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EXHIBIT 10.11
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into
as of November 24, 1997, by and among SUNSHINE MINING AND REFINING COMPANY, a
Delaware corporation (the "Company"), on the one hand, and Stonehill Partners,
L.P., GRS Partners, Aurora Limited Partnership and Stonehill Offshore Partners
Limited (collectively, the "Stockholders"), on the other hand.
R E C I T A L S
A. This Agreement is entered into pursuant to the Purchase Agreement
dated as of November 24, 1997 (the "Purchase Agreement"), by and among
the Company and each of the Stockholders.
B. The Purchase Agreement provides for the issuance by the Company of an
aggregate of $15,000,000 of senior unsecured notes (the "Notes") which
are convertible into shares of the Company's common stock, par value
$.01 per share (each share of such class being referred to herein as a
share of "Common Stock", and the shares to be issued on conversion of
the Notes being referred to herein as the "Conversion Shares"), to the
Stockholders on the date hereof.
C. The Purchase Agreement also provides for the issuance by the Company
of shares of Common Stock to the Stockholders (i) in lieu of cash to
satisfy the coupon payments and certain other payments on the Notes
(the "Payment Shares") and (ii) upon the exercise of certain warrants
issued to them pursuant to the Purchase Agreement (the "Warrant
Shares").
D. The Company and the Stockholders wish to provide for the registration
of the Conversion Shares, the Coupon Shares and the Warrant Shares on
the terms and conditions set forth herein.
A G R E E M E N T
Based on the recitals set forth above and the promises contained
herein, the parties agree as follows:
1. Definitions. Any capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Notes or the
Purchase Agreement. As used herein, the following terms shall have the
following meanings:
"Agreement" has the meaning set forth in the preamble.
"Average Bid Price" has the meaning set forth in the Purchase
Agreement.
"Business Day" means a day other than a Saturday, a Sunday, a day on
which the banking institutions in the State and City of New York are authorized
or obligated by law or executive order to close or a day that is declared a
national or New York state holiday.
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"Closing Date" means the date of this Agreement.
"Company" has the meaning set forth in the preamble.
"Company Counsel" has the meaning set forth in Section 2(a).
"Common Stock" has the meaning set forth in the Recitals.
"Conversion Price" means, with respect to any Note, the conversion
price then in effect with respect to such Note as specified therein.
"Conversion Shares" has the meaning set forth in the Recitals.
"Default" means a Registration Default or an Effectiveness Default, as
the case may be.
"Effectiveness Default" has the meaning set forth in Section 3(a).
"Effectiveness Period" has the meaning set forth in Section 2(a).
"Effectiveness Target Date" means the 90th day after the Closing Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Liquidated Damages" has the meaning set forth in Section 3(a).
"Notes" has the meaning set forth in the Recitals.
"Outstanding Principal" has the meaning set forth in Section 3(a).
"Payment Shares" has the meaning set forth in the Recitals.
"Person" means a corporation, an association, a partnership, an
individual, a joint venture, a joint stock company, a trust, an unincorporated
organization or a government or an agency or political subdivision thereof.
"Prospectus" means the prospectus included in the Registration
Statement, as amended or supplemented including, without limitation, by any
post-effective amendments thereto, and all material incorporated by reference
into such prospectus.
"Purchase Agreement" has the meaning set forth in the Recitals.
"Registration Default" has the meaning set forth in Section 3(a).
"Registration Statement" has the meaning set forth in Section 2(a).
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"Requisite Information" has the meaning set forth in Section 2(b).
"Rule 144" means Rule 144 (as currently in effect or as amended or any
successor or similar provision) promulgated by the SEC under the Securities
Act.
"Rule 415" means Rule 415 (as currently in effect or as amended or any
successor or similar provision) promulgated by the SEC under the Securities
Act.
"SEC" or "Commission" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Selling Stockholder" means any Stockholder whose Shares (in whole or
in part) are included in a Registration Statement.
"Shares" means (a) the Conversion Shares, the Coupon Shares and the
Warrant Shares and (b) any securities issued or issuable in respect of the
Conversion Shares, the Coupon Shares or the Warrant Shares by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, reclassification, merger, consolidation or similar event, and
any other securities issued pursuant to any other pro rata distribution with
respect to such shares of Common Stock. For purposes hereof, a share of Common
Stock ceases to be an Conversion Share, a Coupon Share, a Warrant Share or a
Share (each as defined herein) when (i) it has been effectively registered
under the Securities Act and sold or distributed pursuant to an effective
Registration Statement covering it or (ii) it has become eligible, in the
opinion of counsel to the Company, to be sold or distributed pursuant to Rule
144(k).
