Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of January 8, 1997, by and among County Seat Stores, Inc., a
Minnesota corporation (the "Company"), and the other parties set forth on the
signature page hereto (collectively, the "Stockholders").
W I T N E S S E T H
WHEREAS, in connection with the financial restructuring of the Company
pursuant to the First Amended Plan of Reorganization of County Seat Stores, Inc.
(the "Plan") dated August 22, 1997, and the Company's Restated Certificate of
Incorporation dated October 23, 1997, the Company's authorized capital stock
will consist of, among other things, 40,000,000 shares of common stock (the
"Company Common Stock"); and
WHEREAS, the Company has agreed to grant to each of the Stockholders
the registration rights set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
Certain Definitions
For purposes of this Agreement, the following terms shall have the
following meanings:
(a) The term "Affiliate" shall have the meaning set forth in Rule 405
promulgated under the Securities Act.
(b) The term "Commission" shall mean the United States Securities and
Exchange Commission or any successor agency.
(c) The term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
(d) The term "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(e) The term "Public Offering" shall mean a public offering of equity
securities of the Company pursuant to an effective registration statement under
the Securities Act, including a public offering in which Stockholders are
entitled to sell Shares pursuant to the terms of this Agreement.
(f) The term "Registrable Securities" shall mean (i) any Company
Common Stock issued to the Stockholders pursuant to the Plan, and (ii) any
Company Common Stock issued or issuable with respect to the securities referred
to in clause (i) by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, or other
reorganization. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when (x) a registration statement
registering such securities under the Securities Act has been declared effective
and such securities have been sold or otherwise transferred by the holder
thereof pursuant to such effective registration statement, (y) such securities
are sold to the public in accordance with Rule 144 (or any successor provision)
promulgated under the Securities Act, or (z) such securities are transferred
under circumstances in which any legend borne by the certificates for such
securities relating to restrictions on transferability thereof, under the
Securities Act or otherwise, is removed by the Company.
(g) The term "Registration Period" shall mean the period commencing
on January 1, 1998 and expiring January 1, 2002.
(h) The term "Requisite Amount" shall mean 25% of the Registrable
Securities outstanding at any given time.
(i) The term "Securities Act" shall mean the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
ARTICLE II
Registration Rights
Section 2.01. Demand Registrations.
(a) Requests for Registration. During the Registration Period,
Stockholders holding the Requisite Amount of Registrable Securities shall be
entitled to make a written request
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of the Company (a "Demand") for registration under the Securities Act of all
or part of the Registrable Securities (a "Demand Registration"). Such Demand
shall specify: (i) the aggregate number of Registrable Securities requested
to be registered, (ii) the intended method of distribution in connection with
such Demand Registration to the extent then known, and (iii) the identity of
the Stockholder or Stockholders (each, a "Demanding holder") requesting such
Demand. Within ten (10) days after receipt of a Demand, the Company shall
give written notice of such Demand to all other Stockholders and shall
include in such registration all Registrable Securities with respect to which
the Company has received a written request for inclusion therein within
twenty (20) days after the receipt by such Stockholder of the Company's
notice required by this paragraph (it being understood and agreed that such
request for inclusion shall not constitute a demand).
(b) Number of Demands. The Stockholders shall be entitled to three
(3) Demand Registrations.
(c) Satisfaction of Obligations. A registration shall not be treated
as a permitted Demand for a Demand Registration until (i) the applicable
registration statement under the Securities Act has been filed with the
Commission with respect to such Demand Registration (which shall include any
registration statement that is not withdrawn by holders of Registrable
Securities in the circumstances contemplated by Section 2.03), and (ii) such
registration statement shall have been maintained continuously effective for a
period of at least ninety (90) days or such shorter period as all Registrable
Securities included therein have been disposed of thereunder in accordance with
the manner of distribution set forth in such registration statement.
(d) Availability of Short Form Registrations. The Company shall use
all reasonable efforts to comply with the requirements for use of short form
registration for the sale of securities under the Securities Act.
