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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 3)*
Danielson Holding Corporation
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(Name of Issuer)
Common Stock, Par Value $0.10 per share
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(Title of Class of Securities)
236274106
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(CUSIP Number)
Marc D. Hauser
Equity Group Investments, L.L.C.
2 North Riverside Plaza, Suite 600
Chicago, Illinois 60606
312-466-3556
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 8, 2002
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(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of ss. 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box [_].
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
CUSIP No. 236274106 13D/A Page 2 of 16 Pages
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1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
SZ Investments, L.L.C. FEIN 36-4150443
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2. Check the Appropriate Box If a Member of a Group (See Instructions)
(a) [_]
(b) [_]
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3. SEC Use Only
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4. Source of Funds (See Instructions)
WC
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5. Check If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e) [_]
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6. Citizenship or Place of Organization
Delaware
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7. Sole Voting Power
NUMBER OF 5,460,612
SHARES _________________________________________________________________
BENEFICIALLY 8. Shared Voting Power
OWNED BY 0
EACH _________________________________________________________________
REPORTING 9. Sole Dispositive Power
PERSON 5,460,612
WITH _________________________________________________________________
10. Shared Dispositive Power
0
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
5,460,612
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12. Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [_]
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13. Percent of Class Represented by Amount in Row (11)
17.7% (1)
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14. Type of Reporting Person (See Instructions)
00
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(1) To the best knowledge of SZI, Issuer had 30,817,297 shares of Common Stock
outstanding as of October 31, 2002, as set forth in the Issuer's Quarterly
Report on Form 10-Q for the period ended September 30, 2002.
CUSIP No. 236274106 13D/A Page 3 of 16 Pages
This Amendment No. 3 to Schedule 13D relates to the common stock, par value
$0.10 per share ("Common Stock"), of Danielson Holding Corporation, a Delaware
corporation (the "Issuer"). Items 2, 3, 4, 5, 6 and 7 of the Schedule 13D are
hereby amended to read in their entirety as follows:
ITEM 2. Identity and Background
(a-c) and (f) This Statement is being filed by SZ Investments, L.L.C., a
Delaware limited liability company ("SZI"). The managing member of SZI is Zell
General Partnership, Inc., an Illinois corporation ("ZGP"). SZI is owned by
various trusts for the benefit of Samuel Zell and his family. The trustee of
each of these trusts is Chai Trust Company, L.L.C., an Illinois limited
liability company ("Chai Trust").
The executive officers and directors of SZI are as follows:
Samuel Zell - President; Chairman of the Board of Equity Group
Investments, L.L.C. ("EGI")
Donald J. Liebentritt - Vice President; President of EGI
William C. Pate - Vice President; Managing Director of EGI
Philip G. Tinkler - Treasurer; Vice President and Treasurer of EGI
The officers and directors of Chai Trust are as follows:
Bert Cohen is a Director of Chai Trust. Mr. Cohen is also a
semi-retired investor, whose residence is 181 North Carmelina
Avenue, Los Angeles, California 90049.
Kellie Zell is a Director of Chai Trust and also works as a homemaker.
Donald J. Liebentritt is the President and a Director of Chai Trust.
Mr. Liebentritt is also the President of EGI.
Leah Zell Wanger is a Director of Chai Trust. Ms. Wanger also co-owns
and co-manages Wanger Asset Management, the registered advisor
for the Acorn Mutual Funds, whose business address is 227 West
Monroe Street, Suite 300, Chicago, Illinois 60603.
JoAnn Zell Gillis is a Director of Chai Trust. Mrs. Zell Gillis is a
physician.
Matthew Zell is a Director of Chai Trust. Mr. Zell is a Manager of
EGI.
Robert M. Levin is a Senior Trust Officer of Chai Trust. Mr. Levin is
also a partner in the law firm Levin & Schreder Ltd., whose
business address is 120 North LaSalle Street, Suite 3800,
Chicago, Illinois 60602.
