Document:

Unassociated Document

Exhibit 10.3

 

 EXECUTION VERSION

 

REGISTRATION RIGHTS AGREEMENT

by and among

Hecla Mining Company,

the Guarantors

and

Merrill Lynch, Pierce, Fenner & Smith Incorporated,

and

Scotia Capital (USA) Inc.

as Representatives of the Initial Purchasers

 

Dated as of April 12, 2013

 

  

  

  

REGISTRATION RIGHTS AGREEMENT

 

 

This Registration Rights Agreement (this “Agreement”) is made and entered into as of April 12, 2013, by and among Hecla Mining Company, a Delaware corporation (the “Company”), Hecla Limited, a Delaware corporation, Hecla Alaska LLC, a Delaware limited liability company, Hecla Greens Creek Mining Company, a Delaware corporation, Hecla Juneau Mining Company, a Delaware corporation, Hecla Admiralty Company, a Delaware corporation, Silver Hunter Mining Company, a Delaware corporation, Rio Grande Silver, Inc., a Delaware corporation, Burke Trading Inc., a Delaware corporation, RHL Holdings, Inc., a Delaware corporation, Hecla Silver Valley, Inc., a Delaware corporation, and Hecla MC Subsidiary, LLC, a Delaware limited liability company (collectively, the “Guarantors”), and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Scotia Capital (USA) Inc. as Representative of the several Initial Purchasers named in Schedule A to the Purchase Agreement (as defined below) (collectively, the “Initial Purchasers”), each of whom has agreed to purchase the Company’s 6.875% Senior Notes due 2021 (the “Initial Notes”) fully and unconditionally guaranteed by the Guarantors (the “Guarantees”) pursuant to the Purchase Agreement.  The Initial Notes and the Guarantees attached thereto are herein collectively referred to as the “Initial Securities.”

 

This Agreement is made pursuant to the Purchase Agreement, dated April 9, 2013 (the “Purchase Agreement”), among the Company, the Guarantors and the Initial Purchasers (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to time of the Initial Securities, including the Initial Purchasers.  In order to induce the Initial Purchasers to purchase the Initial Securities, 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 5(f) of the Purchase Agreement.

 

The parties hereby agree as follows:

 

SECTION 1.           Definitions.  As used in this Agreement, the following capitalized terms shall have the following meanings:

 

Additional Interest Payment Date:  With respect to the Initial Securities, each Interest Payment Date.

 

Broker-Dealer:  Any broker or dealer registered under the Exchange Act.

 

Business Day:  Any day other than a Saturday, Sunday or U.S. federal holiday or a day on which banking institutions or trust companies located in New York, New York are authorized or obligated to be closed.

 

Closing Date:  The date of this Agreement.

 

Commission:  The Securities and Exchange Commission.

 

Consummate:  A registered Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be issued in the Exchange Offer, (ii) the maintenance of such 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 (iii) the delivery by the Company to the Registrar under the Indenture of Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Initial Securities that were tendered by Holders thereof pursuant to the Exchange Offer.

 

  

 

  

 

Effectiveness Target Date:  As defined in Section 5 hereof.

 

Exchange Act:  The Securities Exchange Act of 1934, as amended.

 

Exchange Offer:  The registration by the Company under the Securities Act of the Exchange Securities pursuant to a Registration Statement pursuant to which the Company offers the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Exchange Securities in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders.

 

Exchange Offer Registration Statement:  The Registration Statement relating to the Exchange Offer, including the related Prospectus.

 

Exchange Securities:  The 6.875% Senior Notes due 2021, of the same series under the Indenture as the Initial Notes and the Guarantees attached thereto, to be issued to Holders in exchange for Transfer Restricted Securities pursuant to this Agreement.

 

FINRA:  Financial Industry Regulatory Authority.

 

Holders:  As defined in Section 2(b) hereof.

 

Indemnified Holder:  As defined in Section 8(a) hereof.

 

Indenture:  The Indenture, dated as of April 12, 2013, by and among the Company, the Guarantors and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), pursuant to which the Securities are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof.

 

Initial Notes:  As defined in the preamble hereto.

 

Initial Placement:  The issuance and sale by the Company of the Initial Securities to the Initial Purchasers pursuant to the Purchase Agreement.

 

Initial Purchasers:  As defined in the preamble hereto.

 

Initial Securities:  As defined in the preamble hereto.

 

Interest Payment Date:  As defined in the Indenture and the Securities.

 

  

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Person:  An individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

 

Prospectus:  The prospectus included in a Registration Statement, 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.

 

Registration Default:  As defined in Section 5 hereof.

 

Registration Statement:  Any registration statement of the Company relating to (a) an offering of Exchange Securities pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein.

 

Securities:  As defined in the preamble hereto.

 

Securities Act:  The Securities Act of 1933, as amended.

 

Shelf Filing Deadline:  As defined in Section 4(a) hereof.

 

Shelf Registration Statement:  As defined in Section 4(a) hereof.

 

Transfer Restricted Securities:  Each Initial Security, until the earliest to occur of (a) the date on which such Initial Security is exchanged in the Exchange Offer for an Exchange Security entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Securities Act, (b) the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement and (c) the date on which such Initial Security is distributed to the public by a Broker-Dealer pursuant to the “Plan of Distribution” contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein).

 

Trust Indenture Act:  The Trust Indenture Act of 1939, as amended.

 

Underwritten Registration or Underwritten Offering:  A registration in which securities of the Company are sold to an underwriter for reoffering to the public.

 

SECTION 2.           Securities Subject to this Agreement.

 

(a)           Transfer Restricted Securities.  The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities.

 

(b)           Holders of Transfer Restricted Securities.  A Person is deemed to be a holder of Transfer Restricted Securities (each, a “Holder”) whenever such Person owns Transfer Restricted Securities.

 

  

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SECTION 3.           Registered Exchange Offer.

 

(a)           Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) hereof have been complied with), each of the Company and the Guarantors shall (i) cause to be filed with the Commission as soon as practicable after the Escrow End Date (as such term is defined in the Purchase Agreement) but in no event later than 270 days after the Closing Date (or if such 270th day is not a Business Day, the next succeeding Business Day), a Registration Statement under the Securities Act relating to the Exchange Securities and the Exchange Offer, (ii) use its commercially reasonable efforts to cause such Registration Statement to become effective at the earliest possible time, but in no event later than 330 days after the Closing Date (or if such 330th day is not a Business Day, the next succeeding Business Day), (iii) in connection with the foregoing, file (A) all pre-effective amendments to such Registration Statement as may be reasonably necessary in order to cause such Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Registration Statement pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings in connection with the registration and qualification of the Exchange Securities to be made under the state securities or blue sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Registration Statement, commence the Exchange Offer.  The Exchange Offer shall be on the appropriate form permitting registration of the Exchange Securities to be offered in exchange for the Transfer Restricted Securities and to permit resales of Initial Securities held by Broker-Dealers as contemplated by Section 3(c) hereof.

 

(b)           The Company and the Guarantors shall 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 after the date notice of the Exchange Offer is mailed to the Holders.  The Company shall cause the Exchange Offer to comply with all applicable federal and state securities laws.  No securities other than the Exchange Securities shall be included in the Exchange Offer Registration Statement.  The Company shall use its commercially reasonable 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 365 days after the Closing Date (or if such 365th day is not a Business Day, the next succeeding Business Day).

 

(c)           The Company shall indicate in a “Plan of Distribution” section contained in the Prospectus forming a part of the Exchange Offer Registration Statement that any Broker-Dealer who holds Initial Securities that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Company), may exchange such Initial Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Securities received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement.  Such “Plan of Distribution” section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such “Plan of Distribution” shall not name any such Broker-Dealer or disclose the amount of Initial Securities held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy after the date of this Agreement.

 

  

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Each of the Company and the Guarantors shall use its commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period ending on the earlier of (i) 180 days from the date on which the Exchange Offer Registration Statement is declared effective and (ii) the date on which a Broker-Dealer is no longer required to deliver a prospectus in connection with market-making or other trading activities.

