A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of April 21, 1998
by and among
DIAMOND BRANDS INCORPORATED
and
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
This Registration Rights Agreement (this "AGREEMENT") is made and entered into
---------
as of April 21, 1998, by and among Diamond Brands Incorporated, a Minnesota
corporation (the "COMPANY"), ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
-------
("DLJ") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") (each an
--- --------------
"INITIAL PURCHASER" and, collectively, the "INITIAL PURCHASERS"), each of whom
------------------ ------------------
has agreed to purchase the Company's 12.875% Series A Senior Discount Debentures
due 2009 (the "SERIES A DEBENTURES") pursuant to the Purchase Agreement (as
-------------------
defined below).
This Agreement is made pursuant to the Purchase Agreement, dated April 15,
1998, (the "PURCHASE AGREEMENT"), by and among the Company, and the Initial
------------------
Purchasers. In order to induce the Initial Purchasers to purchase the Series A
Debentures, the Company has agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a condition
to the obligations of the Initial Purchasers set forth in Section 2 of the
Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Indenture, dated April 21, 1998,
(the "INDENTURE") between the Company and State Street Bank and Trust Company,
---------
as Trustee, relating to the Series A Debentures and the Series B Debentures (as
defined herein)
The parties hereby agree as follows:
I. SECTION
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
ACT: The Securities Act of 1933, as amended.
---
AFFILIATE: As defined in Rule 144 of the Act.
---------
AFFILIATED MARKET MAKER: A Broker-Dealer who is deemed to be an Affiliate
-----------------------
of the Company.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
-------------
BUSINESS DAY: Any day except a Saturday, Sunday, or other day in the City
-------------
of New York, or in the city of the corporate trust office of the Trustee, on
which banks are authorized to close.
CERTIFICATED SECURITIES: Definitive Debentures, as defined in the
-----------------------
Indenture.
CLOSING DATE: The date hereof.
------------
COMMISSION: The Securities and Exchange Commission.
----------
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes
----------
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange
2
Offer Registration Statement relating to the Series B Debentures to be issued in
the Exchange Offer, (b) the maintenance of such Exchange Offer Registration
Statement continuously effective and the keeping of the Exchange Offer open for
a period not less than the minimum period required pursuant to Section 3(b)
hereof and (c) the delivery by the Company to the Registrar under the Indenture
of Series B Debentures in the same aggregate principal amount as the aggregate
principal amount of Series A Debentures tendered by Holders thereof pursuant to
the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
---------------------
DEBENTURES: The Series A Debentures and the Series B Debentures
-----------
EFFECTIVENESS DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
----------------------
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
------------
EXCHANGE OFFER: The exchange and issuance by the Company of a principal
--------------
amount of Series B Debentures (which shall be registered under the Act pursuant
to the Exchange Offer Registration Statement) equal to the outstanding principal
amount of Series A Debentures that are Transfer Restricted Securities and are
tendered by such Holders in connection with such exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating
-------------------------------------
to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers propose
--------------
to sell the Series A Debentures to certain "qualified institutional buyers," as
such term is defined in Rule 144A under the Act and pursuant to Regulation S
under the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
---------------
HOLDERS: As defined in Section 2 hereof.
-------
NASD: National Association of Securities Dealers, Inc.
-----
PERSON: An individual, partnership, corporation, trust, unincorporated
-------
organization, or a government or agency or political subdivision thereof.
PROSPECTUS: The prospectus included in a Registration Statement at the
----------
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
-------------------
REGISTRATION DEFAULT: As defined in Section 5 hereof.
--------------------
3
REGISTRATION STATEMENT: Any registration statement of the Company relating
----------------------
to (a) an offering of Series B Debentures pursuant to an Exchange Offer or (b)
the registration for resale of Transfer Restricted Securities pursuant to the
Shelf Registration Statement, in each case, (i) that is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
REGULATION S: Regulation S promulgated under the Act.
------------
RULE 144: Rule 144 promulgated under the Act.
--------
SERIES B DEBENTURES: The Company's 12 7/8% Series B Senior Discount
-------------------
Debentures due 2009 to be issued pursuant to the Indenture: (i) in the Exchange
Offer or (ii) as contemplated by Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
----------------------------
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
-----------------
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
---
in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Series A Debenture, until the
------------------------------
earliest to occur of (a) the date on which such Series A Debenture is exchanged
in the Exchange Offer for a Series B Debenture which is entitled to be resold to
the public by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (b) the date on which such Series A Debenture has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Series B Debentures), or (c) the date on
which such Series A Debenture is distributed to the public pursuant to Rule 144
under the Act (and purchasers thereof have been issued Series B Debentures) and
each Series B Debenture until the date on which such Series B Debenture is
disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).
II. 1.1.1. SECTION HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "HOLDER") whenever such Person owns Transfer Restricted Securities.
------
III. 1.1.1. SECTION REGISTERED EXCHANGE OFFER
Unless the Exchange Offer shall not be permitted by applicable federal law
(after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company shall (i) cause the Exchange Offer Registration Statement to
be filed with the Commission as soon as practicable after the Closing Date, but
in no event later than 75 days after the Closing Date (such 75th day being the
"FILING DEADLINE"), (ii) use its best efforts to cause such Exchange Offer
----------------
Registration
4
Statement to become effective at the earliest possible time, but in no event
later than 150 days after the Closing Date (such 150th day being the
"EFFECTIVENESS DEADLINE"), (iii) in connection with the foregoing, (A) file all
-----------------------
pre-effective amendments to such Exchange Offer Registration Statement as may be
necessary in order to cause it to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings, if any, in
connection with the registration and qualification of the Series B Debentures to
be made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the effectiveness of such
Exchange Offer Registration Statement, commence and Consummate the Exchange
Offer. The Exchange Offer shall be on the appropriate form permitting (i)
registration of the Series B Debentures to be offered in exchange for the Series
A Debentures that are Transfer Restricted Securities and (ii) resales of Series
B Debentures by any Broker-Dealer that tendered into the Exchange Offer Series A
Debentures that such Broker-Dealer acquired for its own account as a result of
market making activities or other trading activities (other than Series A
Debentures acquired directly from the Company or any of its Affiliates) as
contemplated by Section 3(c) below.
