shall be irrevocable and, after making such withdrawal, a Holder
shall no longer have any right to include Registrable Securities in the
registration as to which such withdrawal was made.
5. Registration Procedures.
(a) Obligations of the Company. Whenever registration of
Registrable Securities has been requested pursuant to Section 3 or 4 of this
Agreement, the Company shall use its best efforts to effect the registration and
sale of such Registrable
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Securities in accordance with the intended method of distribution thereof as
quickly as prac ticable, and in connection with any such request, the Company
shall, as expeditiously as possible:
(i) prepare and file with the SEC (in any
event not later than sixty (60) Business Days after receipt of a request to file
a registration statement with respect to Registrable Securities) a registration
statement on any form on which registration is requested for which the Company
then qualifies, which counsel for the Company and Holders' Counsel shall deem
appropriate and which shall be available for the sale of such Registrable
Securities in accordance with the intended method of distribution thereof, and
use its best efforts to cause such registration statement to become effective;
provided, however, that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company shall (A) provide Holders'
Counsel with an adequate and appropriate opportunity to participate in the
preparation of such registration statement and each prospectus included therein
(and each amendment or supplement thereto) to be filed with the SEC, which
documents shall be subject to the review of Holders' Counsel, and (B) notify
Holders' Counsel and each seller of Registrable Securities pursuant to such
registration statement of any stop order issued or threatened by the SEC and
take all reasonable action required to prevent the entry of such stop order or
to remove it if entered;
(ii) 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 and to comply with the provisions of the Act with respect to
the disposition of all Registrable Securities covered by such registration
statement until the earlier of (a) such time as all of such Registrable
Securities and other securities have been disposed of in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement and (b) 180 days after the effective date of such
registration statement, except with respect to any such registration statement
filed pursuant to Rule 415 (or any successor Rule) under the Act if the Company
is eligible to file a registration statement on Form S-3, in which case such
period shall be two (2) years;
(iii) as soon as reasonably possible,
furnish to each seller of Registrable Securities, prior to filing a registration
statement, copies of such registration statement as it is proposed to be filed,
and thereafter such number of copies of such regis tration statement, each
amendment and supplement thereto (in each case including all exhibits thereto),
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as each such seller may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such seller;
(iv) 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 of Registrable Securities may request, and
to continue such qualification in effect in each such jurisdiction for as long
as is permissible pursuant to the laws of such jurisdiction, or for as long as
any such seller requests or until all of such Registrable
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Securities are sold, whichever is shortest, and do any and all other acts and
things which may be reasonably necessary or advisable to enable any such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided, however, that the Company shall not
be required to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 5(a)(iv), (B)
subject itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction;
(v) use its best efforts to obtain all other
approvals, covenants, exemptions or authorizations from such governmental
agencies or authorities as may be necessary to enable the sellers of such
Registrable Securities to consummate the disposition of such Registrable
Securities;
(vi) notify each seller of Registrable
Securities at any time when a prospectus relating thereto is required to be
delivered under the Act, upon discovery that, or upon 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 to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they were made, and the
Company shall promptly prepare a supplement or amendment to such prospectus and
furnish to each such seller a reasonable number of copies of a supplement to or
amendment of such prospectus as may be necessary so that, after delivery to the
purchasers of such Registrable Securities, such prospectus shall not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances under which they were made;
(vii) enter into and perform customary
agreements (including an underwriting agreement in customary form with the
Approved Underwriter or Company Underwriter, if any, selected as provided in
Section 3 or 4; provided, that the underwriting agreement, if any, shall be
reasonably satisfactory in form and substance to the Company) and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities;
(viii) make available for inspection by any
seller of Registrable Securities, any managing underwriter participating in any
disposition pursuant to such registration statement, Holders' Counsel and any
attorney, accountant or other agent retained by any such seller or any managing
underwriter (each, an "INSPECTOR" and, collectively, the "INSPECTORS"), all
financial and other records, pertinent corporate documents and properties of the
Company and any subsidiaries thereof as may be in existence at such time
(collectively, the "RECORDS") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's and any
subsidiaries' officers, directors and employees, and the independent public
accountants of the Company, to supply all information reasonably requested by
any such Inspector in connection with such registration statement; provided,
that such Inspector agrees to keep all such information confidential.