"Stockholders" has the meaning set forth in the preamble.
"Trading Day" has the meaning set forth in the Purchase Agreement.
"Underwritten Offering" means a registration in which securities of
the Company are sold to an underwriter for reoffering to the public.
"Violations" has the meaning set forth in Section 8(a).
"Warrant Shares" has the meaning set forth in the Recitals.
2. Shelf Registration.
(a) The Company hereby agrees to use all reasonable
efforts to:
(i) as soon as practicable after the date hereof,
file with the SEC a registration statement for an offering to
be made on a continuous basis pursuant to Rule 415 under the
Securities Act (or any successor provision thereto) covering
all of the Shares (the "Registration Statement"); and
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(ii) cause the Registration Statement to be
declared effective pursuant to the Securities Act as soon as
practicable after the date hereof but not later than the
Effectiveness Target Date, and subject to Sections 4(d) and
4(f), use all reasonable efforts to keep the Registration
Statement continuously effective and available for resale of
the Shares under the Securities Act for the period (the
"Effectiveness Period") ending on the earlier of (A) the date
on which there ceases to be outstanding any Shares and (B) the
date on which the Company receives an opinion from its legal
counsel ("Company Counsel") to the effect that all Shares can
be freely traded without the continued effectiveness of the
Registration Statement, and, in the case of (A) or (B), no
further Shares are issuable under the Notes or the Warrants.
(b) The Company may require each Selling Stockholder to
furnish to the Company, within three (3) Business Days after the Closing Date
and thereafter promptly as any additional information becomes known to such
Selling Shareholder, such information regarding the Selling Stockholder and the
distribution of such Selling Stockholder's Shares as is required by law to be
disclosed in the Registration Statement (the "Requisite Information").
Subject to Section 4(f), the Company shall file
within three (3) Business Days of the receipt of notice from any Selling
Stockholder which includes the Requisite Information with respect to such
Selling Stockholder, a prospectus supplement pursuant to Rule 424 under the
Securities Act (or any successor provision thereto) to amend or supplement the
Registration Statement to include in the Registration Statement the Requisite
Information as to such Selling Stockholder (and the Shares held by such Selling
Stockholder). The Company shall provide each Selling Stockholder a copy of
such Prospectus as so amended or supplemented containing the Requisite
Information within three (3) Business Days of filing such Prospectus with the
Commission in order to permit such Selling Stockholder to comply with the
prospectus delivery requirements of the Securities Act in a timely manner with
respect to any proposed disposition of such Selling Stockholder's Shares.
No Selling Stockholder shall be entitled to use the
Prospectus unless and until such Selling Stockholder shall have furnished the
information required by this Section 2(b) in accordance with the first or
second paragraph hereof and such information with respect to such Selling
Stockholder shall have been included in the Prospectus. If any information
furnished to the Company by a Selling Stockholder for inclusion in the
Registration Statement or the Prospectus becomes materially misleading, such
Selling Stockholder agrees (i) to furnish promptly to the Company all
information required to be disclosed in such Registration Statement in order to
make the information previously furnished to the Company not materially
misleading and (ii) to stop selling or offering for sale Shares pursuant to the
Registration Statement until such Selling Stockholder's receipt of the copies
of a supplemented or amended Prospectus as contemplated by Section 4(b)(xi)
hereof.
3. Liquidated Damages.
(a) The Company and the Stockholders agree that the
Selling Stockholders will suffer damages if the Company fails to fulfill its
obligations pursuant to Section 2 hereof and that it would not be possible to
ascertain the extent of such damages. Accordingly, the
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Company hereby agrees to pay liquidated damages ("Liquidated Damages") to each
Selling Stockholder under the circumstances and to the extent set forth below:
(i) if the Registration Statement is not declared
effective by the Commission on or prior to the Effectiveness
Target Date (a "Registration Default"); or
(ii) if, at any time during the Effectiveness
Period for a period of time which shall exceed 20 days in the
aggregate in any 360-day period, the Registration Statement
has been declared effective by the Commission and such
Registration Statement ceases to be effective (without being
succeeded on the same day by a post-effective amendment to
such Registration Statement that cures such failure and that
is immediately declared effective) or use of the Prospectus is
suspended pursuant to Section 4(c), except as set forth in
Sections 4(e) and 4(f) (an "Effectiveness Default").