(a) A. The Company shall use its respective best
efforts to cause the Exchange Offer Registration
Statement to be effective continuously, and shall keep
the Exchange Offer open for a period of not less than
the minimum period required under applicable federal
and state securities laws to Consummate the Exchange
Offer; provided, however, that in no event shall such
period be less than 20 Business Days. The Company
shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No
securities other than the Series B Debentures shall be
included in the Exchange Offer Registration Statement.
The Company shall use its respective best efforts to
cause the Exchange Offer to be Consummated on the
earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no
event later than 195 days after the Closing Date (such
195th day being the "CONSUMMATION DEADLINE").
---------------------
(b) B. The Company shall include a "Plan of
Distribution" section in the Prospectus contained in
the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer
Restricted Securities that were acquired for the
account of such Broker-Dealer as a result of market-
making activities or other trading activities (other
than Series A Debentures acquired directly from the
Company or any Affiliate of the Company), may exchange
such Transfer Restricted Securities pursuant to the
Exchange Offer. Such "Plan of
5
Distribution" section shall also contain all other
information with respect to such sales by such Broker-
Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or
disclose the amount of Transfer Restricted Securities
held by any such Broker-Dealer, except to the extent
required by the Commission as a result of a change in
policy, rules or regulations after the date of this
Agreement.
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Debentures received by such Broker-Dealer in the Exchange Offer, the Company
shall permit the use of the Prospectus contained in the Exchange Offer
Registration Statement by such Broker-Dealer to satisfy such prospectus delivery
requirement. To the extent necessary to ensure that the prospectus contained in
the Exchange Offer Registration Statement is available for sales of Series B
Debentures by Broker-Dealers, the Company agrees to use its respective best
efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by and subject to the provisions
of Section 6(a) and (c) hereof and in conformity with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of one year from the date on which the
Exchange Offer is Consummated. The Company shall provide sufficient copies of
the latest version of such Prospectus to such Broker-Dealers, promptly upon
request, and in no event later than one day after such request, at any time
during such one year period.
IV. SECTION
I. SHELF REGISTRATION
I. A. Shelf Registration. If (i) the Exchange Offer is not permitted by
--- ------------------
applicable law (after the Company have complied with the procedures set forth in
Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 20 Business Days following the Consummation of
the Exchange Offer that (A) such Holder was prohibited by law or Commission
policy from participating in the Exchange Offer or (B) such Holder may not
resell the Series B Debentures acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A
Debentures acquired directly from the Company or any of its Affiliates, then the
Company shall:
(x) cause to be filed, on or prior to (i) 30 days after the date on which the
Company determines that the Exchange Offer Registration Statement cannot be
filed as a result of clause (a)(i) above or (ii) 60 days after the date on which
the Company receives the notice specified in clause (a)(ii) above, (each such
date, the "FILING DEADLINE"), a shelf registration statement
---------------
6
pursuant to Rule 415 under the Act (which may be an amendment to the Exchange
Offer Registration Statement in either event (the "SHELF REGISTRATION
------------------
STATEMENT")), relating to all Transfer Restricted Securities, the Holders of
---------
which shall have provided the information required pursuant to Section 4(b)
hereof, and
(y) shall use its respective best efforts to cause such Shelf Registration
Statement to become effective on or prior to 150 days after the Filing Deadline
for the Shelf Registration Statement (such 150th day the "EFFECTIVENESS
-------------
DEADLINE").
--------
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., pursuant to
clause (a)(i) above), then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above;
provided that, in such event, the Company shall remain obligated to meet the
Effectiveness Deadline set forth in clause (y) above.
(a) To the extent necessary to ensure that the
Shelf Registration Statement is available for sales of
Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the
other securities required to be registered therein
pursuant to Section 6(b)(ii) hereof, the Company shall
use their respective best efforts to keep any Shelf
Registration Statement required by this Section 4(a)
continuously effective, supplemented and amended as
required by and subject to the provisions of Sections
6(b) and (c) hereof and in conformity with the
requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as
announced from time to time, for a period of at least
two years (as extended pursuant to Section 6(c)(i))
following the Closing Date, or such shorter period as
will terminate when all Transfer Restricted Securities
covered by such Shelf Registration Statement have been
sold pursuant thereto.
(b) A. Provision by Holders of Certain
-----------------------------------
Information in Connection with the Shelf Registration
-----------------------------------------------------
Statement. No Holder of Transfer Restricted Securities
---------
may include any of its Transfer Restricted Securities
in any Shelf Registration Statement pursuant to this
Agreement unless and until such Holder furnishes to the
Company in writing, within 20 days after receipt of a
request therefor, the information specified in Item 507
or 508 of Regulation S-K, as applicable, of the Act for
use in connection with any Shelf Registration Statement
or Prospectus or
7
preliminary Prospectus included therein. No Holder of
Transfer Restricted Securities shall be entitled to
liquidated damages pursuant to Section 5 hereof unless
and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly
furnish all additional information required to be
disclosed in order to make the information previously
furnished to the Company by such Holder not materially
misleading.