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(ix) obtain a "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by "cold comfort" letters, as Holders'
Counsel or the managing underwriter reasonably request;
(x) furnish, at the request of any seller of
Registrable Securities on the date such securities are delivered to the
underwriters for sale pursuant to such registration or, if such securities are
not being sold through underwriters, on the date the registration statement with
respect to such securities becomes effective, an opinion, dated such date, of
counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the seller making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as such seller may reasonably request and as are
customarily included in such opinions;
(xi) 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 but no later than
fifteen (15) months after the effective date of the registration statement, an
earnings statement covering a period of twelve (12) months beginning after the
effective date of the registration statement, in a manner which satisfies the
provisions of Section 11(a) of the Act;
(xii) cause all such Registrable Securities
to be listed on each securities exchange on which similar securities issued by
the Company are then listed (if any) if the listing of such Registrable
Securities is then permitted under the rules of such exchange or, if no similar
securities are then so listed, cause all such Registrable Securities to be
listed on an exchange on which the Initiating Holders request that such
Registrable Securities be listed, subject to the satisfaction of the applicable
listing requirements of each such exchange;
(xiii) keep each seller of Registrable
Securities advised in writing as to the initiation and progress of any
registration under Section 3 or 4 hereunder;
(xiv) provide officers' certificates and
other customary closing documents;
(xv) cooperate with each seller of
Registrable Securities and each underwriter participating in the disposition of
such Registrable Securities and their respective counsel in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc. (the "NASD"); and
(xvi) use its best efforts to take all other
steps necessary to effect the registration of the Registrable Securities
contemplated hereby.
(b) Seller Information. The Company may require as a
condition precedent of the Company's obligations under this Section 5 that each
seller of Registrable Securities as to which any registration is being effected
furnish to the Company such
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information regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request in writing.
(c) Notice to Discontinue. Each Holder agrees that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5(a)(vi), such Holder shall forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Sec tion 5(a)(vi) and,
if so directed by the Company, such Holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
which is current at the time of receipt of such notice. If the Company shall
give any such notice, the Company shall extend the period during which such
registration statement shall be maintained effective pursuant to this Agreement
(including, without limitation, the period referred to in Section 5(a)(ii)) by
the number of days during the period from and including the date of the giving
of such notice pursuant to Section 5(a)(vi) to and including the date when the
Holder shall have received the copies of the supplemented or amended prospectus
contemplated by and meeting the requirements of Section 5(a)(vi).
(d) Sale to Underwriter. Subject to the limitations on
inclusion of Registrable Securities in a registration under Sections 3(d) and
4(a), in lieu of converting any shares of Convertible Preferred Stock into
Registrable Securities to be included in a registration under Section 3 or 4
prior to or simultaneously with the filing or the effectiveness of any
registration statement filed pursuant thereto, the holder of such Convertible
Preferred Stock may sell such Convertible Preferred Stock to the Approved
Underwriter or the Company Underwriter, as the case may be, and any other
underwriters of the offering being registered (collectively, the Approved
Underwriter or Company Underwriter, as the case may be, and such other
underwriters, the "UNDERWRITERS") if the Underwriters consent thereto and if the
Underwriters undertake to convert such shares of Convertible Preferred Stock
into Registrable Securities before making any distribution pur suant to such
registration statement and to include such Registrable Securities among the
Registrable Securities being offered pursuant to such registration statement.
Assuming timely delivery by the Holder of the Convertible Preferred Stock
certificates to or for the account of the Underwriters, the Company agrees to
cause the relevant Registrable Securities to be issued so as to permit the
Underwriters to make and complete the distribution (including the distribution
of such Registrable Securities) contemplated by the underwriting.