In the event of any such Registration Default, the Company shall pay as the
sole remedy Liquidated Damages to each Selling Stockholder an amount equal to
one percent (1%) of the aggregate principal amount of such Notes held by such
Selling Stockholder during such Default (the "Outstanding Principal"), for each
30-day period following the Effectiveness Target Date during which a
Registration Default has occurred and is continuing and during which the
Average Bid Price of the Common Stock exceeds the Conversion Price by ten
percent (10%) during any ten (10) consecutive Trading Days during such 30-day
period.
In the event of an initial Effectiveness Default during any 360-day period, the
Company shall pay as the sole remedy Liquidated Damages to each Selling
Stockholder an amount equal to one percent (1%) of the Outstanding Principal
and shall pay an additional amount equal to one and one-half percent (1 1/2%)
of the Outstanding Principal for each subsequent 35 day period in such 360-day
period during which the Effectiveness Default is continuing.
The Company may elect, at its sole option, by notice to the Holders given at
any time prior to the 15 Trading Day period referred to below, to pay any
amounts due pursuant to this Section 3, in whole or in part in cash. To the
extent the Company does not elect to pay such amounts in cash within such
specified time period, the Company shall, by issuing on the next Interest
Payment Date following the event that gave rise to the Liquidated Damages the
number of shares of the Company's Common Stock (rounded to the nearest whole
number), valued as provided below, with an aggregate value equal to the amount
of Liquidated Damages to be paid in stock. For this purpose, the shares of the
Company's Common Stock shall be valued at the Average Bid Price for the 15
Trading Days ending five (5) days prior to the Interest Payment Date, less a
discount of 5% of such Average Bid Price, or if the Conversion Price is then
being determined pursuant to the Issuer's Election, less a discount of 10% of
such Average Bid Price. In that event, the Company shall, as soon as
practicable after the Interest Payment Date, issue and deliver to the Holders a
certificate or certificates for the number of shares of Common Stock (rounded
to the nearest whole number) issuable to the Holders in payment of Liquidated
Damages or shall issue and deliver such shares as otherwise agreed to by the
Company and the Holders.
Following the cure of all Registration Defaults or Effectiveness Defaults
relating to any Shares, the accrual of Liquidated Damages with respect to such
Shares will cease (without
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in any way limiting the effect of any subsequent Registration Default or
Effectiveness Default). A Registration Default shall be cured on the date that
Prospectuses are delivered to the Selling Stockholders after the Registration
Statement is declared effective by the Commission; and an Effectiveness Default
shall be cured on the date Prospectuses are delivered to the Selling
Stockholders after a post-effective amendment to the Registration Statement is
declared effective or suspension of the use of the Prospectus is withdrawn.
Notwithstanding the foregoing, no Selling Stockholder
shall be entitled to Liquidated Damages unless and until such Selling
Stockholder shall have provided all information required by Section 2(b).
(b) The Company shall notify the Stockholders of a
Registration Default or an Effectiveness Default within three (3) Business Days
after each and every date on which such Default occurs. Liquidated Damages
shall be paid by the Company to the Selling Stockholders entitled to Liquidated
Damages on the next Interest Payment Date under the Notes.
(c) All of the Company's obligations set forth in this
Section 3 which are outstanding with respect to any Shares at the time such
security ceases to be a Share shall survive until such time as all such
obligations with respect to such security have been satisfied in full.
4. Registration Procedures.
(a) The parties hereto agree that the Shares shall not be
sold in any Underwritten Offering and the Company shall in no event be required
to cooperate with or pay for any Underwritten Offering.