James Bunegar is Vice President, Chief Financial Officer, Assistant
Trust Officer and Treasurer of Chai Trust. Mr. Bunegar is also
the Vice President - Taxes of EGI.
The principal business of SZI and ZGP is general investments.
The business address of each of SZI, ZGP, William Pate, Philip Tinkler,
Chai Trust, Kellie Zell, Donald Liebentritt, JoAnn Zell Gillis, Matthew Zell and
James Bunegar is Two North Riverside Plaza, Chicago, Illinois 60606.
All of the executive officers and directors of SZI and Chai Trust are
United States citizens.
(d) and (e) Neither SZI nor, to the best knowledge of SZI, ZGP, Chai Trust
or any of the persons listed in Item 2 hereto, has during the last five years
(i) been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was, or is, subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
CUSIP No. 236274106 13D/A Page 4 of 16 Pages
ITEM 3. Source and Amount of Funds or Other Consideration
On August 12, 1999 (the "Closing Date"), pursuant to the Stock Purchase and
Sale Agreement described in Item 4 below, SZI acquired from the Issuer: (i)
2,000,000 newly issued shares of Common Stock (the "Initial Shares") and (ii) a
warrant to purchase an additional 2,000,000 shares of Common Stock (the
"Warrant"). The aggregate amount of funds used in acquiring the Initial Shares
and the Warrant was $9,000,000. All funds used in acquiring the Initial Shares
and the Warrant were obtained from the working capital of SZI.
In connection with the Issuer's acquisition of American Commercial Lines
LLC ("ACL") and the recapitalization of ACL, the Issuer announced that it would
conduct a rights offering to be issued pro rata to all holders of the Issuer's
Common Stock to purchase newly-issued shares of Common Stock in the aggregate
amount of $42 million ("Rights Offering"). SZI agreed with the Issuer pursuant
to a binding Term Sheet ("Term Sheet") to exercise the Warrant and purchase up
to 4.0 million shares of Common Stock offered in the Rights Offering which were
not otherwise subscribed for. On May 29, 2002, the Issuer closed the Rights
Offering. In accordance with the terms of the Rights Offering, SZI purchased
1,560,174 shares of Common Stock at a purchase price of $5.00 per share (the
"Rights Offering Shares"), and, pursuant to its obligations under the Term
Sheet, exercised its outstanding Warrant to purchase 1,900,437 shares of Common
Stock at a purchase price of $4.74 per share (the "Warrant Shares"). All funds
used to purchase the Rights Offering Shares and the Warrant Shares came from the
working capital of SZI.
The Initial Shares, the Rights Offering Shares and the Warrant Shares are
sometimes collectively referred herein to as the "Purchased Shares".
ITEM 4. Purpose of the Transaction
The acquisition of the Initial Shares and the Warrant was effected for the
purpose of investing in the Issuer and to provide funds with which the Issuer
may from time to time fund business acquisitions. In connection with the
transaction, an affiliate of SZI entered into an agreement with the Issuer to
provide certain advisory services to the Issuer and certain of its subsidiaries
in connection with such potential acquisitions.
The Issuer entered into a Stock Purchase and Sale Agreement dated as of
April 14, 1999 (the "Stock Purchase Agreement") with Samstock, L.L.C., a
wholly-owned subsidiary of SZI ("Samstock"). The Stock Purchase Agreement was
amended by Amendment No. 1, Assignment and Consent to Assignment of Stock
Purchase Agreement, dated May 7, 1999 by and among Samstock, the Issuer and SZI
(the "Amendment") pursuant to which the rights and obligations of Samstock under
the Purchase Agreement were assigned to and assumed by SZI. On the Closing Date,
SZI acquired the Initial Shares and the Warrant pursuant to the Stock Purchase
Agreement, as amended.
In connection with the acquisition of the Initial Shares and the Warrant,
the Issuer granted to SZI certain registration rights, which rights are now
memorialized in a Registration Rights Agreement dated as of November 8, 2002 and
made by and between the Isssuer and SZI (the "Registration Rights Agreement"), a
copy of which is attached hereto as Exhibit 7 and is incorporated herein by
reference.