6. Registration Expenses. The Company shall pay all expenses
(other than underwriting discounts and commissions) arising from or incident to
the performance of, or compliance with, this Agreement, including, without
limitation, (a) SEC, stock exchange and NASD registration and filing fees, (b)
all fees and expenses incurred in complying with securities or blue sky laws
(including, without limitation, reasonable fees, charges and dis bursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), (c) all printing, messenger and delivery expenses, (d) the fees,
charges and disbursements of counsel to the Company and of its independent
public accountants and any
Page 30 of 38 Pages
12
other accounting and legal fees, charges and expenses incurred by the Company
(including, without limitation, any expenses arising from any special audits
incident to or required by any registration or qualification) and (e) the
reasonable fees, charges and expenses of any special experts retained by the
Company in connection with any requested Demand Registration or piggy-back
registration pursuant to the terms of this Agreement, regardless of whether the
registration statement filed in connection with such registration is declared
effective. In connection with each registration hereunder, the Company shall
reimburse the Holders of Registrable Securities being registered in such
registration for the reasonable fees, charges and disbursements of not more than
one Holders' Counsel. All of the expenses described in this Section 6 are
referred to in this Agreement as "REGISTRATION EXPENSES." Notwithstanding the
foregoing provisions of this Section 6, in connection with any registration
hereunder, each Holder of Registrable Securities being registered shall pay all
underwriting discounts and commissions and any capital gains, income or transfer
taxes, if any, attributable to the sale of such Registrable Securities, pro rata
with respect to payments of discounts and commissions in accordance with the
number of shares sold in the offering.
7. Indemnification; Contribution.
(a) Indemnification by the Company. In the event of any
proposed registration of securities of the Company pursuant to Section 3 or
Section 4, the Company agrees to indemnify and hold harmless each Holder, its
directors, officers, partners, employees, advisors and agents, and each Person
who controls (within the meaning of the Act or the Exchange Act) such Holder, to
the extent permitted by law, from and against any and all losses, claims,
damages, expenses (including, without limitation, reasonable costs of
investigation and fees, disbursements and other charges of counsel) or other
liabilities resulting from or arising out of or based upon any untrue, or
alleged untrue, statement of a material fact contained in any registration
statement, prospectus or preliminary prospectus or notification or offering
circular (as amended or supplemented if the Company shall have fur nished any
amendments or supplements thereto) or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by or on behalf of such Holder expressly for use therein. The Company
shall also indemnify any underwriters of the Registrable Securities, their
officers, directors and employees, and each Person who controls any such
underwriter (within the meaning of the Act and the Exchange Act) to the same
extent as provided above with respect to the indemnification of the Holders of
Registrable Securities.