(b) In connection with the Registration Statement and any
Prospectus required by this Agreement, during the Effectiveness Period the
Company shall, subject to any notice by the Company of the existence of any
fact or the happening of any event described in Section 4(b)(iv)(D) and the
provisions of Sections 4(d) and 4(g):
(i) use all reasonable efforts to keep the
Registration Statement continuously effective for the
Effectiveness Period; upon the occurrence of any event that
would cause the Registration Statement or the Prospectus
contained therein (A) to contain a material misstatement or
omission or (B) to not be effective or to not be usable for
resales of Shares during the Effectiveness Period, the Company
shall in the case of clause (A) file promptly an appropriate
amendment to the Registration Statement or a supplement to the
Prospectus correcting any such misstatement or omission, and,
in the case of either clause (A) or (B), use all reasonable
efforts to cause such amendment, if applicable, to be declared
effective or the Registration Statement and the related
Prospectus to become usable for their intended purposes as
soon as practicable thereafter;
(ii) furnish to each of the Selling Stockholders
and to counsel for the Selling Stockholders, before filing
with the Commission, copies of the Registration Statement and
the Prospectus included therein, and any
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pre-effective amendments thereof, which documents shall be
subject to the review of the Selling Stockholders and such
counsel for a period of at least three (3) Business Days; and
shall consider any requests for additions to or modifications
of the Registration Statement and the Prospectus, included
therein and any pre-effective amendments thereto reasonably
made by any Selling Stockholder or counsel for the Selling
Stockholders;
(iii) use all reasonable efforts to prepare and
file with the Commission such amendments and post-effective
amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective during the
Effectiveness Period; use all reasonable efforts to cause the
Prospectus to be supplemented by any required Prospectus
supplement within the time period specified in Section 2(b)
hereof, and as so supplemented, cause the Prospectus to be
filed pursuant to Rule 424 under the Securities Act and to
comply fully with the applicable provisions of Rule 424 under
the Securities Act in a timely manner; and use all reasonable
efforts to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by
the Registration Statement during the Effectiveness Period in
accordance with the intended method or methods of distribution
by the sellers thereof set forth in the Registration Statement
or supplement to the Prospectus;
(iv) use all reasonable efforts to notify the
Selling Stockholders promptly and, if requested by such
Persons, to confirm such advice in writing, (A) when the
Prospectus, any Prospectus supplement or any post-effective
amendment to the Registration Statement applicable to such
Stockholder has been filed, and, with respect to the
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 Shares for offering or
sale in any jurisdiction or of the initiation of any
proceeding for any of the preceding purposes or (D) of the
existence of any fact or of the happening of any event (but
not the substance or details of any such fact or event) that
makes untrue 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, 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;
(v) if at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration
Statement, or any state securities commission shall issue an
order suspending the qualification or exemption from
qualification of the Shares under state securities or Blue Sky
laws, use all reasonable efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
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(vi) if requested by any Selling Stockholder,
within the period specified in Section 2(b) hereof, use all
reasonable efforts to incorporate in the Registration
Statement or Prospectus, pursuant to a supplement or
post-effective amendment, if necessary, such Requisite
Information as such Selling Stockholders request to have
included therein, and use all reasonable efforts to make all
required filings of any such Prospectus supplement or
post-effective amendment as soon as practicable after the
Company is notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided,
however, that the Company shall not be required to take any
action pursuant to this Section 4(b)(vi) that would, in the
opinion of Company Counsel, violate applicable law or to
include information to which the Company reasonably objects;
(vii) deliver to each Selling Stockholder, without
charge, as many copies of the Registration Statement and the
Prospectus (including each preliminary prospectus intended for
public distribution) (including documents incorporated by
reference therein and exhibits thereto) and any amendment or
supplement thereto as such Selling Stockholder reasonably may
request; subject to Section 4(c) below, the Company hereby
consents to the use of the Prospectus and any amendment or
supplement thereto by each of the Selling Stockholders in
connection with the offering and the sale of the Shares
covered by the Prospectus or any amendment or supplement
thereto in conformity with the Plan of Distribution set forth
in the Prospectus and in compliance with all applicable laws
and this Agreement;
(viii) take all such other actions in connection
therewith as are reasonable and customary in order to expedite
or facilitate the disposition of the Shares pursuant to the
Registration Statement contemplated by this Agreement, all to
such extent as may be reasonably requested by any Stockholder
in connection with any sale or resale pursuant to the
Registration Statement contemplated by this Agreement;
(ix) prior to any public offering of Shares,
cooperate with the Selling Stockholders, and their respective
counsel in connection with the registration and qualification
of the Shares under the securities or Blue Sky laws of such
domestic jurisdictions as the Selling Stockholders 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 Shares covered by the Registration
Statement; provided, however, that in no event shall the
Company be obligated to (i) qualify as a foreign corporation
or as a dealer in securities in any jurisdiction where it is
not now so qualified, (ii) file any general consent to service
of process in any jurisdiction where it is not as of the date
hereof so subject or (iii) subject itself to taxation in any
jurisdiction if it is not so subject;
(x) cooperate with the Selling Stockholders to
facilitate the timely (but in no event later than one (1)
Business Day after such request) preparation and delivery of
certificates representing Shares to be sold and not bearing
any restrictive legends; and enable such Shares to be in such
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denominations and registered in such names as the Selling
Stockholders may request;
(xi) as soon as reasonably practicable after the
occurrence of any fact or event of the kind described in
Section 4(b)(iv)(D) above, use all reasonable efforts to
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
Shares, the Prospectus shall not contain an untrue statement
of a material fact or omit to state any material fact
necessary, to make the statements made therein not misleading
in the light of the circumstances in which they were made;
provided, however, that notwithstanding anything to the
contrary herein, the Company shall not be required to prepare
and file such a supplement or post-effective amendment or
document if the fact no longer exists;
(xii) make generally available to its security
holders, in a regular filing on Form 10-Q or Form 10-K, a
consolidated earnings statement meeting the requirements of
Rule 158 under the Securities Act (which need not be audited)
for the twelve-month period commencing after the effective
date of the Registration Statement.