 

The Company shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 180-day (or shorter as provided in the foregoing sentence) period in order to facilitate such resales.

 

SECTION 4.           Shelf Registration.

 

(a)           Shelf Registration.  If (i) the Company is not required to file an Exchange Offer Registration Statement or to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a) hereof have been complied with), (ii) for any reason the Exchange Offer is not Consummated within 365 days after the Closing Date (or if such 365th day is not a Business Day, the next succeeding Business Day), or (iii) with respect to any Holder of Transfer Restricted Securities (A) such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) such Holder may not resell the Exchange Securities 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 Initial Securities acquired directly from the Company or one of its affiliates, then, upon such Holder’s request, which shall be delivered to the Company in writing with a reasonable description as to the applicability of the foregoing clause (A), (B) or (C), the Company and the Guarantors shall:

 

(x)           cause to be filed a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the “Shelf Registration Statement”) on or prior to the earliest to occur of (1) the 30th day after the date on which the Company determines that it is not able to file the Exchange Offer Registration Statement, (2) the 30th day after the date on which the Company receives notice from a Holder of Transfer Restricted Securities as contemplated by clause (iii) above, and (3) the 365th day after the Closing Date (or if such 365th day is not a Business Day, the next succeeding Business Day) (such earliest date being the “Shelf Filing Deadline”), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and

 

  

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(y)           use their commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective by the Commission on or before the 30th day after the Shelf Filing Deadline (or if such 30th day is not a Business Day, the next succeeding Business Day).

 

Each of the Company and the Guarantors shall use its commercially reasonable efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time until the earliest of (i) 2 years following the effective date of such Shelf Registration Statement, (ii) the date when all the Initial Securities covered by such Shelf Registration Statement have been sold pursuant to such Shelf Registration Statement or (iii) the date upon which all of the Initial Securities covered by such Shelf Registration Statement (a) become eligible for resale, without regard to volume, manner of sale or other restrictions, pursuant to Rule 144, (b) are represented by security certificates that do not bear any restrictive legends relating to the Securities Act and (c) bear an unrestricted CUSIP marker.

 

(b)           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 Business Days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein.  Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed under the Securities Act or the Exchange Act (and any regulations under either statute), or in order to make the information previously furnished to the Company by such Holder not materially misleading.

 

SECTION 5.           Special Interest.  If (i) any of the Registration Statements required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (ii) any of such Registration Statements has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the “Effectiveness Target Date”), (iii) the Exchange Offer has not been Consummated within 365 days after the Closing Date with respect to the Exchange Offer Registration Statement 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 promptly by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared effective (each such event referred to in clauses (i) through (iv), a “Registration Default”), the Company hereby agrees that the interest rate borne by the Transfer Restricted Securities shall be increased by 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default (or combination of Registration Defaults) and shall increase by 0.25 % per annum at the end of each subsequent 90-day period, but in no event shall all such increases in the aggregate exceed 1.00% per annum, and in no event shall such increase exceed 0.25% per annum in any 90-day period regardless of how many Registration Defaults occur in such 90-day period.  Following the cure of all Registration Defaults relating to any particular Transfer Restricted Securities, the interest rate borne by the relevant Transfer Restricted Securities will be reduced to the original interest rate borne by such Transfer Restricted Securities; provided, however, that, if after any such reduction in interest rate, a different Registration Default occurs, the interest rate borne by the relevant Transfer Restricted Securities shall again be increased pursuant to the foregoing provisions.

  

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All obligations of the Company and the Guarantors set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full.

 

SECTION 6.           Registration Procedures.

 

(a)           Exchange Offer Registration Statement.  In connection with the Exchange Offer, the Company and the Guarantors shall comply with all of the provisions of Section 6(c) hereof, shall use their commercially reasonable efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution, and shall comply with all of the following provisions:

 

(i)            If in the reasonable opinion of counsel to the Company there is a question as to whether the Exchange Offer is permitted by applicable law or Commission policy, each of the Company and the Guarantors hereby agrees to seek a no-action letter or other favorable decision from the Commission allowing the Company and the Guarantors to Consummate an Exchange Offer for such Initial Securities.  Each of the Company and the Guarantors hereby agrees to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy.  Each of the Company and the Guarantors hereby agrees, however, to (A) participate in telephonic conferences with the Commission, (B) deliver 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 pursue a favorable resolution by the Commission staff of such submission.

 

(ii)           As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement:

 

(1)           Each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company, prior to the Consummation thereof, 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 Exchange Securities to be issued in the Exchange Offer and (C) it is acquiring the Exchange Securities in its ordinary course of business.

 

  

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(2)           All such Holders of Transfer Restricted Securities shall otherwise cooperate in the Company’s preparations for the Exchange Offer.

 

(3)           Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission’s letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (which may include any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should 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 if the resales are of Exchange Securities obtained by such Holder in exchange for Initial Securities acquired by such Holder directly from the Company.

 

(b)           Shelf Registration Statement.  In connection with the Shelf Registration Statement, each of the Company and the Guarantors shall comply with all the provisions of Section 6(c) hereof and shall use its commercially reasonable 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, and pursuant thereto each of the Company and the Guarantors will as expeditiously as possible after such obligation is triggered, in compliance with Section 4(a) hereof, prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities 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.

 

(c)           General Provisions.  In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Initial Securities by Broker-Dealers), each of the Company and the Guarantors shall:

 

(i)             use its commercially reasonable efforts to keep such Registration Statement continuously effective and provide all requisite financial statements (including, if required by the Securities Act or any regulation thereunder, financial statements of the Guarantors for the period specified in Section 3 or 4 hereof, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission 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, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its commercially reasonable 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;

 

  

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(ii)            prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the provisions of the Securities 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)           advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to 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 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 Securities Act or of the 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 known by the Company 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 or the Prospectus in order to make the statements therein not misleading in light of the circumstances under which they were made.  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, each of the Company and the Guarantors shall use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time;

 

  

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(iv)          furnish without charge to each of the Initial Purchasers, each selling Holder named in any Registration Statement, and each of the underwriter(s), if any, before filing with the Commission, copies of any Registration Statement 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 reasonable comment of such Holders and underwriter(s) in connection with such sale, if any, for a period of at least three 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 an Initial Purchaser of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object in writing within three Business Days after the receipt thereof (such objection to be deemed timely made upon confirmation of telecopy transmission within such period); provided, however, that this paragraph shall not apply to the Company’s annual report on Form 10-K, its quarterly reports on Form 10-Q, its current reports on Form 8-K or any other documents filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (the “Exchange Act Documents”); provided further that the Company shall promptly notify Holders of the filing of any Exchange Act Documents and provide copies of such Exchange Act Documents except such Exchange Act Documents or other filings related to the offering, registration or listing of, or other acts, events, circumstances or activities in respect of, other securities and not to Transfer Restricted Securities.  The objection of an Initial Purchaser or underwriter, if any, shall be deemed to be reasonable if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission;

 

(v)           promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus (other than Exchange Act Documents or other filings related to the offering, registration or listing of, or other acts, events, circumstances or activities in respect of, other securities and not to Transfer Restricted Securities), provide copies of such document to the Initial Purchasers, each selling Holder named in any Registration Statement, and to the underwriter(s), if any, make the Company’s and the Guarantors’ 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 selling Holders or underwriter(s), if any, reasonably may request;

 

(vi)          make available at reasonable times for inspection by the Initial Purchasers, the managing underwriter(s), if any, participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such Initial Purchasers or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of each of the Company and the Guarantors and cause the Company’s and the Guarantors’ officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness and to participate in meetings with investors to the extent requested by the managing underwriter(s), if any;

 

  

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(vii)         if requested by any selling Holders or the underwriter(s), if any, promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, 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 make all required filings of such Prospectus supplement or post-effective amendment as soon as reasonably practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment;

 

(viii)        cause the Transfer Restricted Securities covered by the Registration Statement or the Company’s unsecured senior notes to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Securities covered thereby or the underwriter(s), if any;