V. SECTION
1. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer, if
applicable, has not been Consummated on or prior to the Consummation Deadline or
(iv) any Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded immediately by a post-effective
amendment to such Registration Statement that cures such failure and that is
itself declared effective immediately (each such event referred to in clauses
(i) through (iv) above, a "REGISTRATION DEFAULT"), then the Company hereby
--------------------
agrees to pay to each Holder of Transfer Restricted Securities affected thereby
liquidated damages in an amount equal to $.05 per week per $1,000 in principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues for the first 90-day
period immediately following the occurrence of such Registration Default. The
amount of the liquidated damages shall increase by an additional $.05 per week
per $1,000 in principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum amount of liquidated damages of $.30 per week per $1,000 in
principal amount of Transfer Restricted Securities; provided that the Company
shall in no event be required to pay liquidated damages for more than one
Registration Default at any given time. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made usable in the case of (iv) above, the
liquidated damages payable with respect to the Transfer Restricted Securities as
a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as
8
more fully set forth in the Indenture and the Debentures. Notwithstanding the
fact that any securities for which liquidated damages are due cease to be
Transfer Restricted Securities, all obligations of the Company to pay liquidated
damages with respect to such securities shall survive until such time as such
obligations with respect to such securities shall have been satisfied in full.
VI. 1.1.1. SECTION REGISTRATION PROCEDURES
VII. 1.1.1. B. EXCHANGE OFFER REGISTRATION STATEMENT. IN CONNECTION WITH THE
----------------------------------------
EXCHANGE OFFER, THE COMPANY SHALL (X) COMPLY WITH ALL APPLICABLE PROVISIONS OF
SECTION 6(C) BELOW, (Y) USE ITS RESPECTIVE BEST EFFORTS TO EFFECT SUCH
EXCHANGE AND TO PERMIT THE RESALE OF SERIES B DEBENTURES BY BROKER-DEALERS
THAT TENDERED IN THE EXCHANGE OFFER SERIES A DEBENTURES THAT SUCH BROKER-
DEALER ACQUIRED FOR ITS OWN ACCOUNT AS A RESULT OF ITS MARKET MAKING
ACTIVITIES OR OTHER TRADING ACTIVITIES (OTHER THAN SERIES A DEBENTURES
ACQUIRED DIRECTLY FROM THE COMPANY OR ANY OF ITS AFFILIATES) BEING SOLD IN
ACCORDANCE WITH THE INTENDED METHOD OR METHODS OF DISTRIBUTION THEREOF, AND
(Z) COMPLY WITH ALL OF THE FOLLOWING PROVISIONS:
(i) II. If, following the date hereof there has
been published a change in Commission policy with
respect to exchange offers such as the Exchange Offer,
that in the reasonable opinion of counsel to the
Company raises a substantial question as to whether the
Exchange Offer is permitted by applicable federal law,
the Company hereby agrees to seek a no-action letter or
other favorable decision from the Commission allowing
the Company to Consummate an Exchange Offer for such
Transfer Restricted Securities. The Company hereby
agrees to pursue the issuance of such a decision to the
Commission staff level. In connection with the
foregoing, the Company hereby agrees to take all such
other actions as are requested by the Commission or
otherwise required in connection with the issuance of
such decision, including without limitation (A)
participating in telephonic conferences with the
Commission, (B) delivering to the Commission staff an
analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel
has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution
(which need not be favorable) by the Commission staff.
9
(ii) III. As a condition to its participation in
the Exchange Offer, each Holder of Transfer Restricted
Securities (including, without limitation, any Holder
that is a Broker-Dealer) shall furnish, upon the
request of the Company, prior to the Consummation of
the Exchange Offer, a written representation to the
Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is
not an Affiliate of the Company, (B) it is not engaged
in, and does not intend to engage in, and has no
arrangement or understanding with any person to
participate in, a distribution of the Series B
Debentures to be issued in the Exchange Offer and (C)
it is acquiring the Series B Debentures in its ordinary
course of business. As a condition to its participation
in the Exchange Offer, each Holder (including, without
limitation, any Holder that is a Broker-Dealer) using
the Exchange Offer to participate in a distribution of
the Series B Debentures shall acknowledge and agree
that, if the resales are of Series B Debentures
obtained by such Holder in exchange for Series A
Debentures acquired directly from the Company or an
Affiliate thereof, it (1) could not, under Commission
policy as in effect on the date of this Agreement, rely
on the position of the Commission enunciated in Exxon
-----
Capital Holdings Corporation (available May 13, 1988)
----------------------------
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Co., Inc. (available June 5,
----------------------------
1991), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and similar no-
-------------------
action letters (including, if applicable, any no-action
letter obtained pursuant to clause (i) above), and (2)
must comply with the registration and prospectus
delivery requirements of the Act in connection with a
secondary resale transaction and that such a secondary
resale transaction must be covered by an effective
registration statement containing the selling security
holder information required by Item 507 or 508, as
applicable, of Regulation S-K.
(iii) IV. Prior to effectiveness of the Exchange
Offer Registration Statement, the Company shall provide
a supplemental letter to the
10
Commission (A) stating that the Company is registering
the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings
----------------------
Corporation (available May 13, 1988), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------- --------------
and Co., Inc. (available June 5, 1991), as interpreted
-------------
in the Commission's letter to Shearman & Sterling date
-------- ----------
July 2, 1993, and, if applicable, any no-action letter
obtained pursuant to clause (i) above, (B) including a
representation that neither the Company has entered
into any arrangement or understanding with any Person
to distribute the Series B Debentures to be received in
the Exchange Offer and that, to the best of the
Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the
Series B Debentures in its ordinary course of business
and has no arrangement or understanding with any Person
to participate in the distribution of the Series B
Debentures received in the Exchange Offer and (C) any
other undertaking or representation required by the
Commission as set forth in any no-action letter
obtained pursuant to clause (i) above, if applicable.