(xiii) cause the Common Stock covered by the
Registration Statement to be listed on the New York Stock
Exchange or such other national securities exchange or
automated quotation system on which the Common Stock is then
listed or quoted; and
(xiv) provide promptly to each Stockholder upon
request any document filed with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange Act.
(c) Each Stockholder agrees by acquisition of a Share
that, upon receipt of any notice from the Company of the existence of any fact
or event of the kind described in Section 4(b)(iv)(D) hereof, such Stockholder
shall: (i) keep the fact of such notice confidential and (ii) stop selling or
offering for sale Shares pursuant to the Registration Statement until such
Stockholder's receipt of the copies of a supplemental or amended Prospectus as
contemplated by Section 4(b)(xi) hereof, or until it receives advice in writing
from 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
Stockholder shall deliver to the Company (at the expense of the Company) all
copies, other than permanent file copies then in such Stockholder's possession,
of the Prospectus covering such Shares that was current at the time of receipt
of such notice.
(d) Notwithstanding any provision of this Agreement to
the contrary, it shall not be a breach or violation of any obligation of the
Company hereunder if the Company fails to take any action otherwise required
hereunder because, in its reasonable determination, such action would require
the Company to disclose material, non-public information that the Company has a
bona fide business or legal reason for not disclosing regardless of whether the
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Company caused such material, non-public information to exist; provided, that
any suspension of the use of the Prospectus included in the Registration
Statement as a result of this Section 4(d) shall not effect the Company's
obligation to pay Liquidated Damages pursuant to Section 3.
(e) The Company shall have no obligation to keep a
Prospectus usable or to give notice that a Prospectus is not usable by a
particular Selling Stockholder to the extent such Prospectus is not usable by
such Selling Stockholder because current Requisite Information with respect to
such Selling Stockholder is not included therein because such Selling
Stockholder has not provided such information to the Company in accordance with
Section 2(b).
(f) Notwithstanding anything to the contrary contained
herein, the Company shall not be obligated to amend the Registration Statement
or amend or supplement the Prospectus more often than quarterly if the sole
reason for such amendment or supplement is the furnishing of new or amended
information from one or more Selling Stockholders, and until any such amendment
or supplement is filed, such Selling Stockholder or Selling Stockholders shall
not sell any Shares pursuant to the then current Registration Statement and
Prospectus.
5. Registration Expenses.
All expenses incident to the Company's performance of or
compliance with this Agreement shall be borne by the Company regardless of
whether the Registration Statement becomes effective, including, but not
limited to, the following: (i) all registration and filing fees and expenses;
(ii) all fees and expenses associated with compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing of
copying (including printing of any certificates evidencing the Shares and
copying of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of Company Counsel; (v) all application and filing
fees in connection with listing any securities on a national securities
exchange or automated quotation system; and (vi) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any special audit and comfort letters required by or incident to such
performance).
The Company shall, in any event, bear its own 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.
6. Other Securities. The Company may, in its sole discretion,
include in any Registration Statement the issuance of securities by the Company
and the sale or distribution of securities previously issued to, or securities
issuable upon exercise of options or warrants previously issued to, other
persons.