Pursuant to the terms of the Registration Rights Agreement, SZI (or its
designee) may make up to two requests that the Issuer file a shelf registration
statement covering the resale of the Common Stock held from time to time by SZI,
subject to certain limitations. In addition, SZI has piggyback registration
rights in connection with a public offering of Common Stock by the Issuer solely
for cash.
The purpose of the transactions contemplated under the Term Sheet was to
assist the Issuer in satisfying its cash contribution obligations in connection
with the acquisition and recapitalization of ACL. On May 29, 2002, the Issuer
closed the Rights Offering. Pursuant to its obligations under the Term Sheet and
in accordance with the terms of the Rights Offering, SZI purchased 1,560,174
shares of Common Stock under the Rights Offering and exercised its outstanding
Warrant to purchase 1,900,437 shares of Common Stock.
The summaries contained in this Schedule 13D of certain provisions of each
of the Stock Purchase Agreement, Amendment, Term Sheet and Registration Rights
Agreement are not intended to be complete and are qualified in their entirety by
reference to each respective agreement attached as Exhibits to Schedule 13D and
incorporated herein by reference.
CUSIP No. 236274106 13D/A Page 5 of 16 Pages
Like all holders of 5% or more of Issuer's Common Stock, SZI will be
subject to restrictions contained in Issuer's Certificate of Incorporation,
which limits stock transfers by 5% or greater shareholders and prohibits parties
from acquiring 5% or more of Issuer's Common Stock without the Issuer's consent.
Subject to the restrictions contained in Issuer's Certificate of Incorporation,
SZI intends to continue to review its investment in the Common Stock and, from
time to time depending upon certain factors, including without limitation the
financial performance of the Issuer, the availability and price of shares of
Common Stock and other general market and investment conditions, may determine
to acquire through open market purchases or otherwise additional shares of
Common Stock, or may determine to sell through the open market or otherwise, in
each case, subject to the limitations of the Stock Purchase Agreement, as
amended.
Except as stated above, neither SZI nor, to the best knowledge of SZI, any
of ZGP or the persons listed in Item 2 hereto, has any plans or proposals of the
types referred to in clauses (a) through (j) of Item 4 of Schedule 13D, as
promulgated by the Securities and Exchange Commission.
ITEM 5. Interest in Securities of the Issuer
(a) and (b) To the best knowledge of SZI, based upon the Issuer's Quarterly
Report on Form 10-Q for the period ended September 30, 2002, there were
30,817,297 shares of Common Stock outstanding as of October 30, 2002. Based upon
the foregoing, the 5,460,612 shares of Common Stock beneficially owned by SZI
represent approximately 17.7% of the issued and outstanding Common Stock.
SZI currently has the sole power to vote or to direct the vote of the
Purchased Shares.
Except as set forth below, as of the date hereof, neither SZI, nor to the
best knowledge of SZI, any of the persons set forth in Item 2 hereof, owns any
shares of Common Stock other than the Purchased Shares owned by SZI. Donald
Liebentritt owns 48,957 shares of Common Stock, with respect to which Mr.
Liebentritt has sole power to vote and to dispose of such shares, and vested
options to purchase 10,000 shares with respect to which Mr. Liebentritt has sole
power to dispose. William Pate owns 73,438 shares of Common Stock, with respect
to which Mr. Pate has sole power to vote and dispose of such shares, and vested
options to purchase 15,200 shares with respect to which Mr. Pate has the sole
power to dispose. Philip Tinkler owns 11,900 shares of Common Stock, with
respect to which Mr. Tinkler has sole power to vote and dispose of such shares,
and options to purchase 5,000 shares with respect to which Mr. Tinkler has the
sole power to dispose.
An affiliate of SZI owns approximately 40% of the 11.25% Senior Notes and
12% pay-in-kind Senior Subordinated Notes of ACL.