(b) A. Shelf Registration Statement. In
-------------------------------
connection with the Shelf Registration Statement, the
Company shall: Shelf Registration Statement. B. In
----------------------------
connection with the Shelf Registration Statement, the
Company shall:
(i) V. comply with all the provisions of Section 6(c) below and use
its respective best efforts to effect such registration to permit the sale of
the Transfer Restricted Securities being sold in accordance with the intended
method or methods of distribution thereof (as indicated in the information
furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto
the Company will prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Act, which form
shall be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof, and
(ii) VI. issue, upon the request of any Holder or purchaser of Series
A Debentures covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Debentures having an aggregate principal amount equal to the
aggregate principal amount of Series A Debentures sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company shall register Series B Debentures on the Shelf
11
Registration Statement for this purpose and issue the Series B Debentures to the
purchaser(s) of securities subject to the Shelf Registration Statement in the
names as such purchaser(s) shall designate.
(d) A. General Provisions. In connection with
----------------------
any Registration Statement and any related Prospectus
required by this Agreement, the Company shall:
(i) VII. use its respective best efforts to
keep such Registration Statement continuously
effective and provide all requisite financial
statements for the period specified in Section 3
or 4 of this Agreement, as applicable. Upon the
occurrence of any event that would cause any such
Registration Statement or the Prospectus contained
therein (A) to contain an untrue statement of
material fact or omit to state any material fact
necessary to make the statements therein not
misleading or (B) not to be effective and usable
for resale of Transfer Restricted Securities
during the period required by this Agreement, the
Company shall file promptly an appropriate
amendment to such Registration Statement curing
such defect, and, if Commission review is
required, use its respective best efforts to cause
such amendment to be declared effective and such
Registration Statement and the related Prospectus
to become usable for their intended purpose(s) as
soon as practicable thereafter. Notwithstanding
anything to the contrary set forth in this
Agreement, the Company's obligations to use its
respective best efforts to keep the Shelf
Registration Statement continuously effective,
supplemented and amended shall be suspended in the
event continued effectiveness of the Shelf
Registration Statement would, in the opinion of
counsel to the Company, require the Company to
disclose a material financing, acquisition or
other corporate transaction, and the Board of
Directors shall have determined in good faith that
such disclosure is not in the best interests of
the Company, but in no event will any such
suspension, individually or in the aggregate,
exceed ninety (90) days since the Closing Date.
12
(ii) VIII. prepare and file with the
Commission such amendments and post-effective
amendments to the applicable Registration
Statement as may be necessary to keep such
Registration Statement effective for the
applicable period set forth in Section 3 or 4
hereof, or such shorter period as will terminate
upon the earlier of the following (A) when all
Transfer Restricted Securities covered by such
Registration Statement have been sold and (B)
when, in the written opinion of counsel to the
Company, all outstanding Transfer Restricted
Securities held by Persons that are not Affiliates
of the Company may be resold without registration
under the Act pursuant to Rule 144(k) under the
Act or any successor provision thereto; cause the
Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Act, and
to comply fully with Rules 424, 430A and 462, as
applicable, under the Act in a timely manner; and
comply with the provisions of the Act with respect
to the disposition of all securities covered by
such Registration Statement during the applicable
period in accordance with the intended method or
methods of distribution by the sellers thereof set
forth in such Registration Statement or supplement
to the Prospectus;
(iii) IX. advise each Holder and each
Initial Purchaser who is required to deliver a
prospectus in connection with sales or market
making activities (an "AFFILIATED MARKET MAKER")
-----------------------
promptly and, if requested by such Holders,
confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with
respect to any applicable Registration Statement
or any post-effective amendment thereto, when the
same has become effective, (B) of any request by
the Commission for amendments to the Registration
Statement or amendments or supplements to the
Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of
any stop order suspending the effectiveness of the
Registration Statement under the Act or of the
13
suspension by any state securities commission of
the qualification of the Transfer Restricted
Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding
for any of the preceding purposes, (D) of the
existence of any fact or the happening of any
event that makes any statement of a material fact
made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or
any document incorporated by reference therein
untrue, or that requires the making of any
additions to or changes in the Registration
Statement in order to make the statements therein
not misleading, or that requires the making of any
additions to or changes in the Prospectus in order
to make the statements therein, in the light of
the circumstances under which they were made, not
misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness
of the Registration Statement, or any state
securities commission or other regulatory
authority shall issue an order suspending the
qualification or exemption from qualification of
the Transfer Restricted Securities under state
securities or Blue Sky laws, the Company shall use
its respective best efforts to obtain the
withdrawal or lifting of such order at the
earliest possible time;
(ix) X. subject to Section 6(c)(i), if any
fact or event contemplated by Section 6(c)(iii)(D)
above shall exist or have occurred, prepare a
supplement or post-effective amendment to the
Registration Statement or related Prospectus or
any document incorporated therein by reference or
file any other required document so that, as
thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or
omit to state any material fact necessary to make
the statements therein, in the light of the
circumstances under which they were made, not
misleading;
(v) XI. furnish to each Holder and each
Affiliated Market Maker in connection with such
exchange or sale, if any, before filing with the
Commission, copies of any Registration Statement
14
or any Prospectus included therein or any
amendments or supplements to any such Registration
Statement or Prospectus (including all documents
incorporated by reference after the initial filing
of such Registration Statement), which documents
will be subject to the review and comment of such
Holders in connection with such sale, if any, for
a period of at least five Business Days, and the
Company will not file any such Registration
Statement or Prospectus or any amendment or
supplement to any such Registration Statement or
Prospectus (including all such documents