7. Stockholder Undertakings. Each Stockholder covenants with the
Company as follows:
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(a) No Stabilization. No Stockholder shall effect any
stabilization transactions or engage in any stabilization activity proscribed
by Regulation M under the Exchange Act in connection with any securities of the
Company during the period of any distribution of the Shares by Selling
Stockholders pursuant to any Registration Statement.
(b) Brokers. Each Selling Stockholder (i) shall furnish
each broker through whom such Selling Stockholder offers the Shares such number
of copies of any Prospectus and any supplements thereto or amendments thereof
which such broker may require (provided that the Company has provided such
Selling Stockholder with such Prospectus, supplements and amendments), (ii)
shall inform such broker as to the number of Shares offered through such
broker, that such Shares are part of a distribution and that such broker is
subject to the provisions of Regulation M under the Exchange Act until such
time as such broker has completed the sale of all such Shares, and (iii) shall
notify such broker when distribution of the Shares by such Selling Stockholder
pursuant to any Registration Statement has been completed or any Registration
Statement is no longer effective or is withdrawn.
(c) Amendments and Supplements. Each Selling Stockholder
shall promptly furnish to each person (including each broker) to whom such
Selling Stockholder has delivered copies of the Prospectus an equivalent number
of copies of any amendment thereof or supplement thereto (provided that the
Company has provided such Selling Stockholder with such amendment or
supplement).
(d) Transaction Information. Each Stockholder shall
report promptly to the Company upon completion of the distribution of such
Selling Stockholder's Shares pursuant to any Registration Statement.
(e) Exchange Act Compliance. Each Selling Stockholder
shall, at any time such Selling Stockholder is engaged in a distribution of the
Shares under any Registration Statement, comply to the extent required with
Rules 10b-5 and Regulation M (as currently in effect or as amended or any
successor or similar provisions) promulgated under the Exchange Act and shall
distribute the Shares solely in the manner described in any Registration
Statement, and shall not do any of the following during the period from the
effective date of any Registration Statement until the completion of any
offering of the Shares by such Selling Stockholder pursuant to such
Registration Statement:
(i) Bid for or purchase, for any account in which
such Selling Stockholder or any affiliate of such Selling
Stockholder has a beneficial interest, any securities of the
Company other than in transactions permitted by Regulation M
under the Exchange Act;
(ii) Attempt to induce any person to purchase any
securities of the Company other than in transactions permitted
by Regulation M under the Exchange Act; and
(iii) Pay or offer or agree to pay to anyone,
directly or indirectly, any compensation for soliciting
another to purchase any securities of the Company on a
national securities exchange or pay or offer or agree to pay
to anyone any
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compensation for purchasing securities of the Company on a
national securities exchange other than those securities
offered by such Selling Stockholder.
(f) Publicity; Selling Efforts. Each Selling Stockholder
shall not, during the period of any offering by such Selling Stockholder of any
Shares under any Registration Statement, use or disseminate any information
concerning the Company other than the Prospectus (or any amendment thereof or
supplement thereto furnished by the Company) and may not undertake any form of
publicity with respect to the Company or engage in any similar activities that
may be deemed to be an unlawful selling effort within the meaning of Section 10
of the Exchange Act.
(g) Material Nonpublic Information. A Stockholder shall
not offer to sell, sell or otherwise enter into any transaction in connection
with any Shares if the Stockholder is aware of material nonpublic information
regarding the Company or its subsidiaries.
(h) Brokerage Commissions. Except as disclosed in the
Prospectus, a Selling Stockholder will not pay unusual or special brokerage
commissions (other than ordinary brokerage arrangements) on any sales effected
through a broker, and no selling arrangement will have been entered into
between a Selling Stockholder and any securities dealer or broker.