(c) During the last 60 days, no transactions in the Common Stock were
effected by SZI, or to the best knowledge of SZI, any of the persons set forth
in Item 2.
(d) No person other than SZI has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of shares of
Common Stock owned by SZI.
(e) Not applicable.
CUSIP No. 236274106 13D/A Page 6 of 16 Pages
ITEM 6. Contracts, Arrangements, Understandings or Relationships with
respect to Securities
of the Issuer
Except for the matters described herein, neither SZI nor, to the best
knowledge of SZI, any of ZGP, Chai Trust or the persons listed in Item 2 hereto
has any contract, arrangement, understanding or relationship with any person
with respect to any securities of the Issuer.
ITEM 7. Material to be Filed as Exhibits.
Exhibit 1 Stock Purchase and Sale Agreement (incorporated
by reference to Exhibit 10.1 of Danielson Holding
Corporation's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1999, filed with the
Securities and Exchange Commission on
August 13, 1999)
Exhibit 2 Amendment No. 1, Assignment and Consent to
Assignment of Stock Purchase Agreement
(incorporated by reference to Exhibit 10.2 of
Danielson Holding Corporation's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1999,
filed with the Securities and Exchange Commission
on August 13, 1999)
Exhibit 3 Warrant*
Exhibit 4 Summary of Terms of Standby Commitment of Rights
Offering between Danielson Holding Corporation and
SZ Investments, L.L.C., dated as of March 21,
2002**
Exhibit 5 Letter Agreement dated April 14, 1999 between
Equity Group Investments, L.L.C. and Danielson
Holding Corporation and amendments dated June 2,
1999 and April 1, 2002**
Exhibit 6 Amended and Restated Summary of Terms of Standby
Commitment of Rights Offering between Danielson
Holding Corporation and SZ Investments, L.L.C., dated
as of April 17, 2002***
Exhibit 7 Registration Rights Agreement between Danielson
Holding Corporation and SZ Investments, L.L.C., dated
as of November 8, 2002****
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* Filed on August 12, 1999 on Schedule 13D
** Filed on March 21, 2002 and April 1, 2002 on Schedule 13D/A (Amendment No. 1)
*** Filed on May 29, 2002 on Schedule 13D/A (Amendment No. 2)
**** Filed herewith
CUSIP No. 236274106 13D/A Page 7 of 16 Pages
SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certify that the information set forth in this statement
is true, complete and correct.
DATED: November 8, 2002
SZ INVESTMENTS, L.L.C.
By: /s/ DONALD J. LIEBENTRITT
-------------------------------------
Name: Donald J. Liebentritt
Title: Vice President
The original statement shall be signed by each person on whose behalf the
statement is filed or his authorized representative. If the statement is signed
on behalf of a person by his authorized representative (other than an executive
officer or general partner of the filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement: provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001)
CUSIP No. 236274106 13D/A Page 8 of 16 Pages
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE
-------------- ----------- ----
7 Registration Rights Agreement between Danielson 9
Holding Corporation and SZ Investments, L.L.C.,
dated as of November 8, 2002
CUSIP No. 236274106 13D/A Page 9 of 16 Pages
EXHIBIT 7
CUSIP No. 236274106 13D/A Page 10 of 16 Pages
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement dated as of November 8, 2002, (as
amended, supplemented or otherwise modified from time to time, this
"Agreement"), by and between Danielson Holding Corporation, a Delaware
corporation (the "Company"), and SZ Investments, L.L.C., a Delaware limited
liability company ("SZI").
W I T N E S S E T H:
WHEREAS, the Company and SZI are entering into this Agreement to maintain
uninterrupted as between them certain arrangements with respect to registration
rights, which arrangements were originally memorialized in an Investment
Agreement dated April 14, 1999, which Investment Agreement was terminated by all
the parties thereto immediately prior hereto.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree as
follows:
ARTICLE I
REGISTRATION RIGHTS
1.1 Definitions. For purposes of this Article I:
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(a) The term "Common Stock" means the Company's common stock, par value
$.10 per share.