incorporated by reference) to which such Holders
shall reasonably object within five Business Days
after the receipt thereof. A Holder shall be
deemed to have reasonably objected to such filing
if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as
proposed to be filed, contains an untrue statement
of a material fact or omit to state any material
fact necessary to make the statements therein not
misleading or fails to comply with the applicable
requirements of the Act;
(vi) XII. promptly prior to the filing of
any document that is to be incorporated by
reference into a Registration Statement or
Prospectus, provide copies of such document to
each Holder and each Affiliated Market Maker in
connection with such exchange or sale, if any,
make the Company's representatives available for
discussion of such document and other customary
due diligence matters, and include such
information in such document prior to the filing
thereof as such Holders may reasonably request;
(vii) XIII. make available, at reasonable
times, for inspection by each Holder and each
Affiliated Market Maker and any attorney or
accountant retained by such Holders, all financial
and other records, pertinent corporate documents
of the Company and cause the Company's officers,
directors and employees to supply all information
reasonably requested by any such Holder, attorney
or accountant in connection with such Registration
15
Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its
effectiveness;
(viii) XIV. if requested by any Holders in
connection with such exchange or sale or any
Affiliated Market Maker, promptly include in any
Registration Statement or Prospectus, pursuant to
a supplement or post-effective amendment if
necessary, such information as such Holders may
reasonably request to have included therein,
including, without limitation, information
relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with
respect to the principal amount of Transfer
Restricted Securities being sold to such
underwriter(s), the purchase price being paid
therefor and any other terms of the offering of
the Transfer Restricted Securities to be sold in
such offering and the use of the Registration
Statement or Prospectus for market making
activities; and make all required filings of such
Prospectus supplement or post-effective amendment
as soon as practicable after the Company is
notified of the matters to be included in such
Prospectus supplement or post-effective amendment;
(ix) XV. furnish to each Holder in
connection with such exchange or sale and each
Affiliated Market Maker, without charge, at least
one copy of the Registration Statement, as first
filed with the Commission, and of each amendment
thereto, including all documents incorporated by
reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) XVI. deliver to each Holder and each
Affiliated Market Maker without charge, as many
copies of the Prospectus (including each
preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may
request; the Company hereby consents to the use
(in accordance with law) of the Prospectus and any
amendment or supplement thereto by each selling
Holder in connection with the offering and the
sale
16
of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement
thereto and all lawful market making activities of
such Affiliated Market Maker, as the case may be;
(xi) XVII. upon the request of any Holder,
enter into such agreements (including underwriting
agreements) and make such representations and
warranties and take all such other actions in
connection therewith in order to expedite or
facilitate the disposition of the Transfer
Restricted Securities pursuant to any applicable
Registration Statement contemplated by this
Agreement as may be reasonably requested by any
Holder in connection with any sale or resale
pursuant to any applicable Registration Statement.
In such connection, and also in connection with
market making activities by any Affiliated Market
Maker, the Company shall:
B. (A) upon request of any Holder, furnish (or in the case of paragraphs (2)
and (3), use its best efforts to cause to be furnished) to each Holder, upon
Consummation of the Exchange Offer or upon the effectiveness of the Shelf
Registration Statement, as the case may be:
1. (1) a certificate, dated such date, signed on behalf of the
Company by (x) the President or any Vice President and (y) a principal
financial or accounting officer of the Company, confirming, as of the
date thereof, the matters set forth in Sections 6(x), 9(a) and 9(b) of
the Purchase Agreement and such other similar matters as such Holders
may reasonably request;
2. (2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for the Company covering
matters similar to those set forth in paragraph (e) of Section 9 of
the Purchase Agreement and such other matter as such Holder may
reasonably request, and in any event including a statement to the
effect that such counsel has participated in conferences with officers
and other representatives of the Company, representatives of the
independent public accountants for the Company and have considered the
matters required to be stated therein and the statements contained
therein, although such counsel has not independently verified the
accuracy, completeness or fairness of such statements; and that such
counsel advises that, on the basis of the foregoing (relying as to
materiality to the extent such counsel deems appropriate upon the
statements of officers and other representatives of the Company) and
without independent check or verification), no facts came to such
counsel's attention that caused such counsel to believe that the
applicable Registration Statement, at the time such Registration
17
Statement or any post-effective amendment thereto became effective
and, in the case of the Exchange Offer Registration Statement, as of
the date of Consummation of the Exchange Offer, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the opinion
dated the date of Consummation of the Exchange Offer, as of the date
of Consummation, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes no responsibility
for, and has not independently verified, the accuracy, completeness or
fairness of the financial statements, Debentures and schedules and
other financial and statistical data included in any Registration
Statement contemplated by this Agreement or the related Prospectus;
and
3. (3) a customary comfort letter, dated the date of
Consummation of the Exchange Offer, or as of the date of effectiveness
of the Shelf Registration Statement, as the case may be, from the
Company's independent accountants, in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with underwritten offerings, and affirming
the matters set forth in the comfort letters delivered pursuant to
Section 9(g) of the Purchase Agreement; and
C. (B) set forth in full or incorporate by reference in the underwriting
agreement, if any, in connection with the sale or resale pursuant to any Shelf
Registration Statement the indemnification provisions and procedures of Section
8 hereof with respect to all parties to be indemnified pursuant to said Section;
and
D. (C) deliver such other documents and certificates as may be reasonably
requested by such Holders to evidence compliance with the matters covered in
clause (A) above and with any customary conditions contained in the any
agreement entered into by the Company pursuant to this clause (xi);
The above shall be done at each closing under such underwriting or similar
agreement, as and to the extent required thereunder, and if at any time the
representations and warranties of the Company contemplated in (A)(1) above cease