 

(ix)           furnish to each Initial Purchaser, each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including financial statements and schedules, all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference);

 

(x)            deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; each of the Company and the Guarantors hereby consents to the use of the Prospectus and any amendment or supplement thereto as required by law by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto;

 

(xi)           enter into such customary agreements (including an underwriting agreement), and make such customary and reasonable representations and warranties, and take all such other customary and reasonable actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement, all to such extent as may be reasonably requested by any Initial Purchaser or by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement; and whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, each of the Company and the Guarantors shall:

 

(A)           furnish to each Initial Purchaser, each selling Holder and each underwriter, if any, in such substance and scope as they may reasonably request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the date of the Consummation of the Exchange Offer or, if applicable, the effectiveness of the Shelf Registration Statement:

 

  

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(1)           a certificate, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, signed by (y) the President or any Vice President and (z) a principal financial or accounting officer of each of the Company and the Guarantors, confirming, as of the date thereof, the matters set forth in paragraphs (i), (ii) and (iii) of Section 5(e) of the Purchase Agreement and such other matters as such parties may reasonably request;

 

(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 in-house and/or outside counsel or counsels for the Company and the Guarantors, covering the matters set forth in Section 5(c) of the Purchase Agreement and such other matter as such parties may reasonably request, and in any event including a statement to the effect that each such counsel has participated in conferences with officers and other representatives of the Company and the Guarantors, representatives of the independent public accountants for the Company and the Guarantors, representatives of the underwriter(s), if any, and counsel to the underwriter(s), if any, in connection with the preparation of such Registration Statement and the related Prospectus 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, no facts came to such counsel’s attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration 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, 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 in light of the circumstances under which they were made, 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 not misleading in light of the circumstances under which they were made.  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, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and

 

  

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(3)           a customary comfort letter, dated the date of effectiveness of the Shelf Registration Statement, from the Company’s independent accountants, in the customary form and covering matters of the type customarily requested to be covered in comfort letters by underwriters in connection with primary underwritten offerings, and covering or affirming the matters set forth in the comfort letters delivered pursuant to Section 5(a) of the Purchase Agreement, without exception;

 

(B)          set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and

 

(C)          deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with Section 6(c)(xi)(A) hereof and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company or any of the Guarantors pursuant to this Section 6(c)(xi), if any.

 

If at any time the representations and warranties of the Company and the Guarantors contemplated in Section 6(c)(xi)(A)(1) hereof cease to be true and correct, the Company or the Guarantors shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing;

 

(xii)                 prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the state securities or blue sky laws of such jurisdictions as the selling Holders or underwriter(s), if any, may reasonably request and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided, however, that none of the Company or the Guarantors shall be required to register or qualify as a foreign corporation where it is not then 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 then so subject;

 

(xiii)                shall issue, upon the request of any Holder of Initial Securities covered by the Shelf Registration Statement, Exchange Securities having an aggregate principal amount equal to the aggregate principal amount of Initial Securities surrendered to the Company by such Holder in exchange therefor or being sold by such Holder; such Exchange Securities to be registered in the name of such Holder or in the name of the purchaser(s) of such Securities, as the case may be; in return, the Initial Securities held by such Holder shall be surrendered to the Company for cancellation;

 

(xiv)                cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and where appropriate not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two Business Days prior to any sale of Transfer Restricted Securities made by such Holders or underwriter(s);

 

  

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(xv)                 use its commercially reasonable efforts to cause 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 or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in Section 6(c)(xii) hereof;

 

(xvi)                if any fact or event contemplated by Section 6(c)(iii)(D) hereof 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 in order to make the statements therein not misleading in light of the circumstances under which they were made;

 

(xvii)               provide a CUSIP number for all Securities not later than the effective date of the Registration Statement covering such Securities and provide the Trustee under the Indenture with printed certificates for such Securities which are in a form eligible for deposit with the Depository Trust Company and take all other action necessary to ensure that all such Securities are eligible for deposit with the Depository Trust Company;

 

(xviii)                  cooperate and assist in any filings required to be made with FINRA 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 FINRA;

 

(xix)                  otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm commitment or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement;

 

(xx)                  cause the Indenture to be qualified under the Trust Indenture Act 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 of Securities 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 Trust Indenture Act; and to execute and use its commercially reasonable 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;

 

  

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(xxi)                 cause all Securities covered by the Registration Statement to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed if requested by the Holders of a majority in aggregate principal amount of Initial Securities or the managing underwriter(s), if any; and

 

(xxii)                provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act.

 

Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing (the “Advice”) 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.  If so directed by the Company, each Holder will 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 Transfer Restricted Securities that was current at the time of receipt of such notice.  In the event the Company shall give any such 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 the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or shall have received the Advice; provided, however, that no such extension shall be taken into account in determining whether Additional Interest is due pursuant to Section 5 hereof or the amount of such Additional Interest, it being agreed that the Company’s option to suspend use of a Registration Statement pursuant to this paragraph shall be treated as a Registration Default for purposes of Section 5 hereof.

 

SECTION 7.          Registration Expenses.

 

(a)           All expenses incident to the Company’s and the Guarantor’s performance of or compliance with this Agreement will be borne by the Company and the Guarantors, jointly and severally, regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchaser or Holder with FINRA (and, if applicable, the reasonable fees and out-of-pocket expenses of any “qualified independent underwriter” and its counsel that may be required by the rules and regulations of FINRA)); (ii) all fees and expenses of compliance with federal securities and state securities or blue sky laws; (iii) all expenses of printing (including printing certificates for the Exchange Securities to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company, the Guarantors and, subject to Section 7(b) hereof, the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Exchange Securities, if any, on a securities exchange or automated quotation system pursuant to the requirements thereof; and (vi) all fees and disbursements of independent certified public accountants of the Company and the Guarantors (including the expenses of any comfort letters required by or incident to such performance).

 

  

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Each of the Company and the Guarantors 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 or the Guarantors.

 

(b)           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 and the Guarantors, jointly and severally, will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities being tendered in the Exchange Offer and/or resold pursuant to the “Plan of Distribution” contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements for representation in such capacity of not more than one counsel, who shall be Cahill Gordon & Reindel LLP or such other counsel as may 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.

 

SECTION 8.           Indemnification.

 

(a)           The Company and the Guarantors, jointly and severally, agrees to indemnify and hold harmless (i) each Holder and (ii) each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any Holder (any of the Persons referred to in this clause (ii) being hereinafter referred to as a “controlling person”) and (iii) the respective officers, directors, partners, employees, representatives and agents of any Holder or any controlling person (any Person referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an “Indemnified Holder”), to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities, judgments, actions and out-of-pocket expenses (including, without limitation, and as incurred, reimbursement of all reasonable costs of investigating, preparing, pursuing, settling, compromising, paying or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or threatened, including the reasonable fees and out-of-pocket expenses of counsel to any Indemnified Holder), joint or several, directly or indirectly caused by, related to, based upon, arising out of or in connection with any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (or any amendment or supplement thereto), or any omission or alleged omission to state therein a 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, except insofar as such losses, claims, damages, liabilities or expenses are caused by an untrue statement or omission or alleged untrue statement or omission that is made in reliance upon and in conformity with information relating to any of the Holders furnished in writing to the Company by any of the Holders expressly for use therein.  This indemnity agreement shall be in addition to any liability which the Company or any of the Guarantors may otherwise have.