(b) The term "Company Voting Securities" shall mean Common Stock and any
other equity securities of the Company entitled to vote generally for the
election of directors
(c) The term "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(d) The term "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Act").
(e) The term "Registrable Securities" means shares of Common Stock held,
from time to time, by SZI.
(f) The term "Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Act.
(g) The term "Shelf Registration Statement" means a registration statement
intended to effect a shelf registration in connection with a Rule 415 Offering.
1.2 Shelf Registrations and Piggy-Back Registrations.
(a) Provided Article Fifth of the Company's Certificate of Incorporation
does not prohibit the sale, pledging or other disposition or transfer of the
Registrable Securities, if the Company shall at any time receive a written
request from SZI (or its designee) on behalf of SZI who are the holders
("Holders") of Registrable Securities that the Company file a Shelf Registration
Statement with respect to any Registrable Securities, then, within sixty (60)
days after the receipt of such request, the Company shall prepare and file with
the SEC a Shelf Registration Statement (which shall include pledgees of any
selling stockholder in the "plan of distribution") with respect to such number
of Registrable Securities which the Holders request to be registered and use its
reasonable efforts to cause such Shelf Registration Statement to become
effective and keep such Shelf Registration Statement effective until such time
as all such Registrable Securities covered thereby have been sold or disposed of
thereunder or sold, transferred or otherwise disposed of (other than pursuant to
a pledge of such Registrable Securities) to a person that is not a Holder.
Notwithstanding the foregoing, if the Company shall furnish to SZI a certificate
signed by the Chief Executive, Chief Operating, or Chief Financial Officer of
the Company stating that, in the good faith judgment of a majority of the
Disinterested Directors, it would be materially detrimental to the Company for
such Shelf Registration Statement to be filed, the Company shall have the right
to defer such filing for a period of not more than 120 days after receipt of the
SZI's request; provided, however,
CUSIP No. 236274106 13D/A Page 11 of 16 Pages
that the Company may not utilize this right more than twice in any 12-month
period. Notwithstanding the foregoing, SZI and the Company agree that SZI's
right to request a Shelf Registration and the Company's obligation to effect a
Shelf Registration shall terminate as of the earlier of (i) such time as SZI no
longer holds Registrable Securities or (ii) such time as the Company has filed
two (2) Shelf Registration Statements at the request of SZI (or its designee)
and such previously filed Shelf Registration Statements have been effective for
the period required under this Section 1.2(a).
(b) Piggyback Registration. If (but without any obligation to do so) the
Company proposes to register any of its Common Stock under the Act in connection
with the public offering of such Common Stock by the Company solely for cash
(other than a registration relating solely to the sale of securities to
participants in a dividend reinvestment plan, stock plan or employee benefit
plan; a registration relating solely to the issuance of securities to the
security holders of an acquired company in connection with an acquisition; or a
registration on any form which does not permit inclusion of selling
stockholders), or the Company proposes to register any of its securities on
behalf of a holder exercising demand registration rights, the Company shall, at
such time, promptly give SZI written notice of such registration. Upon the
written request of SZI given within 15 days after mailing of such notice by the
Company, the Company shall cause to be registered under the Act all of the
Registrable Securities that SZI has requested to be registered. Notwithstanding
anything to the contrary in this Section 1.2(b), in connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under this Section 1.2(b) to include any of the Holders'
Registrable Securities in such underwriting or the registration statement
relating thereto unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by the Company. If the total
amount of securities, including Registrable Securities, requested by Holders and
other stockholders to be included in such offering exceeds the amount of
securities offered other than by the Company that the underwriters reasonably
believe can be offered without jeopardizing the success of the offering, then
the Company shall be required to include in the offering only that number of
such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering. To achieve any
necessary reduction in the securities to be sold, the securities to be excluded
from the offering shall first be selected (in each case, pro rata among such
class of holders according to the total amount of securities proposed to be
included in the registration statement or in such other proportions as shall
mutually be agreed to by such class of holders) in the following order (subject
to any contrary provisions in registration rights agreements executed by the
Company prior to the date hereof): (i) first, securities being included on
behalf of holders other than either SZI or other holders of Registrable
Securities shall be excluded; (ii) next, if additional securities must be
excluded, Registrable Securities included pursuant to Section 1.2(b) shall be
excluded; (iii) finally, if additional securities must be excluded, securities
offered by the Company shall be excluded.