to be true and correct, the Company shall so advise the underwriter(s), if any,
the selling Holders and each Restricted Broker-Dealer promptly and if requested
by such Person, shall confirm such advice in writing;
(i) I. prior to any public offering of
Transfer Restricted Securities, cooperate with the
Holders and their counsel in connection with the
registration and qualification of the Transfer
Restricted Securities under the securities or Blue
18
Sky laws of such jurisdictions as such Holders may
request and do any and all other acts or things
necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted
Securities covered by the applicable Registration
Statement; provided, however, that the Company
shall be required to register or qualify as a
foreign corporation where it is not now so
qualified or to take any action that would subject
it to the service of process in suits or to
taxation, other than as to matters and
transactions relating to the Registration
Statement, in any jurisdiction where it is not now
so subject;
(ii) II. in connection with any sale of
Transfer Restricted Securities that will result in
such securities no longer being Transfer
Restricted Securities, cooperate with the Holders
to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted
Securities to be sold and not bearing any
restrictive legends; and to register such Transfer
Restricted Securities in such denominations and
such names as the Holders may request at least two
Business Days prior to such sale of Transfer
Restricted Securities;
(iii) III. use its respective best efforts
to cause the disposition of the Transfer
Restricted Securities covered by the Registration
Statement to be registered with or approved by
such other governmental agencies or authorities as
may be necessary to enable the seller or sellers
thereof to consummate the disposition of such
Transfer Restricted Securities, subject to the
proviso contained in clause (xii) above;
(iv) IV. provide a CUSIP number for all
Transfer Restricted Securities not later than the
effective date of a Registration Statement
covering such Transfer Restricted Securities and
provide the Trustee under the Indenture with
printed certificates for the Transfer Restricted
Securities which are in a form eligible for
deposit with the Depository Trust Company;
19
(v) V. cooperate and assist in any
filings required to be made with the NASD and in
the performance of any due diligence investigation
by any underwriter (including any "qualified
independent underwriter") that is required to be
retained in accordance with the rules and
regulations of the NASD, and use its respective
best efforts to cause such Registration Statement
to become effective and approved by such
governmental agencies or authorities as may be
necessary to consummate the disposition of such
Transfer Restricted Securities;
(vi) VI. otherwise use its respective best
efforts to comply with all applicable rules and
regulations of the Commission, and make generally
available to its security holders with regard to
any applicable Registration Statement, within 90
days after the end of the Company's fiscal year
and within 45 days after the end of each such
fiscal quarter, a consolidated earnings statement
meeting the requirements of Rule 158 (which need
not be audited) covering a twelve-month period
beginning after the effective date of the
Registration Statement (as such term is defined in
paragraph (c) of Rule 158 under the Act);
(vii) VII. cause the Indenture to be
qualified under the TIA not later than the
effective date of the first Registration Statement
required by this Agreement and, in connection
therewith, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as
may be required for such Indenture to be so
qualified in accordance with the terms of the TIA;
and execute and use its best efforts to cause the
Trustee to execute, all documents that may be
required to effect such changes and all other
forms and documents required to be filed with the
Commission to enable such Indenture to be so
qualified in a timely manner; and
(viii) VIII. provide promptly to each Holder
and Affiliated Market Maker, upon request, a copy
of each document filed with the Commission
20
pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(b) A. Restrictions on Holders. Each Holder
-----------------------
agrees by acquisition of a Transfer Restricted Security and each
Affiliated Market Maker agrees that, upon receipt of the notice
referred to in Section 6(c)(i) or 6(c)(iii)(C) or any notice from
the Company of the existence of any fact of the kind described in
Section 6(c)(iii)(D) hereof (in each case, a "SUSPENSION
-----------
NOTICE"), such Holder will forthwith discontinue disposition of
-------
Transfer Restricted Securities pursuant to the applicable
Registration Statement until (i) such Person has received copies
of the supplemented or amended Prospectus contemplated by Section
6(c)(iv) hereof, or (ii) such Person is advised in writing by the
Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus (in each case,
the "RECOMMENCEMENT DATE"). Each Person receiving a Suspension
---------------------
hereby agrees that it will either (i) destroy any
Prospectuses, other than permanent file copies, then in such
Person's possession or (ii) deliver to the Company (at the
Company's expense) all copies, other than permanent file copies,
then in such Person's possession of the Prospectus covering such
Transfer Restricted Securities that was current at the time of
receipt of the Suspension Notice. The time period regarding the
effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by a number of
days equal to the number of days in the period from and including
the date of delivery of the Suspension Notice to the date of
delivery of notice of the Recommencement Date.
VIII. SECTION
1. REGISTRATION EXPENSES
1. A. All expenses incident to the Company's performance of or compliance with
this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made by any
Purchaser or Holder with the NASD (and, if applicable, the fees and expenses of
any "qualified independent underwriter") and its counsel that may be required by
the rules and regulations of the NASD); (ii) all fees and expenses of compliance
with federal securities and state Blue Sky or securities laws; (iii) all
expenses of printing (including printing
21
certificates for the Series B Debentures to be issued in the Exchange Offer and
printing of Prospectuses whether for exchanges, sales, market making or
otherwise), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Company and the Holders of Transfer Restricted
Securities; (v) all application and filing fees in connection with listing the
Series B Debentures on an automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
(a) A. In connection with any Registration
Statement required by this Agreement (including,
without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the
Company will reimburse the Initial Purchasers and the
Holders of Transfer Restricted Securities who are
tendering Series A Debentures into in the Exchange
Offer and/or selling or reselling Series A Debentures
or Series B Debentures pursuant to the "Plan of
Distribution" contained in the Exchange Offer
Registration Statement or the Shelf Registration
Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall
be ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, unless another firm shall be
chosen by the Holders of a majority in principal amount
of the Transfer Restricted Securities for whose benefit
such Registration Statement is being prepared.