 

  

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In case any action or proceeding (including any governmental or regulatory investigation or proceeding) shall be brought or asserted against any of the Indemnified Holders with respect to which indemnity may be sought against the Company or the Guarantors, such Indemnified Holder (or the Indemnified Holder controlled by such controlling person) shall promptly notify the Company and the Guarantors in writing; provided, however, that the failure to give such notice shall not relieve any of the Company or the Guarantors of its obligations pursuant to this Agreement to the extent not materially prejudiced by the failure to give such notice.  The Company and the Guarantors will be entitled to participate in and, to the extent that they shall elect, by written notice delivered to the Indemnified Holder promptly after receiving the aforesaid notice from such Indemnified Holder, to assume the defense thereof with counsel reasonably satisfactory to such Indemnified Holder; provided, however, if the defendants in any such action include both the Indemnified Holder and any of the Company or the Guarantors and the Indemnified Holder shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and the Indemnified Holder in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the Company or the Guarantors, the Indemnified Holder shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Holder.  Upon receipt of notice from the Company or the Guarantors to such Indemnified Holder of the election of any of the Company or the Guarantors to assume the defense of such action and approval by the Indemnified Holder of counsel, the Company and the Guarantors will not be liable to such Indemnified Holder under this Section 8 for any legal or other out-of-pocket expenses subsequently incurred by such Indemnified Holder in connection with the defense thereof unless (i) the Indemnified Holder shall have employed separate counsel in accordance with the proviso to the immediately preceding sentence or (ii) the Company and the Guarantors shall not have employed counsel satisfactory to the Indemnified Holder to represent the Indemnified Holder within a reasonable time after notice of commencement of the action, in each of which cases the fees and out-of-pocket expenses of counsel shall be at the expense of the Company and the Guarantors.  The Company and the Guarantors shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for such Indemnified Holders, which firm shall be designated by the Holders.  The Company and the Guarantors shall be liable for any settlement of any such action or proceeding effected with the Company’s and the Guarantors’ prior written consent, which consent shall not be withheld unreasonably, and each of the Company and the Guarantors agrees to indemnify and hold harmless any Indemnified Holder from and against any loss, claim, damage, liability or out-of-pocket expense by reason of any settlement of any action effected with the written consent of the Company and the Guarantors.  The Company and the Guarantors shall not, without the prior written consent of each Indemnified Holder, settle or compromise or consent to the entry of judgment in or otherwise seek to terminate any pending or threatened action, claim, litigation or proceeding in respect of which indemnification or contribution may reasonably be sought hereunder (whether or not any Indemnified Holder is a party thereto), unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Holder from all liability arising out of such action, claim, litigation or proceeding.

 

  

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(b)           Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors and their respective directors, officers of the Company and the Guarantors who sign a Registration Statement, and any Person controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company or any of the Guarantors, and the respective officers, directors, partners, employees, representatives and agents of each such Person, to the same extent as the foregoing indemnity from the Company and the Guarantors to each of the Indemnified Holders, but only with respect to claims and actions based on information relating to such Holder furnished in writing by such Holder expressly for use in any Registration Statement.  In case any action or proceeding shall be brought against the Company, the Guarantors or their respective directors or officers or any such controlling person in respect of which indemnity may be sought against a Holder of Transfer Restricted Securities, such Holder shall have the rights and duties given the Company and the Guarantors, and the Company, the Guarantors, their respective directors and officers and such controlling person shall have the rights and duties given to each Holder by the preceding paragraph.

 

(c)           If the indemnification provided for in this Section 8 is unavailable to an indemnified party under Section 8(a) or (b) hereof (other than by reason of exceptions provided in those Sections) in respect of any losses, claims, damages, liabilities, judgments, actions or expenses referred to therein, then each applicable 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 expenses in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors, on the one hand, and the Holders, on the other hand, from the Initial Placement (which in the case of the Company and the Guarantors shall be deemed to be equal to the total gross proceeds to the Company and the Guarantors from the Initial Placement), the amount of Additional Interest which did not become payable as a result of the filing of the Registration Statement resulting in such losses, claims, damages, liabilities, judgments actions or expenses, and such Registration Statement, or if such allocation is not permitted by applicable law, the relative fault of the Company and the Guarantors, on the one hand, and the Holders, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.  The relative fault of the Company on the one hand and of the Indemnified Holder on the other 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 or any of the Guarantors, on the one hand, or the Indemnified Holders, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 8(a) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.

 

  

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The Company, the Guarantors and each Holder of Transfer Restricted Securities agree that it would not be just and equitable if contribution pursuant to this Section 8(c) 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 expenses 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 such action or claim.  Notwithstanding the provisions of this Section 8, none of the Holders (and its related Indemnified Holders) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total discount received by such Holder with respect to the Initial Securities (before deducting expenses) exceeds 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 Securities 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 Initial Securities held by each of the Holders hereunder and not joint.

 

SECTION 9.          Rule 144A.  Each of the Company and the Guarantors hereby agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A under the Securities Act.

 

SECTION 10.        Participation in Underwritten Registrations.  No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder’s Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements.

 

SECTION 11.         Selection of Underwriters.  The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering.  In any such Underwritten Offering, the investment banker(s) and managing underwriter(s) that will administer such offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided, however, that such investment banker(s) and managing underwriter(s) must be reasonably satisfactory to the Company.

 

SECTION 12.         Miscellaneous.

 

(a)           Remedies.  Each of the Company and the Guarantors hereby 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 agree to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

(b)           No Inconsistent Agreements.  Each of the Company and the Guarantors 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.  The Company has granted registration rights to the holders of certain Hecla warrants; however, since 2009, neither the Company nor any of the Guarantors has 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 or any of the Guarantors’ securities under any agreement in effect on the date hereof.

 

  

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(c)           Adjustments Affecting the Securities.  The Company will not take any action, or permit any change to occur, with respect to the Securities that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer.

 

(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 the Company has (i) consented in writing, (ii) in the case of Section 5 hereof and this Section 12(d)(i), obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (iii) in the case of all other provisions hereof, obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding any 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 securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose 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 being tendered or registered; provided, however, that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Company shall obtain the written consent of each such Initial Purchaser with respect to which such amendment, qualification, supplement, waiver, consent or departure is to be effective.

 

(e)           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)            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)           if to the Company:

 

Hecla Mining Company

6500 N. Mineral Drive, Suite 200

Coeur d’Alene, Idaho

Telecopier No.: (208) 209-1278

Attention: David Sienko

  

-20-

  

With a copy to:

K&L Gates LLP

70 West Madison Street, Suite 3100

Chicago, IL 60602

Telecopier No.: (312) 827-8047

Attention: J. Craig Walker, Esq.

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 answered back, if telexed; 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.

 

(f)           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 of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder.

 

(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 CONFLICTS OF LAW RULES THEREOF THAT WOULD APPLY THE LAWS OF ANY OTHER JURISDICTION.

 

(j)           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.

 

(k)           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 by the Company with respect to the Transfer Restricted Securities.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	 	

HECLA MINING COMPANY

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

 

	 	Guarantors:
	 	 
	 	 
	 	

HECLA LIMITED

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

	 	
HECLA ALASKA LLC

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

	 	

HECLA GREENS CREEK MINING COMPANY

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

	 	

HECLA JUNEAU MINING COMPANY

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

  

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HECLA ADMIRALTY COMPANY

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

	 	

SILVER HUNTER MINING COMPANY

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

	 	

RIO GRANDE SILVER, INC.

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

	 	

BURKE TRADING INC.

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

	 	

RHL HOLDINGS, INC.

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

 

	 	

HECLA SILVER VALLEY, INC.

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

-23-

 

 

	 	

HECLA MC SUBSIDIARY, LLC

	 	 	 
	 	 	 
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

 

-24-

 

 

The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written:

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

as a Representative

 

 

	
By:

	  	 
	  	
Name:

	 
	  	
Title:

	 

 

 

SCOTIA CAPITAL (USA) INC.,

as a Representative

 

 

	
By:

	  	 
	  	
Name:

	 
	  	
Title:ex10-1.htm

 

Exhibit 10.1

M&TBank

 

One Fountain Plaza, Buffalo, NY 14203-1495

716 842 4200  FAX 716 848 7318

Western New York Commercial Banking Department

 

 

April 8, 2013

 

Mr. Daniel G. Keane

c/o Daroth Capital Advisors LLC

130 East 59th Street, 12th Floor

New York, New York  10022

 

Dear Dan:

 

I am pleased to inform you that M&T Bank (the "Bank") has approved the following credit facilities described below for use by Borrower as defined herein and the Bank hereby commits to provide the entire principal amount of the Revolving Credit Facility and the Term Loan (collectively, the "Credit Facility"), all subject to the following terms and conditions:

 

FACILITY l:

 

	
TYPE:

	
Revolving Credit Facility.