1.3 Additional Obligations of the Company. Whenever the Company has filed a
registration statement under this Article I, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered thereby.
(b) Furnish to the holders of Registrable Securities such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities covered by such
registration statement owned by them.
(c) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
states or other jurisdictions as shall be reasonably requested by the holders of
Registrable Securities, provided that the Company shall not be required to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions where it is not so subject.
(d) Notify each holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and
CUSIP No. 236274106 13D/A Page 12 of 16 Pages
then use its best efforts to promptly correct such statement or omission.
Notwithstanding the foregoing and anything to the contrary set forth in this
Section 1.3, each holder of Registrable Securities acknowledges that the Company
shall have the right to suspend the use of the prospectus forming a part of a
registration statement if such offering would interfere with a pending corporate
transaction or for other reasons until such time as an amendment to the
registration statement has been filed by the Company and declared effective by
the SEC, or until such time as the Company has filed an appropriate report with
the SEC pursuant to the Exchange Act. Each holder of Registrable Securities
hereby covenants that it will (a) keep any such notice strictly confidential,
and (b) not sell any shares of Common Stock pursuant to such prospectus during
the period commencing at the time at which the Company gives the holder of
Registrable Securities notice of the suspension of the use of such prospectus
and ending at the time the Company gives the holder of Registrable Securities
notice that it may thereafter effect sales pursuant to such prospectus. The
Company shall only be able to suspend the use of such prospectus for periods
aggregating no more than 90 days in respect of any registration.
(e) Use its best efforts to cause all Registrable Securities to be listed
on all securities exchanges on which similar securities issued by the Company
are then listed.
1.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Article I with
respect to the Registrable Securities of any selling holder of Registrable
Securities that such holder of Registrable Securities shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
required to effect the registration of such holder's Registrable Securities and
as may be required from time to time to keep such registration current.
1.5 Expenses of Registration. All expenses incurred by or on behalf of the
Company in connection with registrations, filings or qualifications pursuant to
Section 1.2, including, without limitation, all registration, filing and
qualification fees, printers' and accounting fees, and fees and disbursements of
counsel for the Company, shall be borne by the Company. In no event shall the
Company be obligated to bear any underwriting discounts or commissions or
brokerage fees or commissions relating to Registrable Securities or the fees and
expenses of counsel to the selling holders of Registrable Securities.
1.6 Indemnification. In the event any Registrable Securities are included
in a registration statement under this Article I:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each holder and the affiliates of such holder, and their respective
directors, officers, general and limited partners, agents and representatives
(and the directors, officers, affiliates and controlling persons thereof), and
each other person, if any, who controls such holder within the meaning of the
Act, against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus (but only if such
statement is not corrected in the final prospectus) contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading (but only if such omission is not
corrected in the final prospectus), or (iii) any violation or alleged violation
by the Company in connection with the registration of Registrable Securities
under the Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Act, the Exchange Act or any state securities
law; and the Company will pay to each such Holder, affiliate or controlling
person, as incurred, any 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 1.6(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 such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such holder or controlling person. Each indemnified party shall furnish
CUSIP No. 236274106 13D/A Page 13 of 16 Pages
such information regarding itself or the claim in question as an indemnifying
party may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(b) To the extent permitted by law, each selling holder of Registrable
Securities will indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement, each person, if
any, who controls the Company within the meaning of the Act, any underwriter,
any other holder selling securities in such registration statement and any
controlling person of any such underwriter or other holder, against any losses,
claims, damages or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such holder expressly
for use in connection with such registration; and each such holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 1.6(b) in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 1.6(b)
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 such
holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this Section 1.6(b) exceed the gross proceeds
from the offering received by such holder.