IX. SECTION
1. INDEMNIFICATION
1. A. The Company agrees to indemnify and hold harmless each Holder, its
directors, officers and each Person, if any, who controls such Holder (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from
and against any and all losses, claims, damages, liabilities and judgments,
(including without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action that
could give rise to any such losses, claims, damages, liabilities or judgments)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary prospectus or Prospectus
(or any amendment or supplement thereto) provided by the Company to any Holder
or any prospective purchaser of Series B Debentures or registered Series A
Debentures, or caused by any omission or alleged omission to state therein a
material fact
22
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission or alleged untrue
statement or omission that is based upon information relating to any of the
Holders furnished in writing to the Company by any of the Holders expressly for
use therein; provided, however, that the foregoing indemnification with respect
to any untrue statement or alleged untrue statement or omission or alleged
omission in any preliminary prospectus or Prospectus, shall not inure to the
benefit of any Indemnified Holder from whom the person asserting such loss,
claim, damage, liability or expense purchased any of the Debentures if a copy of
the Prospectus (or any amendment or supplement thereto) was not sent or given on
behalf of such Indemnified Holder to such person at or prior to the written
confirmation of the sale of such Debentures to such person and if the Prospectus
(or the Prospectus, as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense.
(a) B. Each Holder of Transfer Restricted agrees,
severally and not jointly, to indemnify and hold
harmless the Company, and its respective directors and
officers, and each person, if any, who controls (within
the meaning of Section 15 of the Act or Section 20 of
the Exchange Act) the Company, to the same extent as
the foregoing indemnity from the Company forth in
section (a) above, but only with reference to
information relating to such Holder furnished in
writing to the Company by such Holder expressly for use
in any Registration Statement.
(b) C. In case any action shall be commenced
involving any person in respect of which indemnity may
be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall
------------------
promptly notify the person against whom such indemnity
may be sought (the "INDEMNIFYING PARTY") in writing and
------------------
the indemnifying party shall assume the defense of such
action, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment
of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of
which indemnity may be sought pursuant to both Sections
8(a) and 8(b), a Holder shall not be required to assume
the defense of such action pursuant to this Section
8(c), but may employ separate counsel and participate
in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the
expense of the Holder). Any 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 shall be at the
expense of the indemnified
23
party unless (i) the employment of such counsel shall
have been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party shall
have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any
such action (including any impleaded parties) include
both the indemnified party and the indemnifying party,
and the indemnified party shall have been advised by
such counsel that there may be one or more legal
defenses available to it which are different from or
additional to those available to the indemnifying party
(in which case the indemnifying party shall not have
the right to assume the defense of such action on
behalf of the indemnified party). In any such case, the
indemnifying party shall not, in connection with any
one action or separate but substantially similar or
related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be
liable for the fees and expenses of more than one
separate firm of attorneys (in addition to any local
counsel) for all indemnified parties and all such fees
and expenses shall be reimbursed as they are incurred.
Such firm shall be designated in writing by a majority
of the Holders, in the case of the parties indemnified
pursuant to Section 8(a), and by the Company, in the
case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and
all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected
with its written consent or (ii) effected without its
written consent if the settlement is entered into more
than 20 Business Days after the indemnifying party
shall have received a request from the indemnified
party for reimbursement for the fees and expenses of
counsel (in any case where such fees and expenses are
at the expense of the indemnifying party) and, prior to
the date of such settlement, the indemnifying party
shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened
action in respect of which the indemnified party is or
could have been a party and indemnity or contribution
may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise
or judgment (i) includes an
24
unconditional release of the indemnified party from all
liability on claims that are or could have been the
subject matter of such action and (ii) does not include
a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of the indemnified
party.
(c) D. To the extent that the indemnification
provided for in this Section 8 is unavailable to an
indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein,
then each 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, liabilities or
judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company,
on the one hand, and the Holders, on the other hand,
from their sale of Transfer Restricted Securities or
(ii) if the allocation provided by clause 8(d)(i) is
not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative
benefits referred to in clause 8(d)(i) above but also
the relative fault of the Company, on the one hand, and
of the Holder, on the other hand, in connection with
the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations.
The relative benefits received by the Company, on the
one hand, and the Initial Purchasers, on the other
hand, shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Series
A Debentures (before deducting expenses) received by
the Company, and the total discounts and commissions
received by the Initial Purchasers bear to the total
price to investors of Series A Debentures, in each case
as set forth in the table on the cover page of the
Offering Memorandum. The relative fault of the
Company, on the one hand, and of the Holder, on the
other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged
omission to state a material fact relates to
information supplied by the Company, on the one hand,
or by the Holder, on the other hand, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or
omission.
25
The Company and each Holder agree that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any matter, including any action
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Holder, its
directors, its officers or any Person, if any, who controls such Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total received by such Holder with respect to the sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds the sum of
(i) the amount paid by such Holder for such Transfer Restricted Securities plus
(ii) the amount of any damages which such Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 8(c) are several in
proportion to the respective principal amount of Transfer Restricted Securities
held by each Holder hereunder and not joint.
(d) A. The Company agrees that the indemnity and
contribution provisions of this Section 8 shall apply
to Affiliated Market Makers to the same extent, on the
same conditions, as it applies to Holders.