(e) Restrictions on Demand Registrations. The Company shall not be
obligated (i) in the case of a Demand Registration, to maintain the
effectiveness of a registration statement under the Securities Act, for a period
longer than ninety (90) days, or (ii) to effect any Demand Registration within
one hundred eighty (180) days after the effective date of (A) a "firm
commitment" underwritten registration in which all Stockholders were given
"piggyback" rights pursuant to Section 2.02 hereof, or (B) any other Demand
Registration. In addition, the Company shall be entitled to postpone (upon
written notice to all Stockholders) for up to ninety (90) days the filing or the
effectiveness of a registration statement in respect of a Demand (but no more
than once in any period of twelve (12) consecutive months) if the Board
determines in good faith and in its reasonable judgment that effecting the
Demand Registration in respect of such Demand would have a material adverse
affect on any proposal or plan by the Company to engage in any debt or equity
offering, material acquisition or disposition of assets (other than
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in the ordinary course of business) or any merger, consolidation, tender
offer or other similar transaction. In the event of a postponement by the
Company of the filing or effectiveness of a registration statement in respect
of a Demand, the holders making such Demand shall have the right to withdraw
such Demand in accordance with Section 2.03 hereof.
(f) Participation in Demand Registrations. The Company shall not
include any securities other than Registrable Securities in a Demand
Registration, except with the written consent of the holders of the majority of
the Registrable Securities sought to be registered pursuant to such Demand
Registration held by all the Demanding holders. If, in connection with a Demand
Registration, any managing underwriter (or, if such Demand Registration is not
an underwritten offering, a nationally recognized independent underwriter
selected by the Demanding holders of a majority of the Registrable Securities
held by all the Demanding holders (which such underwriter shall be reasonably
acceptable to the Company and whose fees and expenses shall be borne solely by
the Company)) advises the Company and the Demanding holders of a majority of the
Registrable Securities held by all the Demanding holders that, in its opinion,
the inclusion of all the Registrable Securities and, if authorized pursuant to
this paragraph, other securities of the Company, in each case, sought to be
registered in connection with such Demand Registration would adversely affect
the marketability of the Registrable Securities sought to be sold pursuant
thereto, then (i) the Company shall include in the registration statement
applicable to such Demand Registration only such securities as the Company and
the holders of Registrable Securities sought to be registered therein
("Demanding Sellers") are advised by such underwriter can be sold without such
adverse effect (the "Maximum Demand Number"), and (ii) prior to the inclusion of
any securities which are not Registrable Securities requested to be included
which in the opinion of such underwriters can be sold in an orderly manner
within the price range of such offering, all Registrable Securities held by
Demanding Sellers are included or, if all such shares exceed the Maximum Demand
Number, a pro rata amount of such shares from each Demanding Seller based on the
amount of Registrable Securities requested to be included by each such seller.
(g) Selection of Underwriters. If the Demanding holders of a
majority of the Registrable Securities held by all the Demanding holders request
that such Demand Registration be an underwritten offering, then such holders
shall select a nationally recognized underwriter or underwriters to manage and
administer such offering, such underwriter or underwriters, as the case may be,
to be subject to the approval of the Company, which approval shall not be
unreasonably withheld or delayed, and such underwritings shall be "firm"
underwritings, unless a majority of the Demanding holders should otherwise
agree.
(h) Other Registrations. If the Company has received a Demand and if
the applicable registration statement in respect of such Demand has not been
withdrawn or abandoned, the Company will not file or cause to be effected any
other registration of any of its
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equity securities or securities convertible or exchangeable into or exercisable
for its equity securities under the Securities Act (other than a registration
relating to the Company employee benefit plans, exchange offers by the Company
or a merger or acquisition of a business or assets by the Company, including,
without limitation, a registration on Form S-4 or S-8 or any successor form),
whether on its own behalf or at the request of any holder or holders of such
securities, until a period of at least ninety (90) days has elapsed from the
effective date of any Demand Registration, unless a shorter period of time is
approved by the Demanding holders of a majority of the Registrable Securities
held by all the Demanding holders. Notwithstanding the foregoing, the Company
shall be entitled to postpone any such Demand Registration and may file or cause
to be effected such other registration in accordance with the terms of Section
2.01(e) hereof.