(c) Promptly after receipt by an indemnified party under this Section 1.6
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 1.6, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties. The
failure to deliver written notice to the indemnifying party within a reasonable
time after the commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 1.6 to the extent of such
prejudice, but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 1.6. The indemnified party shall have
the right, but not the obligation, to participate in the defense of any action
referred to above through counsel of its own choosing and shall have the right,
but not the obligation, to assert any and all separate defenses, cross claims or
counterclaims which it may have, and the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of such
counsel has been specifically authorized in advance by the indemnifying party,
(ii) there is a conflict of interest that prevents counsel for the indemnifying
party from adequately representing the interests of the indemnified party or
there are defenses available to the indemnified party that are different from,
or additional to, the defenses that are available to the indemnifying party,
(iii) the indemnifying party does not employ counsel that is reasonably
satisfactory to the indemnified party within a reasonable period of time, or
(iv) the indemnifying party fails to assume the defense or does not reasonably
contest such action in good faith, in which case, if the indemnified party
notifies the indemnifying party that it elects to employ separate counsel, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party and the reasonable fees and expenses of such
separate counsel shall be borne by the indemnifying party; provided, however,
that, the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm (in addition to one firm acting as
local counsel) for all indemnified parties.
(d) The obligations of the Company and the holders under this Section 1.6
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Article I.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement (if
any) entered into in connection with any underwritten public offering of the
Registrable Securities are in conflict with the foregoing provisions, the
provisions in such underwriting agreement shall control.
CUSIP No. 236274106 13D/A Page 14 of 16 Pages
1.7 Reports Under the Exchange Act. With a view to making available to the
holders of Registrable Securities the benefits of Rule 144 promulgated under the
Exchange Act and any other rule or regulation of the SEC that may at any time
permit a holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) use its best efforts to make and keep public information available, as
those terms are understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required under the Act and the Exchange Act; and
(c) furnish to any Holder forthwith upon request (i) a written statement by
the Company as to its compliance with the reporting requirements of Rule 144, or
as to whether it qualifies as a registrant whose securities may be resold
pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company, and
(iii) such other information (and the Company shall take such action) as may be
reasonably requested in availing any holder of Registrable Securities of any
rule or regulation of the SEC which permits the selling of any such securities
without registration or pursuant to such form.
1.8 No Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Article I may only be
assigned by a holder of Registrable Securities to a transferee or assignee of
any Registrable Securities if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Act.
1.9 Waiver Procedures. The observance by the Company of any provision of
this Article I may be waived (either generally or in a particular instance and
either retroactively or prospectively) with the written consent of the holders
of a majority of the Registrable Securities, and any waiver effected in
accordance with this paragraph shall be binding upon each holder of Registrable
Securities.
1.10 "Market Stand-off" Agreement. Any holder of Registrable Securities, if
requested by an underwriter of any registered public offering of Company
securities being sold in a firm commitment underwriting, agrees not to sell or
otherwise transfer or dispose of any Common Stock (or other Company Voting
Securities) held by such holder other than shares of Registrable Securities
included in the registration during the seven days prior to, and during a period
of up to 180 days following, the effective date of the registration statement.
Such agreement shall be in writing in a form reasonably satisfactory to the
Company and such underwriter. The Company may impose stop-transfer instructions
with respect to the securities subject to the foregoing restriction until the
end of the required stand-off period.
ARTICLE II
MISCELLANEOUS
2.1 Remedies. Each of SZI and the Company acknowledge and agree that (i)
the provisions of this Agreement are reasonable and necessary to protect the
proper and legitimate interests of the parties hereto, and (ii) the parties
would be irreparably damaged in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party shall be entitled
to seek preliminary and permanent injunctive relief to prevent breaches of the
provisions of this Agreement by the other party (or its Affiliates) without the
necessity of proving actual damages or of posting any bond, and to enforce
specifically the terms and provisions hereof and thereof in any court of the
United States or any state thereof having jurisdiction, which rights shall be
cumulative and in addition to any other remedy to which the parties may be
entitled hereunder or at law or equity.