8. Indemnification; Contribution.
(a) Indemnification by Company. The Company shall
indemnify and hold harmless, to the extent permitted by law, each Selling
Stockholder, its officers and directors, partners and stockholders, and each
person, if any, who controls such Selling Stockholder (within the meaning of
the Securities Act) against all losses, claims, damages, liabilities and
expenses (including without limitation reasonable attorneys' fees) insofar as
such losses, claims, damages, liabilities and expenses arise out of or are
based on (i) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement under which Shares owned by such
Selling Stockholder were registered under the Securities Act, any Prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
documents filed under state securities or "Blue Sky" laws in connection
therewith, (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
(in the case of a Prospectus, in the light of the circumstances under which
they were made) not misleading or (iii) any violations or alleged violation of
the Securities Act, the Exchange Act, any applicable state securities law or
any rule or regulation promulgated under the Securities Act, the Exchange Act
or any applicable state securities law in connection with the offering covered
by such Registration Statement (items (i), (ii) and (iii) are collectively
referred to herein as "Violations"); and the Company will reimburse each such
Selling Stockholder, its officers and directors, partners and stockholders and
each person, if any, who controls such Selling Stockholder for reasonable legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 8(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld, nor shall the Company be
liable in any such case for any loss, claim, damage, liability or action to the
extent that it arises out of or is based on a Violation that occurs in reliance
upon and
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13
in conformity with written information furnished expressly for use in
connection with such registration by any Selling Stockholder, officer,
director, or controlling person of any Selling Stockholder; and provided
further, however, that the foregoing indemnity shall not inure to the benefit
of any Selling Stockholder to the extent such loss, liability claim, damage or
expense occurred as a result of any Selling Stockholder's breach of this
Agreement.
(b) Indemnification by Each Selling Stockholder. In
connection with any Registration Statement, the Selling Stockholders shall
jointly and severally indemnify and hold harmless, to the extent permitted by
law, the Company, the Company's directors and officers, partners and
stockholders and each person, if any, who controls (within the meaning of the
Securities Act) the Company against any losses, claims, damages, liabilities
and expenses (including without limitation reasonable attorneys' fees) insofar
as such losses, claims, damages, liabilities and expenses arise out of or are
based on a Violation which occurs (i) in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any Selling Stockholder, officer, director, or controlling
person of any Selling Stockholder or (ii) in connection with any Selling
Stockholder's breach of this Agreement; and the Selling Stockholders will
reimburse the Company, its officers and directors, partners and stockholders
and each person, if any, who controls the Company for reasonable legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action.
(c) Indemnification Procedures. Any person entitled to
indemnification hereunder shall give prompt written notice to the indemnifying
party after the receipt by such person of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which such person will claim indemnification or
contribution pursuant hereto and permit the indemnifying party to participate
therein and, to the extent that it desires, jointly with any other indemnifying
party similarly situated, to assume the defense of such claim with counsel
reasonably satisfactory to such indemnified party. If the indemnifying party
elects to assume the defense of a claim, it shall not be liable to such
indemnified party for legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and except as otherwise provided below; provided, however, that
such indemnified party shall, at all times, cooperate in the defense of the
indemnified party. The indemnifying party shall be liable to the indemnified
party for legal or other expenses incurred by the indemnified party even if the
indemnifying party has offered to assume the defense thereof if (i) the
employment of counsel by the indemnified party has been authorized in writing
by the indemnifying party, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the indemnified
party and the indemnifying party in conduct of the defense of such action or
(iii) the indemnifying party shall not in fact have employed counsel to assume
the defense of such action. If the indemnifying party is not entitled to, or
elects not to, assume the defense of a claim, then it will not be obligated to
pay the fees and expenses of more than one counsel with respect to such claim.
The indemnifying party will not be subject to any liability for any settlement
made without its consent. If the failure of any person to give prompt notice
to the indemnifying party of any claim with respect to which it seeks
indemnification prejudices such indemnifying party, such indemnifying party
shall be relieved of its obligation to indemnify such person to the extent that
such indemnifying party has been prejudiced; provided, however, that the
indemnifying party shall not be so relieved if the failure to give
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14
prompt notice to the indemnifying party was beyond the control of the
indemnified party. No indemnifying party will consent to entry of any judgment
or enter into any settlement agreement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.
(d) Contribution. If the indemnification provided for in
this Section from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
(including without limitation reasonable attorneys' fees) referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (including
without limitation reasonable attorneys' fees) in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other, but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statements of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses (including without limitation
reasonable attorneys' fees) referred to above shall be deemed to include,
subject to the limitations set forth in Section 7(c), any legal or other fees
or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto acknowledge that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately-preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Paragraph 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
9. Termination. This Agreement and the obligations of the
Company hereunder shall terminate on the earliest of (a) the first date on
which no shares of Common Stock held by any Stockholder constitute Shares
hereunder, (b) sixty (60) days after no further Shares are issuable under the
Notes or Warrants and (c) the date on which each party hereto agrees in writing
to such termination.