Section 2.02 Piggyback Registrations.
(a) Right to Piggyback. During the Registration Period, whenever the
Company proposes to register any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (other than a registration relating to the Company employee
benefit plans, exchange offers by the Company or a merger or acquisition of a
business or assets by the Company including, without limitation, a registration
on Form S-4 or Form S-8 or any successor form) (a "Piggyback Registration"), the
Company shall give all Stockholders prompt written notice thereof (but not less
than ten (10) days prior to the filing by the Company with the Commission of any
registration statement with respect thereto). Such notice (a "Piggyback
Notice") shall specify, at a minimum, the number of securities proposed to be
registered, the proposed date of filing of such registration statement with the
Commission, the proposed means of distribution, the proposed managing
underwriter or underwriters (if any and if known), and a good faith estimate by
the Company of the proposed minimum offering price of such securities. Upon the
written request of a Stockholder given within ten (10) business days of such
Stockholder's receipt of the Piggyback Notice (which written request shall
specify the number of Registrable Securities intended to be disposed of by such
Stockholder and the intended method of distribution thereof), the Company shall
include in such registration all Registrable Securities with respect to which
the Company has received such written requests for inclusion.
(b) Priority on Piggyback Registrations. If, in connection with a
Piggyback Registration, any managing underwriter (or, if such Piggyback
Registration is not an underwritten offering, a nationally recognized
independent underwriter selected by the Company (reasonably acceptable to the
holders of a majority of the Registrable Securities sought to be included in
such Piggyback Registration and whose fees and expenses shall be borne solely by
the Company)) advises the Company and the holders of the Registrable Securities
to be included in such Piggyback Registration, that, in its opinion, the
inclusion of all the securities sought to be included in such Piggyback
Registration by the Company, any Persons who have sought to
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have shares registered thereunder pursuant to rights to demand (other than
pursuant to so-called "piggyback" or other incidental or participation
registration rights) such registration (such demand rights being "Other Demand
Rights" and such Persons being "Other Demanding Sellers"), any holders of
Registrable Securities seeking to sell such securities in such Piggyback
Registration ("Piggyback Sellers") and any other proposed sellers, in each case,
if any, would adversely affect the marketability of the securities sought to be
sold pursuant thereto, then the Company shall include in the registration
statement applicable to such Piggyback Registration only such securities as the
Company, the Other Demanding Sellers, and the Piggyback Sellers are so advised
by such underwriter can be sold without such an effect (the "Maximum Piggyback
Number"), as follows and in the following order of priority:
(i) if the Piggyback Registration is an offering
on behalf of the Company and not any Person exercising Other Demand
Rights (whether or not other Persons seek to include securities
therein pursuant to so-called "piggyback" or other incidental or
participatory registration rights) (a "Primary Offering"), then (A)
first, such number of securities to be sold by the Company as the
Company, in its reasonable judgment and acting in good faith and in
accordance with sound financial practice, shall have determined, (B)
second, the Registrable Securities requested to be included in such
registration, pro rata among the holders of such Registrable
Securities on the basis of the number of shares requested to be
included by each such holder, and (C) third, other securities
requested to be included in such registration.
(ii) if the Piggyback Registration is an offering
other than pursuant to a Primary Offering, then (A) first, such number
of securities sought to be registered by each Other Demanding Seller,
pro rata in proportion to the number of securities sought to be
registered by all such Other Demanding Sellers, (B) second, if the
number of securities to be included under clause (A) above is less
than the Maximum Piggyback Number, the number of Registrable
Securities, requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the
number of shares requested to be included by each such holder, and (C)
third, other securities requested to be included in such registration.