2.2 Notices. All notices, and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confirmed, facsimile, to
the appropriate address or facsimile number set forth below (or at such other
address or facsimile number for a party as shall be specified by like notice):
CUSIP No. 236274106 13D/A Page 15 of 16 Pages
if to the Company: Danielson Holding Corporation 1701 East Market Street
Jeffersonville, Indiana 47130 Attention: Paul Solomon, Executive Vice President
and General Counsel Fax: (812) 288-1833
if to SZI: SZ Investments, L.L.C. Two N. Riverside Plaza - Suite 600
Chicago, IL 60606 Attention: Bill Pate; Joseph Paolucci Fax: (312) 454-0610;
(312) 454-0335
2.3 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. The parties hereto agree that they will use
their best efforts at all times to support and defend this Agreement.
2.4 Amendments. This Agreement may be amended only by an agreement in
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writing signed by each of the parties hereto;
2.5 Governing Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of Delaware applicable to contracts
made in that State.
2.6 Descriptive Headings. Descriptive headings are for convenience only and
shall not control or affect the meaning or construction of any provision of this
Agreement.
2.7 Counterparts; Facsimile Signatures. This Agreement shall become binding
when one or more counterparts hereof, individually or taken together, bears the
signatures of each of the parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against the party
whose signature appears thereon, or on whose behalf such counterpart is
executed, but all of which taken together shall be one and the same agreement. A
facsimile copy of a signature of a party to this Agreement or any such
counterpart shall be fully effective as if an original signature.
2.8 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
2.9 Assignments. This Agreement may not be assigned without the prior
written consent of each party hereto, and any attempt to effect an assignment
hereof without such consent shall be void.
2.10 Jurisdiction and Service of Process. THE COMPANY AND SZI HEREBY
CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
STATE OF DELAWARE AND IRREVOCABLY AGREE THAT, SUBJECT TO THE OTHER PROVISIONS OF
THIS AGREEMENT, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT WHICH MAY BE LITIGATED SHALL BE LITIGATED IN SUCH COURTS. THE COMPANY
AND SZI ACCEPTS FOR SUCH PARTY AND IN CONNECTION WITH SUCH PARTY'S PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. THE
COMPANY AND SZI AGREES TO ACCEPT SERVICE OF ALL PROCESS BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, IN ANY SUCH PROCEEDINGS IN ANY SUCH
COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY EACH SUCH PARTY TO BE EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT. IF ANY AGENT APPOINTED BY THE COMPANY OR
SZI REFUSES TO ACCEPT SERVICE, SUCH PARTY HEREBY AGREES THAT SERVICE UPON SUCH
PARTY BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF THE COMPANY OR SZI TO BRING PROCEEDINGS AGAINST THE COMPANY OR SZI
IN THE COURTS OF ANY OTHER JURISDICTION.
2.11 Trial. THE COMPANY AND SZI HEREBY WAIVES SUCH PARTY'S RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT
MATTER HEREOF. THE COMPANY AND SZI ALSO WAIVES ANY BOND OR SURETY OR SECURITY
UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY PARTY TO
THIS AGREEMENT WITH RESPECT TO ANY ACTION COMMENCED BY ONE OF THEM AGAINST THE
CUSIP No. 236274106 13D/A Page 16 of 16 Pages
THEM. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE
COMPANY AND SZI ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. EACH OF THE COMPANY AND SZI FURTHER WARRANTS
AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH SUCH PARTY'S LEGAL
COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES SUCH PARTY'S JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, the Company and SZI have executed this Agreement as of
the date first above written.
SZ INVESTMENTS, L.L.C.
By: /s/ Donald J. Liebentritt
Vice President
DANIELSON HOLDING CORPORATION
By: /s/ Paul Solomon
Executive Vice President
and General Counsel