(b) Indemnification by Holders. In connection with any
proposed registration in which a Holder is participating pursuant to Section 3
or 4 hereof, each such Holder shall furnish to the Company in writing such
information with respect to such Holder as the Company may reasonably request or
as may be required by law for use in connection with any registration statement
or prospectus to be used in connection with such registration and each Holder
agrees to indemnify and hold harmless the Company, any underwriter retained by
the Company and their respective directors, officers, employees and each Person
Page 31 of 38 Pages
13
who controls (within the meaning of the Act and the Exchange Act) the Company or
such underwriter to the same extent as the foregoing indemnity from the Company
to the Holders (subject to the proviso to this sentence and applicable law), but
only with respect to any such information furnished in writing by or on behalf
of such Holder expressly for use therein; provided, however, that the liability
of any Holder under this Section 7(b) shall be limited to the amount of the net
proceeds received by such Holder in the offering giving rise to such liability.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder (the "INDEMNIFIED PARTY") agrees to give
prompt written notice to the indemnifying party (the "INDEMNIFYING PARTY") after
the receipt by the Indemnified Party of any written notice of the commencement
of any action, suit, proceeding or investigation or threat thereof made in
writing for which the Indemnified Party intends to claim indemnification or
contribution pursuant to this Agreement; provided, that, the failure so to
notify the Indemnifying Party shall not relieve the Indemnifying Party of any
liability that it may have to the Indemnified Party hereunder. If notice of
commencement of any such action is given to the Indemnifying Party as above
provided, the Indemnifying Party shall be entitled to participate in and, to the
extent it may wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense of such action at its own expense, with counsel
chosen by it and satisfactory to such Indemnified Party. The Indemnified Party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
(other than reasonable costs of investi gation) shall be paid by the Indemnified
Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the
Indemnifying Party fails to assume the defense of such action with counsel
satisfactory to the Indemnified Party in its reasonable judgment, (iii) the
named parties to any such action (including any impleaded parties) have been
advised by such counsel that either (A) representation of such Indemnified Party
and the Indemnifying Party by the same counsel would be inappropriate under
applicable standards of professional conduct or (B) there may be one or more
legal defenses available to it which are different from or additional to those
available to the Indemnifying Party; provided, however, that the Indemnifying
Party shall only have to pay the fees and expenses of one firm of counsel for
all Indemnified Parties in each jurisdiction, except to the extent
representation of all Indemnified Parties by the same counsel is inappropriate
under applicable standards of professional conduct. In either of such cases the
Indemnifying Party shall not have the right to assume the defense of such action
on behalf of such Indemnified Party. No Indemnifying Party shall be liable for
any settlement entered into without its written consent, which consent shall not
be unreasonably withheld. No Indemnifying Party shall, without the written
consent of the Indemnified Party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the Indemnified Party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(A) includes an unconditional release of the Indemnified Party from all
liability arising out of such action or claim and (B) 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. The rights accorded to any
Page 32 of 38 Pages
14
Indemnified Party hereunder shall be in addition to any rights that such
Indemnified Party may have at common law, by separate agreement or otherwise.
(d) Contribution. If the indemnification provided for in
Section 7(a) from the Indemnifying Party is unavailable to an Indemnified Party
in respect of any losses, claims, damages, expenses or other liabilities
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, expenses or other
liabilities in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party and Indemnified Party in connection with the actions
which resulted in such losses, claims, damages, expenses or other liabilities,
as well as any other relevant equitable considerations. The relative faults of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, was made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the Indemnifying Party's and
Indemnified Party's relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by a
party as a result of the losses, claims, damages, expenses or other liabilities
referred to above shall be deemed to include, subject to the limitations set
forth in Sections 7(a), 7(b) and 7(c), any legal or other fees, charges or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution pursuant to this
Section 7(d).
8. Rule 144; Other Exemptions. If the Company shall have filed
a registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the Act
in respect of Common Stock or securities of the company convertible into or
exchangeable or exercisable for Common Stock, the Company covenants that it
shall file any reports required to be filed by it under the Exchange Act and the
rules and regulations adopted by the SEC thereunder, and that it shall take such
further action as each Holder may reasonably request (including, but not limited
to, providing any information necessary to comply with Rules 144 and 144A under
the Act), all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Act within the
limitation of the exemptions provided by (a) Rule 144 or Rule 144A under the
Act, as such rules may be amended from time to time, or (b) any other rules or
regulations now existing or hereafter adopted by the SEC. The Company shall,
upon the request of any Holder, deliver to such Holder a written statement as to
whether the Company has complied with such requirements.
Page 33 of 38 Pages
15
9. Certain Limitations on Registration Rights. In the case of
a registration under Section 4 if the Company has determined to enter into an
underwriting agreement in connection therewith, no person may participate in
such registration unless such person (a) agrees to sell such person's securities
on the basis provided therein and (b) completes and executes all questionnaires,
powers of attorney, indemnities, lock-up agreements, underwriting agreements and
other documents reasonably required under the terms of such underwriting
agreements.