(c) Withdrawal by the Company. If, at any time after giving written
notice of its intention to register any of its securities as set forth in
Section 2.02 and prior to the time the registration statement filed in
connection with such registration is declared effective, the Company shall
determine for any reason not to register such securities, the Company may, at
its elec-
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tion, give written notice of such determination to each Stockholder and
thereupon shall be relieved of its obligation to register any Registrable
Securities in connection with such particular withdrawn or abandoned
registration (but not from its obligation to pay the Registration Expenses in
connection therewith as provided herein). In the event that the Piggyback
Sellers of such a registration hold the Requisite Amount of Registrable
Securities, such holders may continue the registration as a Demand Registration.
Section 2.03 Shelf Registration
The Company shall cause to be filed as soon as practicable but in
no event later than 75 days following the date hereof, a shelf registration
statement (the "Shelf Registration") pursuant to Rule 415 under the Securities
Act relating to all Registrable Securities. Notwithstanding the foregoing, the
Company shall not be required to include Registrable Securities of any holder
that has not provided to the Company all information reasonably requested by the
Company for use therein. The Company shall use its reasonable best efforts to
cause such registration statement to become effective within 120 days of the
date hereof and to keep such registration statement continuously effective,
supplemented and amended to the extent necessary to ensure that it is available
for sales of Registrable Securities by the holders thereof, and to ensure that
it complies with the requirements of the Securities Act and the policies, rules
and regulations of the Commission until such time as all Registrable Securities
registered thereunder have been sold pursuant to such registration statement or
otherwise.
Section 2.04. Withdrawal Rights.
Any Stockholder having notified or directed the Company to
include any or all of its Registrable Securities in a registration statement
under the Securities Act shall have the right to withdraw any such notice or
direction with respect to any or all of the Registrable Securities designated
for registration thereby by giving written notice to such effect to the Company
prior to the effective date of such registration statement. In the event of any
such withdrawal, the Company shall not include such Registrable Securities in
the applicable registration and such Registrable Securities shall continue to be
Registrable Securities hereunder. No such withdrawal shall affect the
obligations of the Company with respect to the Registrable Securities not so
withdrawn; provided that in the case of a Demand Registration, if such
withdrawal shall reduce the number of Registrable Securities sought to be
included in such registration below the Requisite Amount, then the Company shall
as promptly as practicable give each holder of Registrable Securities sought to
be registered notice to such effect, referring to this Agreement and summarizing
this Section 2.04, and within five (5) business days following the effectiveness
of such notice, either the Company or the holders of a majority of the
Registrable Securities sought to be registered may, by written notices made to
each holder of Registrable Securities sought to be registered and the Company,
respectively, elect that such registration
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statement not be filed or, if theretofore filed, be withdrawn. During such five
(5) business day period, the Company shall not file such registration statement
if not theretofore filed or, if such registration statement has been theretofore
filed, the Company shall not seek, and shall use its best efforts to prevent,
the effectiveness thereof. Any registration statement withdrawn or not filed
(i) in accordance with an election by the Company, (ii) in accordance with an
election by the holders of the majority of the Registrable Securities sought to
be registered pursuant to such Demand Registration held by all the Demanding
holders pursuant to Section 2.01(e) hereof, (iii) in accordance with an
election by the holders of the majority of the Registrable Securities sought to
be registered pursuant to such Demand Registration held by all the Demanding
holders prior to the effectiveness of the applicable Demand Registration
Statement or (iv) in accordance with an election by the holders of the majority
of the Registrable Securities sought to be registered pursuant to such Demand
Registration held by all the Demanding holders subsequent to the effectiveness
of the applicable Demand Registration Statement, if any post-effective amendment
or supplement to the applicable Demand Registration Statement contains adverse
information regarding the Company shall not be counted as a Demand. Except as
set forth in clause (iv) of the previous sentence any Demand withdrawn in
accordance with an election by the Demanding holders subsequent to the
effectiveness of the applicable Demand Registration Statement shall be counted
as a Demand unless the Stockholders reimburse the Company for its reasonable
out-of-pocket expenses (but, without implication that the contrary would
otherwise be true, not including any Internal Expenses, as defined below)
related to the preparation and filing of such registration statement (in which
event such registration statement shall not be counted as a Demand hereunder).
Upon the written request of a majority of the Stockholders, the Company shall
promptly prepare a definitive statement of such out-of-pocket expenses in
connection with such registration statement in order to assist such holders with
a determination in accordance with the next preceding sentence.