X. SECTION
1. RULE 144A and RULE 144
The Company agrees with each Holder, for so long as any Transfer Restricted
Securities remain outstanding and during any period in which the Company (i) is
not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon
request of any Holder, to such Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and
(ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
XI 1.1.1. SECTION MISCELLANEOUS
XII. 1.1.1.B. REMEDIES. THE COMPANY ACKNOWLEDGES AND AGREES THAT ANY
-----------
FAILURE BY THE COMPANY TO COMPLY WITH ITS RESPECTIVE OBLIGATIONS UNDER
SECTIONS 3 AND 4 HEREOF MAY RESULT IN MATERIAL IRREPARABLE INJURY TO THE
INITIAL PURCHASERS OR THE HOLDERS OR
26
AFFILIATED MARKET MAKERS FOR WHICH THERE IS NO ADEQUATE REMEDY AT LAW, THAT IT
WILL NOT BE POSSIBLE TO MEASURE DAMAGES FOR SUCH INJURIES PRECISELY AND THAT, IN
THE EVENT OF ANY SUCH FAILURE, THE INITIAL PURCHASERS OR ANY HOLDER OR
AFFILIATED MARKET MAKERS MAY OBTAIN SUCH RELIEF AS MAY BE REQUIRED TO
SPECIFICALLY ENFORCE THE COMPANY'S OBLIGATIONS UNDER SECTIONS 3 AND 4 HEREOF.
THE COMPANY FURTHER AGREES TO WAIVE THE DEFENSE IN ANY ACTION FOR SPECIFIC
PERFORMANCE THAT A REMEDY AT LAW WOULD BE ADEQUATE.
(a) C. No Inconsistent Agreements. The Company
------------------------------
will not, on or after the date of this Agreement, enter
into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders
in this Agreement or otherwise conflicts with the
provisions hereof. Except as set forth on Exhibit B
hereto, the Company has not previously entered into any
agreement granting any registration rights with respect
to its securities to any Person. The rights granted to
the Holders hereunder do not in any way conflict with
and are not inconsistent with the rights granted to the
holders of the Company's securities under any agreement
in effect on the date hereof.
(b) D. Amendments and Waivers. The
--------------------------
provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given
unless (i) in the case of Section 5 hereof and this
Section 10(c)(i), the Company has obtained the written
consent of Holders of all outstanding Transfer
Restricted Securities and (ii) in the case of all other
provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities
(excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the
foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the
rights of Holders whose Transfer Restricted Securities
are being tendered pursuant to the Exchange Offer, and
that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities
are not being tendered pursuant to such Exchange Offer,
may be given by the Holders of a majority of the
outstanding principal amount of Transfer Restricted
Securities subject to such Exchange Offer.
(c) E. Third Party Beneficiary. The Holders
---------------------------
shall be third party beneficiaries to the agreements
made
27
hereunder between the Company, on the one hand, and the
Initial Purchasers, on the other hand, and Holders of
at least 25% in principal amount at maturity of the
then outstanding Debentures shall have the right to
enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect
their rights or the rights of Holders hereunder.
(d) F. Notices. All notices and other
-----------
communications provided for or permitted hereunder
shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt
requested), telex, telecopier, or air courier
guaranteeing overnight delivery:
(i) II. if to a Holder, at the address
set forth on the records of the Registrar under
the Indenture, with a copy to the Registrar under
the Indenture; and
(ii) III. if to the Company:
Diamond Brands Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇ & Company, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇
And with a copy to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
28
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
Upon the date of filing of the Exchange Offer or a Shelf Registration
Statement, as the case may be, notice shall be delivered to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation, on behalf of the Initial Purchasers (in the
form attached hereto as Exhibit A) and shall be addressed to: Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ (Compliance Department), ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(e) A. Successors and Assigns. This Agreement
--------------------------
shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties,
including without limitation and without the need for
an express assignment, subsequent Holders; provided,
that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Transfer
Restricted Securities in violation of the terms hereof
or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer
Restricted Securities in any manner, whether by
operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of
this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively
deemed to have agreed to be bound by and to perform all
of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this
Agreement and, if applicable, the Purchase Agreement,
and such Person shall be entitled to receive the
benefits hereof.
(f) B. 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.
(g) C. Headings. The headings in this Agreement
------------
are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
29
(h) D. 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
CONFLICT OF LAW RULES THEREOF.
(i) E. Severability. In the event that any one
----------------
or more of the provisions contained herein, or the
application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in
every other respect and of the remaining provisions
contained herein shall not be affected or impaired
thereby.
(j) F. 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, other than those set forth
or referred to herein with respect to the registration
rights granted with respect to the Transfer Restricted
Securities. This Agreement supersedes all prior
agreements and understandings between the parties with
respect to such subject matter.
30
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
DIAMOND BRANDS INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President of Finance and
Chief Financial Officer
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ SECURITIES CORPORATION
By:____________________________________
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By:____________________________________
Name:
Title:
31
EXHIBIT A
NOTICE OF FILING OF
A/B EXCHANGE OFFER REGISTRATION STATEMENT
To: ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (Compliance Department)
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
From: Diamond Brands Incorporated
12 7/8% Senior Discount Debentures due 2009
Date: ______ __, 199_
For your information only (NO ACTION REQUIRED):
Today, ______, 199_, we filed [an A/B Exchange Registration Statement/a
Shelf Registration Statement] with the Securities and Exchange Commission. We
currently expect this registration statement to be declared effective within __
business days of the date hereof.
32
EXHIBIT B
LIST OF CONTRACTS AND AGREEMENTS
--------------------------------
Stockholders Agreement, dated as of April 21, 1998 among Diamond Brands
Incorporated, ▇▇▇▇▇▇ ▇▇▇▇ - TPG Partners, L.P., ▇▇▇▇▇▇ ▇▇▇▇ I Parallel, L.P. and
the other parties named therein.
33