10. Miscellaneous.
(a) Recapitalizations, Exchanges, etc. The provisions of
this Agreement shall apply, to the full extent set forth herein with respect to
the Shares, to any and all shares of capital stock of the Company or any
successor or assign of the Company (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in exchange for or in
substitution of, the Shares and shall be appropriately adjusted for any stock
dividends, splits, reverse splits, combinations, recapitalizations and the like
occurring after the date hereof.
(b) No Inconsistent Agreements; Other Registration Rights.
The Company shall not enter into any agreement with respect to its securities
that is inconsistent with or adversely affects the rights granted to the Holders
in this Agreement other than any lock-up agreement with the underwriters in
connection with an underwritten offering pursuant to which the Company agrees,
for a period not in excess of 180 days if such underwritten offering is an
Initial Public Offering or, for a period not in excess of 90 days if such
underwritten offering is not an Initial Public Offering, not to register for
sale, and not to sell or otherwise dispose of, Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock. The Company
shall not grant any other Person registration rights without the written consent
of the Designated Holders holding at least a majority of the Registrable
Securities held by all of the Designated Holders. If the Company shall at any
time hereafter provide to any holder of any securities of the Company rights
with respect to the registration of such securities and such rights are provided
on terms or conditions more favorable to such holder than the terms and
conditions applicable to the Designated Holders herein, the Company shall
provide (by way of amendment to this Agreement or otherwise) such more favorable
terms or conditions to the Designated Holders under this Agreement.
(c) Remedies. The Holders, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, shall be
entitled to specific performance of their rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive in any action for specific performance the defense
that a remedy at law would be adequate.
Page 34 of 38 Pages
16
(d) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions of such
section may not be given unless the Company has obtained the prior written
consent of (i) the Designated Holders holding at least a majority of the
Registrable Securities held by all of the Designated Holders and (ii) the
Holders holding at least a majority of the Registrable Securities.
(e) Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:
(i) if to Fund II, Offshore II or Terfin:
Three Cities Research, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(ii) if to the Company:
Family Bargain Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Page 35 of 38 Pages
17
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; when delivered
by courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the parties
hereto; provided, however, that the registration rights and the other
obligations of the Company contained in this Agreement shall, with respect to
any Registrable Security, be automatically transferred from a Holder to any
subsequent holder of such Registrable Security (including any pledgee).
Notwithstanding any transfer of such rights, all of the obligations of the
Company hereunder shall survive any such transfer and shall continue to inure to
the benefit of all transferees.
(g) 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.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles of conflicts of law of such State.
(j) Jurisdiction. Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated hereby
may be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York and hereby expressly submits to
the personal jurisdiction and venue of such courts for the purposes thereof and
expressly waives any claim of improper venue and any claim that such courts are
an inconvenient forum. Each party hereby irrevocably consents to the service of
process of any of the aforementioned courts in any such suit, action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth in Section 10(e), such service to
become effective 10 days after such mailing.
(k) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, it being
intended that all of the rights and privileges of the Holders shall be
enforceable to the fullest extent permitted by law.
Page 36 of 38 Pages
18
(l) Rules of Construction. Unless the context otherwise
requires, "or" is not exclusive, and references to sections or subsections refer
to sections or subsections of this Agreement.
(m) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings in respect of the subject matter contained
herein, other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(n) Further Assurances. Each of the parties shall execute
such documents and perform such further acts as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.
Page 37 of 38 Pages
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IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed and delivered by their respective officers hereunto duly
authorized on the date first above written.
FAMILY BARGAIN CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: EVP
THREE CITIES FUND II, L.P.
By: TCR Associates, L.P.,
as General Partner
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Attorney-in-Fact
THREE CITIES OFFSHORE II C.V.
By: TCR Associates Offshore, L.P.,
as General Partner
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: General Partner
TERFIN INTERNATIONAL LTD.
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Attorney-in-Fact
Page 38 of 38 Pages