	 	 
	
PURPOSE:

	
Initially, to repay any existing indebtedness and transaction expenses related to the go-private reorganization (the "Reorganization") of MOD-PAC Corp., a New York corporation (the "Target"), then to be utilized for working capital, letters of credit, capital expenditures and general corporate purposes. It is assumed that up to $2 million of transaction expenses related to the Reorganization will be financed at closing with this Revolving Credit Facility.  The Target, together with Mandan Acquisition Corp., a New York corporation ("Mandan") are referred to, collectively, as the "Borrower."

	 	 
	
AMOUNT:

	
$6,000,000.

	 	 
	
RATE GRID:

	
Interest on the Revolving Credit Facility will be payable monthly for Base Rate Loans or at the end of each interest period (but in any event every three months) for LIBOR Loans based upon a grid as follows:

 

	
Revolver and Term Loan

	  	  
	
Total Leverage(*)

	
Base Rate+(**)

	
or   LIBOR+(***)

	
Unused

Fee

	
3.00x

	
1.25%

	
2.25%

	
0.25%

	
2.50x and <3.00x

	
1.00%

	
2.00%

	
0.25%

	
2.00x and <2.50x

	
0.75%

	
1.75%

	
0.125%

	
<2.00x

	
0.50%

	
1.50%

	
0.125%

 

	  	
(*)       Total Leverage to be defined as Total Funded Debt divided by EBITDA (to be defined in accordance with Exhibit A).

	 	 
	  	
(**)      The Base Rate shall, on any day of determination, be the higher of (i) M&T's Prime rate, (ii) the Federal Funds Effective Rate plus 1/2% or

              (iii) the 30-day LIBOR plus 1.00%, as any of such rates may change from time to time.

 

  

  

M&TBank

 

Mr. Daniel G. Keane

April 8, 2013

Page 2

 

	  	
(***)    Borrower may elect interest periods of one (1), two (2), three (3) and six (6) month LIBOR.

	 	 
	
TERM:

	
Five (5) years.

	 	 
	
REPAYMENT:

	
Interest only based on election of Base Rate or LIBOR borrowing.

	 	 
	
COLLATERAL:

	
Subject to permitted liens and other exceptions to be agreed upon, a first priority security interest in all non-realty assets of the Borrower and any guarantors other than Excluded Assets (as defined in Exhibit A), including without limitation, cash, deposit accounts, capital stock, accounts receivable, inventory, chattel paper, documents, instruments, machinery and equipment, furniture, fixtures, vehicles, and general intangibles, including patents, trademarks and other intellectual property.  Rosalia, LLC, a New York limited liability company (the "Parent") shall also grant the Bank a security interest and pledge of 100% of the capital stock of Borrower.  All Bank debt to be cross-collateralized.

	 	 
	
GUARANTORS:

	
All direct and indirect domestic subsidiaries of MOD-PAC Corp. or the entity surviving the Reorganization whether currently existing or hereafter acquired or organized.  In addition, the Parent (but only the Parent, and not any entity that holds the equity of Parent) shall also guaranty the indebtedness. It is anticipated that Borrower will organize an Interest Charge-DISC subsidiary or an affiliate and a separate subsidiary or affiliate to serve as a captive insurance provider for the Borrower.  Both the Interest Charge-DISC and captive insurance entities will serve as guarantors of the Credit Facilities.

	 	 
	
COMMITMENT FEE:

	
3/8% ($22,500).

	 	 
	
PREPAYMENT PREMIUM:

	
Any portion of the Revolving Credit Facility bearing interest at a rate based upon the LIBOR rate which is prepaid is subject to breakage costs, if applicable.  Except for such Breakage (defined below), the Borrower may prepay the Revolving Credit Facility without premium or penalty.  In addition, the Borrower may decrease the size of the Revolving Credit Facility in whole at any time and in part from time to time without penalty.

 

"Breakage" means the higher of $250.00 or the actual amount of the liabilities, expenses, costs or funding losses that are a direct or indirect result of such prepayment, whether such liability, expense, cost or loss is by reason of (a) any reduction in yield, by reason of the liquidation or reemployment of any deposit or other funds acquired by the Bank, (b) the fixing of the interest rate payable on any LIBOR-based loan or (c) otherwise, but in each case excluding loss of the applicable margin.

 

  

  

  

M&TBank

 

Mr. Daniel G. Keane

April 8, 2013

Page 3

 

	
FACILITY 2:

	  
	 	 
	
TYPE:

	
Term Loan.

	 	 
	
PURPOSE:

	
This facility will be utilized to partially finance the Reorganization.

	 	 
	
AMOUNT:

	
$16,000,000.

	 	 
	
RATE GRID:

	
Interest shall accrue on the outstanding portion of the Term Loan consistent with the interest rates set forth in the interest rate grid on page one.

	 	 
	
TERM:

	
Five (5) years.

	 	 
	
REPAYMENT:

	
Payable in quarterly installments of principal as follows:

 

	
Quarters Following Closing

	
Amount

	
one through four

	
$400,000

	
five through eight

	
$500,000

	
nine through twelve

	
$500,000

	
thirteen through sixteen

	
$600,000

	
seventeen through nineteen

	
$600,000

	
At maturity, the remaining unpaid balance

	
$6,200,000

 

	
COLLATERAL:

	
Same Collateral as Facility #1

	 	 
	
GUARANTORS:

	
Same Guarantors as Facility #1

	 	 
	
COMMITMENT FEE:

	
3/8% ($60,000).

	 	 
	
PREPAYMENT

	  
	
PREMIUM:

	
Any portion of the Term Loan bearing interest at a rate based upon the LIBOR rate which is prepaid is subject to Breakage (as defined above), if applicable.  Any prepayment of the Term Loan shall be applied to reduce future scheduled installments of principal of the Term Loan in such manner as directed by the Borrower at the time of such prepayment.

 

Conditions Applicable to All Credit Facilities

 

	
GENERAL TERMS:

	
Representations, warranties, affirmative and negative covenants and events of default will be set forth on Exhibit A hereto and the following (in each case subject to customary exceptions, thresholds and baskets to be agreed upon):

	 	 
	  	
1.         In addition to the scheduled payments of principal to be made by the Borrower, the Borrower shall apply 25% of the amount of any Excess Cash Flow to repay the outstanding and unpaid principal balance of the Term Loan ("Facility 2").  Excess Cash Flow (to be defined but in any event to take into account the provisions described below) for any period, to be defined as the excess of EBITDA less (a) income tax expense paid in cash and tax distributions paid in cash, (b) interest expense paid in cash, (c) scheduled or mandatory principal payments of debt (excluding repayments under the Revolving Credit Facility), (d) any voluntary prepayment of the Term Loan, (e) capital expenditures made or committed to be made (not financed with long term indebtedness, but excluding revolving indebtedness), (f) acquisitions financed with cash, certain other investments and certain restricted payments, and (g) certain other reductions to address add-backs to net income in calculating EBITDA.  Excess Cash Flow payments will be required annually.  The Excess Cash Flow requirement will be eliminated upon the Borrower reaching Total Leverage (as defined below) of less than 2.0x; and

 

  

  

M&TBank

 

Mr. Daniel G. Keane

April 8, 2013

Page 4

 

	  	
2.         All non-Bank debt owed by Borrower or any of its subsidiaries to any affiliate to be subordinated on terms reasonably satisfactory to the Bank; and

	 	 
	  	
3.         Negative pledge will be provided by the Borrower whereby the Borrower will agree not to grant or permit any lien or encumbrance on the real property and improvements located at 1801 Elmwood Avenue, Buffalo, New York (subject to standard exceptions), and subject to the understanding that such real property and improvements may be transferred to another wholly-owned subsidiary of the Borrower, which will be a Guarantor and will execute a negative pledge agreement in form reasonably satisfactory to the Bank at the time such transfer); and

	 	 
	  	
4.         Primary deposit accounts of Borrower and its subsidiaries to be maintained with the Bank.  Other accounts of Borrower and its Subsidiaries shall be subject to customary springing dominion control agreements, provided that Excluded Accounts shall not be subject to any such restriction.