10. Rule 144 Reporting. With a view to making available to the
Stockholders the benefits of certain rules and regulations of the SEC that may
permit the sale of the Shares to the public without registration, the Company
agrees to use commercially reasonable efforts during the term of this Agreement
to (a) make and keep public information available, as those terms are
understood and defined in Rule 144, (b) file with the SEC, in a timely manner,
all reports and other documents required of the Company under the Exchange Act
and (c) so long as any Stockholder owns any Shares, furnish to such Stockholder
upon written request a written statement by the Company as to the Company's
compliance with the
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15
reporting requirements of Rule 144, a copy of the most recent annual or
quarterly report of the Company and such other reports, documents and
information as a Stockholder may reasonably request in availing himself or
itself of any rule or regulation of the SEC allowing it to sell any such
securities without registration.
11. Miscellaneous.
(a) Successors and Assigns. The registration rights
provided hereunder are transferable only to permitted transferees of the Notes
and the Warrants as set forth in the terms thereof. Any transfer or assignment
in contravention of this Section shall be null and void.
(b) Entire Agreement; Amendment. This Agreement and the
other documents delivered pursuant hereto and referenced herein constitute the
full and entire understanding and agreement between the parties and supersede
any other agreement, written or oral, with regard to the subject matter hereof.
Except as expressly provided herein, neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated, except by a written
instrument signed by the parties hereto.
(c) Notices, Etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
certified or registered mail, postage prepaid with return receipt requested,
telecopy (with hardcopy delivered by overnight courier service), or delivered
by hand, messenger or overnight courier service, and shall be deemed given when
received at the addresses of the parties set forth below, or at such other
address furnished in writing to the other parties hereto.
If to the Company: SUNSHINE MINING AND REFINING COMPANY
000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx, President
(000) 000-0000 (fax)
with a copy to: Xxxxxx and Xxxxx, LLP
Suite 3100
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
(000) 000-0000 (fax)
If to the Stockholders: c/o Stonehill Investment Corp.
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
(000) 000-0000 (fax)
with a copy to: Proskauer Xxxx Xxxxx & Xxxxxxxxxx, LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx
(000) 000-0000 (fax)
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16
(d) No Third Party Beneficiary, Etc. There shall be no
third party beneficiary hereof. Neither the availability of, nor any limit on,
any remedy hereunder shall limit the remedies of any party hereto against third
parties.
(e) Reformation; Severability. In case any provision
hereof shall be invalid, illegal or unenforceable, such provision shall be
reformed to best effectuate the intent of the parties and permit enforcement
thereof, and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. If such
provision is not capable of reformation, it shall be severed from this
agreement and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
(f) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument. Any counterpart may be
delivered by facsimile; provided, however, that attachment thereof shall
constitute the representation and warranty of the person delivering such
signature that such person has full power and authority to attach such
signature and to deliver this Agreement. Any facsimile signature shall be
replaced with an original signature as promptly as practicable.
(g) Titles and Subtitles. The titles of the paragraphs
and subparagraphs hereof are for convenience of reference only and are not to
be considered in construing this Agreement. References to "Sections" herein
are references to sections of this Agreement. The words "herein," "hereof,"
"hereto" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision.
(h) Governing Law; Attorneys' Fees. This Agreement shall
be governed by, construed, interpreted and applied in accordance with the laws
of the State of New York, without giving effect to any conflict of laws rules
that would refer the matter to the laws of another jurisdiction.
* * * * *
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17
This Agreement has been executed and delivered as of the date first
written above.
The Company:
SUNSHINE MINING AND REFINING COMPANY
By: /s/ XXXXXXX X. XXXXX
----------------------------------
Xxxxxxx X. Xxxxx, Executive Vice
President and Chief Financial Officer
The Stockholders:
STONEHILL PARTNERS, L.P.
By: /s/ XXXX XXXXXXXX
----------------------------------
Xxxx Xxxxxxxx, General Partner
STONEHILL INVESTMENT CORP., for and on
behalf of GRS PARTNERS and
AURORA LIMITED PARTNERSHIP
By: /s/ XXXX XXXXXXXX
----------------------------------
Xxxx Xxxxxxxx, Vice President
STONEHILL OFFSHORE PARTNERS LIMITED
By: STONEHILL ADVISORS, LLC
By: /s/ XXXX XXXXXXXX
--------------------------------
Xxxx Xxxxxxxx, Managing Member
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