	 	 
	
REPORTING:

	
To be limited to the following:

	 	 
	  	
1.         Within thirty (30) days of each month, internally prepared financial statements of Borrower; and

	 	 
	  	
2.         Within forty-five (45) days of each quarter, a quarterly compliance certificate certified by Borrower's chief financial officer; and

	 	 
	  	
3.         Within one hundred and twenty (120) days of year end, annual audited financial statements of Borrower; and

	 	 
	  	
4.         Not more than forty-five (45) days after the end of each fiscal year, a budget for the Borrower in form reasonably satisfactory to the Bank; and

	 	 
	  	
5.         Upon request, such other financial and other information as the Bank may reasonably request from time to time.

 

  

  

M&TBank

 

Mr. Daniel G. Keane

April 8, 2013

Page 5

 

	
FINANCIAL COVENANTS:

	
To be limited to the following:

 

1.         Maximum Total Leverage ratio of 3.75x, with stepdowns to be determined.  Maximum Total Leverage to be defined as Total Funded Debt divided by EBITDA.  To be measured quarterly with EBITDA calculated on a trailing 12 month basis. Total Funded Debt to be defined as (a) the aggregate principal amount of indebtedness of Borrower and its subsidiaries on the consolidated balance sheet of Borrower, determined on a consolidated basis in accordance with GAAP, consisting of (i) indebtedness for borrowed money, and (ii) debt obligations evidenced by promissory notes or similar instruments, minus (b) unrestricted cash on hand.  Total Funded Debt shall not include (A) any capitalized lease obligations existing at the time of this commitment or (B) the amount of any subordinated debt of the parent of the Parent, contributed as equity to the Parent and from the Parent, as equity, to Borrower.

	 	 
	  	
2.         Minimum Fixed Charge Coverage ratio of 1.15x with step-up to 1.25x to be determined.  Fixed Charge Coverage ratio to be defined as EBITDA minus maintenance capital expenditures minus cash taxes paid minus distributions paid, divided by cash interest expense plus regularly scheduled principal payments (excluding mandatory prepayments).  To be measured quarterly and calculated on a trailing 12 month basis.

 

	
CONDITIONS TO LENDING:

	
The commitment of the Bank under this Commitment Letter with respect to the Credit Facilities and to make the Loans on the Closing Date contemplated by this Commitment Letter are solely subject to the satisfaction of each of the conditions precedent set forth below:

	 	 
	  	
1.        Maximum Total Leverage to be less than 3.0 to 1.0 at closing for the latest four-quarter period ending more than 45 days prior to the Closing Date; and

 

	  	
2.        The Bank shall have reviewed, and be reasonably satisfied with, (i) the Agreement and Plan of Merger, dated as of April ___, 2013 (the "Merger Agreement"), among the Parent, Mandan, and Mod-Pac Corp., including the accompanying Merger Certificate, exhibits and schedules thereto (it being agreed that the draft dated April 8, 2013 of the Merger Agreement, and the schedules and exhibits thereto shall be the Merger Agreement referred to in this Section), and (ii) the Paying Agent Agreement referred to in the Merger Agreement; and

 

  

  

M&TBank

 

Mr. Daniel G. Keane

April 8, 2013

Page 6

	 	 
	  	
3.         Receipt of fully executed Merger Agreement and consummation of transactions contemplated thereby concurrently with the funding of the Credit Facilities without any amendment or modification to the Merger Agreement in a manner that would be materially adverse to the interests of the Bank; and

 

4.         The Bank shall have a perfected, first priority lien on and security interest in all assets as required in opposite the heading "Collateral," subject to the Certain Funds Provision; and

 

5.         Execution and delivery of Loan Documents on terms and conditions consistent with this Commitment Letter; and

 

6.         The accuracy in all material respects of the Merger Agreement Representations and the Specified Representations, subject to the Certain Funds Provisions; and

 

7.         A favorable opinion of legal counsel to the Borrower and any guarantors as to such matters relating to the status of the Borrower and guarantors, the enforceability of the loan documentation and the Reorganization as customarily required and reasonably acceptable to the Bank; and

	 	 
	  	
8.         Except as (x) disclosed in the SEC Reports (as defined in the Merger Agreement) filed with or furnished to the SEC on or after January 1, 2010 through the date that is two (2) Business Days prior to the date of the execution of the Merger Agreement (excluding disclosure contained in the "risk factors" section or constituting "forward-looking statements," in each case, to the extent such disclosure is cautionary, predictive or speculative in nature) or (y) disclosed to Parent and Mandan in a letter (the "Company Disclosure Letter") delivered to them by the Target prior to the execution of the Merger Agreement, since December 31, 2012 through the date of the Merger Agreement, there shall not have been any event, change or occurrence that, individually or in the aggregate has had, or would reasonably be expected to have, a Material Adverse Effect (as defined in the Merger Agreement).

 

  

  

M&TBank

 

Mr. Daniel G. Keane

April 8, 2013

Page 7

 

Notwithstanding anything to the contrary in this Commitment Letter, the Loan Documents or any other letter agreement or any other written agreement concerning the financing of the Reorganization contemplated hereby to the contrary, (a) the only representations, the accuracy of which shall be a condition to the initial funding under the Credit Facility on the Closing Date shall be (i) such of the representations made by the Target and its subsidiaries in the Merger Agreement as are material to the interests of the Bank, but only to the extent that Buyer has the right to terminate (or not perform) its obligations under the Merger Agreement as a result of a breach of such representations in the Merger Agreement (the "Merger Agreement Representations") and (ii) the Specified Representations (as defined below) and (b) the terms of the Loan Documents shall be in a form such that they do not impair the making available of initial funding under the Credit Facility on the Closing Date if the conditions set forth in "Conditions to Lending" in this Commitment Letter are satisfied, it being understood that, (x) other than with respect to any UCC Filing Collateral, Stock Certificates and IP Filing Collateral (each as defined below), to the extent any security interest in the Collateral is not perfected on the Closing Date after the Borrower's use of commercially reasonable efforts to do so, the perfection of such security interests shall not constitute a condition precedent to the availability of the Credit Facility on the Closing Date but may instead be required to be perfected after the Closing Date pursuant to arrangements and timing to be mutually agreed by the parties hereto acting reasonably, (y) with respect to perfection of security interests in UCC Filing Collateral and IP Filing Collateral, the Borrower shall be obligated to deliver, or cause to be delivered, on or prior to the Closing Date, necessary UCC financing statements and intellectual property security agreements to the Bank and to irrevocably authorize, and to cause the applicable guarantors to irrevocably authorize, the Bank to file necessary UCC financing statements and IP security agreements, but to the extent that any security interest in UCC Filing Collateral and IP Filing Collateral may also be perfected by another more preferable (as determined by the Bank) method, and perfection through such additional method is not completed on or prior to the Closing Date after the Borrower's use of commercially reasonable efforts to do so, the perfection of such security interests through such additional method shall not constitute a condition precedent to the availability of the Credit Facilities on the Closing Date but may instead be required to be perfected through such additional method after the Closing Date pursuant to arrangements and timing to be mutually agreed by the parties hereto acting reasonably, and (z) with respect to perfection of security interests in Stock Certificates, the Borrower  shall be obligated to deliver to the Bank on or prior to the Closing Date Stock Certificates together with undated signed stock powers in blank.  For purposes hereof, (1) "Specified Representations" means the representations and warranties to be included in the Loan Documents relating as to due organization, corporate power and authority, the due authorization, execution, delivery and enforceability of the Loan Documents, the Loan Documents not conflicting with charter documents or law, solvency, Federal Reserve margin regulations, Investment Company Act, Patriot Act, status of the Credit Facilities as senior debt and "designated senior debt" and validity, priority and perfection of security interests (subject to the limits set forth in the preceding sentence), (2) "UCC Filing Collateral" means Collateral, excluding Stock Certificates, consisting solely of assets for which a security interest can be perfected by filing a Uniform Commercial Code financing statement, (3) "IP Collateral" means Collateral consisting solely of intellectual property assets for which a security interest can be perfected by filing a Uniform Commercial Code financing statement or with the U.S. Patent and Trademark Office or Copyright Office, and (4) "Stock Certificates" means Collateral consisting of stock certificates representing capital stock of the Borrower and its subsidiaries required as Collateral pursuant to the Term Sheet for which a security interest can be perfected by delivering such stock certificates. The provisions of this paragraph shall be referred to herein as the "Certain Funds Provisions."

 

The availability of the Credit Facilities is contingent upon the execution and delivery to the Bank of loan documentation (collectively, the "Loan Documents") evidencing and securing the credit facilities which shall contain terms and conditions reflecting the term and conditions of this Commitment Letter (including, without limitation, Exhibit A) and such other terms and conditions (not inconsistent with the Commitment Letter (including, without limitation, Exhibit A) as are mutually agreed, with standards, qualifications, thresholds and exceptions for materiality or otherwise and "baskets" to be agreed and grace and cure periods which will be established taking into account: (i) the operational and strategic requirements of the Borrower and its subsidiaries in light of their consolidated capital structure, size, industry and practices, in each case, after giving effect to the Reorganization and (ii) the model with respect to the Target and its subsidiaries provided to the Bank in connection with the Reorganization; and (iii) be negotiated in good faith by the Borrower and the Bank, subject in all events to the Certain Funds Provision, provided that the Bank shall have negotiated in good faith to complete the definitive Loan Documents with respect to the Credit Facility.

 

  

  

M&TBank

 

Mr. Daniel G. Keane

April 8, 2013

Page 8

 

The Borrower hereby agrees that the Borrower shall be responsible for all reasonable and documented out-of-pocket costs and expenses (collectively, the "Bank Expenses") previously or subsequently incurred in connection with the negotiation, preparation, execution and delivery of the loan documents and the closing of the loans described herein including, without limitation, the reasonable and documented fees and expenses of our legal counsel (which shall be limited to one law firm), recording fees and appraisal and field examination fees, provided that if no loan is extended pursuant to the Credit Facility during the term of this Commitment Letter, then the Bank shall apply the Commitment Fees to the payment of the Bank Expenses.  This obligation shall survive any expiration or termination of this commitment and shall continue in full force and effect notwithstanding  any failure of the credit facilities to be closed.

 

Each party hereto agrees that this Commitment Letter is a binding and enforceable agreement with respect to the subject matter contained herein, including an agreement to negotiate in good faith the Loan Documents by the parties hereto in a manner consistent with this Commitment Letter, it being acknowledged and agreed that the funding of the Credit Facility is subject to the conditions precedent specified herein.

 

This letter constitutes the entire agreement and understanding between the Borrowers and the Bank and with respect to the commitments described herein and supersedes all prior negotiations,  understandings, and agreements  between  the  parties  with  respect  to  this  letter and the transactions  described  herein, including, without limitation, those expressed in any prior proposal or commitment letter delivered by the Bank to the Borrower.   No modification, rescission, waiver, release, or amendment  of any provision of this commitment  shall be made, except  by a written  agreement  signed  by you  and a duly authorized officer of the Bank.

 

This commitment letter, which is not assignable by Borrower, shall automatically expire, and shall be null and void, if (i) we have not received a copy of this letter executed by the Borrower on or before April 12, 2013; (ii) prior to any such receipt, we, orally or in writing, give notice of withdrawal hereof; or (iii) the loans have not closed on or before September 30, 2013 (the "Closing Date").  We may extend the Closing Date, in our sole discretion, provided such extension is in writing.

 

Kindly acknowledge your acceptance of this letter by signing and returning the original of this letter in the enclosed self-addressed envelope together with the payment of the Commitment Fees referenced above which shall be non-refundable, provided that if no loan is extended pursuant to the Credit Facility during the term of this Commitment Letter, then the Bank shall apply the Commitment Fees to the payment of the Bank Expenses.  The enclosed copy is for your records.

 

  

  

M&TBank

 

Mr. Daniel G. Keane

April 8, 2013

Page 9

 

We thank you for the opportunity to serve you and look forward to a productive working relationship.  If you have any questions, please contact me at 848-7304.

 

Very truly yours,

 

 

Michael J. Prendergast

Vice President

 

	
Accepted By:

	  	  
	
MANDAN ACQUISITION CORP.

	  	  
	  	  	  	  
	
By:

	/s/ Daniel G. Keane	  
	  	
Daniel G. Keane

	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	
Date:

	April 11, 2013	  	  
	  	  	  	  

  

  

M&TBank

 

Exhibit A

 

	
Representations and

	
Limited to the following (subject to customary exceptions, thresholds and

	
Warranties

	
baskets to be agreed upon and, on the Closing Date, the Certain Funds Provisions):

	
  

	
A.

	
Good Standing and Authority;

 

	
  

	
B.

	
Due Authorization, Execution and Delivery;

 

	
  

	
C.

	
Enforceability of Loan Documents;

 

	
  

	
D.

	
Title to Assets;

 

	
  

	
E.

	
Pending Litigation;

 

	
  

	
F.

	
No Violation;

 

	
  

	
G.

	
Financial Statements and Tax Returns;

 

	
  

	
H.

	
Subsidiaries and Affiliates;

 

	
  

	
I.

	
ERISA Matters

 

	
  

	
J.

	
Licenses, Permits and Approvals;

 

	
  

	
K.

	
Environmental Matters;

 

	
  

	
L.

	
Solvency;

 

	
  

	
M.

	
No Default or Event of Default;

 

	
  

	
N.

	
No Material Adverse Effect (as defined in the Merger Agreement);

 

	
  

	
O.

	
Federal Reserve; Margin Regulations;

 

	
  

	
P.

	
Investment Company Act;

 

	
  

	
Q.

	
Anti-Terrorism Laws.

 

	
Affirmative Covenants:

	
Limited to the following (subject to customary exceptions, thresholds and baskets to be agreed upon):

	  	
A.

	
Maintain adequate insurance: Borrower will, at all times, maintain property, casualty and liability insurance policies in coverage and amounts reasonably acceptable to the Bank, cancelable only upon ten (10) days prior written notice (in the case of nonpayment of premium) and otherwise thirty (30) days prior written notice to the Bank and naming the Bank as loss payee or additional insured.

 

	  	
B.

	
Compliance and payment of Taxes and obligations;

 

  

Exh. A-1

M&TBank

 

	  	
C.

	
Maintenance of Corporate Standing;

 

	  	
D.

	
Maintenance of properties and equipment;

 

	  	
E.

	
Books and Records;

 

	  	
F.

	
Compliance with Law;

 

	  	
G.

	
ERISA Compliance;

 

	  	
H.

	
Environmental Compliance;

 

	  	
I.

	
Examinations and Inspections;

 

	  	
J.

	
Future Subsidiaries to join in guaranty;

 

	  	
K.

	
Further Assurances;

 

	  	
L.

	
Use of Proceeds; and

 

	  	
M.

	
Compliance with Anti-Terrorism Laws.

 

	
Negative Covenants:

	
Limited to the following (subject to customary exceptions, thresholds and baskets to be agreed upon):

 

	  	
A.

	
Limitation on Additional Indebtedness, Guarantees, Liens and Leases;

 

	  	
B.

	
Limitations on Sale of Assets and Sale-Leaseback Arrangements, provided that the Loan Documents will permit, among other things, (a) the transfer of assets from the Borrower or a wholly-owned subsidiary of the Borrower to the Borrower or another wholly-owned subsidiary of the Borrower (including, without limitation, the real property and improvements located at 1801 Elmwood Avenue, Buffalo, New York), (b) the sale of the cogeneration facility of the Borrower (subject to a mandatory prepayment of the Term Loan equal to the net cash proceeds received from such sale), and (c) the sale of the portion of the real estate and improvements known as the "Front Building" owned by the Borrower (which is subject to a capital lease) (subject to a mandatory prepayment of the Term Loan equal to the net cash proceeds received from such sale);

 

	  	
C.

	
Restriction on Loans, Advances, Investments and Redemptions;

 

	  	
D.

	
Limitation on Affiliate Transactions (it being understood and agreed that Borrower may establish and pay commissions to an IC-DISC, and an insurance captive each of which might not be a subsidiary of the Parent);

 

	  	
E.

	
Limitation on Mergers and Acquisitions, provided that the Loan Documents will permit the merger contemplated by the Merger Agreement;

 

 

  

Exh. A-2

M&TBank

 

	  	
F.

	
Prohibition on change of organizational jurisdiction;

 

	  	
G.

	
Restriction on providing negative pledge to other third parties;

 

	  	
H.

	
Prohibition on prepayments and amendments to subordinated indebtedness; and

 

	  	
I.

 

 

J.

 

	
Restriction on distributions, provided that the Loan Documents shall permit (a) the issuance of tax dividends and tax distributions and (b) so long as no Event of Default exists or would be created thereby, the issuance of dividends in order to pay interest on the subordinated debt issued in connection with the Reorganization.

 

Payments to Borrower’s IC-DISC and captive insurance to be limited to amounts to be mutually agreed upon in the definitive loan documentation.

	
Events of Default:

	
Limited to the following (subject to customary exceptions, thresholds and baskets to be agreed upon):

 

	  	
A.

	
Payment default;

 

	  	
B.

	
Breach of representation or warranties;

 

	  	
C.

	
Violation of covenant(s);

 

	  	
D.

	
Cross default;

 

	  	
E.

	
Bankruptcy, insolvency;

 

	  	
F.

	
Material Judgments;

 

	  	
G.

	
ERISA Matters;

 

	  	
H.

	
Change in Control; and

 

	  	
I.

	
Invalidity of loan documentation or security interests.

 

	
Certain Definitions:

	
EBITDA means for any period, the net income of Borrower for such  period plus the sum of the following (to the extent deducted in the computation of such net income): (a) depreciation expense, (b) amortization expense, (c) interest expense, (d) tax expense, provision for taxes and tax distributions and dividends, (e) any expenses or charges (other than depreciation or amortization expense) related to any equity offering, permitted investment, acquisition, disposition, recapitalization or incurrence of indebtedness permitted to be incurred by the loan documents, (f) the amount of any restructuring charge or reserve, integration cost or other business optimization expense or cost associated with establishing new facilities, including any one-time costs incurred in connection with acquisitions and costs related to the closure and/or consolidation of facilities, (g) any other non-cash charges, write-downs, expenses, losses or items reducing net income for such period including any impairment charges or the impact of purchase accounting (excluding any such non-cash charge, write-down or item to the extent it represents an accrual or reserve for a cash expenditure for a future period) or other items classified by the Borrower as special items, (h) non-cash compensation expense arising out of the grant or exercise of stock options or other equity based compensation, (i) commission paid by the Borrower or any of its subsidiaries to any IC-DISC that is an affiliate of the Borrower, (j) other non-recurring expenses of the Borrower and its subsidiaries reducing net income to be mutually agreed upon in the definitive loan documentation, and (k) any amounts in respect of legal, accounting and other fees, expenses and costs that are not capitalized and are paid in conjunction with the negotiation and execution of the credit facilities and the Reorganization.

 

  

Exh. A-3

M&TBank

 

	  	
Net income will be defined as GAAP Net Income plus extraordinary losses minus extraordinary gains.

 

	  	
Excluded Accounts means (i) petty cash and other deposit accounts of which the aggregate average balance during any calendar month does not exceed $100,000, and (ii) any other deposit account solely used for, (A) funding payroll or segregating payroll taxes or funding other employee wage or benefit payments to or for the benefit of the employees of the Borrower or any of its subsidiaries in the ordinary course of business, which may be subject to an additional limitation to be mutually agreed upon in the credit agreement, (B) segregating 401(k) contributions or contributions to an employee stock purchase plan, (C) employee portion of funding for other employee health and benefit plans and (D) funds required by law or any contractual obligation to be held in trust or in escrow in connection with transactions to be mutually agreed upon in the definitive loan documentation.

 

	  	
Excluded Assets means (i) any fee owned or leasehold real property (in each case, other than "Material Real Properties" to be defined in a mutually acceptable manner), provided Borrower has executed and delivered to Bank a negative pledge agreement covering such excluded property or such excluded property is subject to the negative pledge clause in the credit agreement, (ii) [intentionally omitted], (iii) [intentionally omitted], (iv) licenses, state or local franchises, charters and authorizations and any other assets to the extent that the Bank may not validly possess a security interest therein under applicable laws (including, without limitation, rules and regulations of any governmental authority or agency) or the pledge or creation of a security interest in which would require governmental consent, approval, license or authorization, other than to the extent such prohibition or limitation is rendered ineffective under the UCC or other applicable law notwithstanding such prohibition (it being understood that this clause (iv) is not intended to exclude any account receivable owing by a governmental authority arising from the sale of inventory), (v) any particular asset or right under contract, if the pledge thereof or the security interest therein (A) is prohibited by applicable law other than to the extent such prohibition is rendered ineffective under the UCC or other applicable law notwithstanding such prohibition, or (B) to the extent and for as long as it would violate the terms of any written agreement, license or lease executed in the ordinary course of business or in accordance with the terms and conditions of the Loan Documents with respect to such asset or would give the other parties thereto the right to terminate, accelerate or otherwise alter the rights or obligations of the Borrower or a subsidiary thereof under such written agreement, license or lease with respect to such asset (in each case, after giving effect to the relevant provisions of the UCC or other applicable laws), (vi) [intentionally omitted], (vii) any permitted agreement, lease, license or property subject to a purchase money security interest or other similar arrangement to the extent the pledges thereof and security interests therein are permitted by Bank under the loan documentation for the Credit Facility and prohibited by such permitted agreement, lease, license or purchase money arrangement, other than proceeds and receivables thereof, except to the extent the pledge of such permitted agreement, lease, license or property is expressly deemed effective under the UCC or other applicable law or principle of equity notwithstanding such prohibition, (viii) [intentionally omitted], (ix) Excluded Accounts, (x) any intent-to-use trademark application prior to the filing of a "Statement of Use" or "Amendment to Allege Use" with respect thereto, to the extent, if any, that and solely during the period, if any, in which the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable federal Law, (xi) particular assets if and for so long as, in the reasonable judgment of the Bank in consultation with the Borrower, the cost of creating or perfecting such pledges or security interests in such assets or obtaining title insurance, surveys, abstracts or appraisals in respect of such assets exceed the practical benefits to be obtained by the lenders therefrom, (xii) any assets of a foreign subsidiary and, in the case of the equity of any foreign subsidiary, limited to 65% of the voting capital stock of any first tier foreign subsidiary, and (xiii) other exceptions to be mutually agreed upon in the definitive loan documentation for the Credit Facility.  Notwithstanding anything to the contrary, Excluded Assets shall not include (A) any cash proceeds of any Excluded Assets referred to above (except to the extend such cash proceeds are deposited in an Excluded Account in accordance with the terms and conditions of such definition), or (B) any noncash proceeds, substitutions or replacements of any Excluded Assets referred to above (unless such noncash proceeds, substitutions or replacements would independently constitute Excluded Assets referred to in clauses (i) through (xiii)).

 

It is understood and agreed that the Borrower and its subsidiaries shall not be required (a) to take additional action to perfect any security interest of the Bank in motor vehicles and other assets subject to certificates of title except to the value of all such motor vehicles and other assets exceeds a threshold to be mutually agreed upon, or (b) to transfer any letter of credit or take additional action to perfect the Bank's security interest in any letter of credit rights in each case except to the extent that an Event of Default has occurred and is continuing.

Exh. A-4

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