Section 2.05. Holdback Agreements.
Each Stockholder agrees not to effect any public sale or
distribution (including sales pursuant to Rule 144) of equity securities of the
Company, or any securities convertible into or exchangeable or exercisable for
such securities, during the ten (10) day period prior to the date which the
Company has, or in the case of a Demand Registration, the Demanding holders
have, notified the Stockholders that it or they intend to commence a Public
Offering through the sixty (60) day period immediately following the effective
date of any Demand Registration or any Piggyback Registration (in each case,
except as part of such registration), or, in each case, if later, the date of
any underwriting agreement with respect thereto; provided, however, that the
Stockholders shall not be obligated to comply with this Section 2.04 on more
than one (1) occasion in any nine (9) month period.
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Section 2.06. Registration Procedures.
(a) Whenever the Stockholders have requested that any Registrable
Securities be registered pursuant to this Agreement (whether pursuant to Demand
Registration, Piggyback Registration or Shelf Registration), the Company
(subject to its right to withdraw such registration as contemplated by Section
2.02(c)) shall use its best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof and, in connection therewith, the Company shall as
expeditiously as possible:
(i) prepare and file with the Commission a
registration statement with respect to such Registrable Securities on
any form for which the Company then qualifies and is available for the
sale of Registrable Securities to be registered thereunder in
accordance with the intended method of distribution and use its
reasonable best efforts to cause such registration statement to become
effective within ninety (90) days of the date of such filing (or, in
the case of the Shelf Registration, within 120 days of the date
hereof);
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective for a continuous period of not
less than ninety (90) days (or, if earlier, until all Registrable
Securities included in such registration statement have been sold
thereunder in accordance with the manner of distribution set forth
therein) or such longer period as may be set forth in Section 2.03 and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the sellers thereof as set forth in such registration
statement (including, without limitation, by incorporating in a
prospectus supplement or post-effective amendment, at the request of a
seller of Registrable Securities, the terms of the sale of such
Registrable Securities);
(iii) before filing with the Commission any such
registration statement or prospectus or any amendments or supplements
thereto, the Company shall furnish to counsel selected by the
Demanding holders of a majority of the Xxxxxxxx-
0
ble Securities held by the Demanding holders, counsel for the underwriter
or sales or placement agent, if any, and any other counsel for holders of
Registrable Securities, if any, in connection therewith, drafts of all such
documents proposed to be filed and provide such counsel with a reasonable
opportunity for review thereof and comment thereon, such review to be
conducted and such comments to be delivered with reasonable promptness;
(iv) promptly (i) notify each seller of
Registrable Securities of each of (x) the filing and effectiveness of
the registration statement and prospectus and any amendment or
supplements thereto, (y) the receipt of any comments from the
Commission or any state securities law authorities or any other
governmental authorities with respect to any such registration
statement or prospectus or any amendments or supplements thereto, and
(z) any oral or written stop order with respect to such registration,
any suspension of the registration or qualification of the sale of
such Registrable Securities in any jurisdiction or any initiation or
threatening of any proceedings with respect to any of the foregoing
and (ii) use its best efforts to obtain the withdrawal of any order
suspending the registration or qualification (or the effectiveness
thereof) or suspending or preventing the use of any related prospectus
in any jurisdiction with respect thereto;
(v) furnish to each seller of Registrable
Securities, the underwriters and the sales or placement agent, if any,
and counsel for each of the foregoing, a conformed copy of such
registration statement and each amendment and supplement thereto (in
each case, including all exhibits thereto and documents incorporated
by reference therein) and such additional number of copies of such
registration statement, each amendment and supplement thereto (in such
case without such exhibits and documents) the prospectus (including
each preliminary prospectus) included in such registration statement
and prospectus supplements and all exhibits thereto and documents
incorporated by reference therein and such other documents as such
seller, underwriter, agent or counsel may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by
such seller;
(vi) if requested by the managing underwriter or
underwriters of any registration or by the Demanding holders of a
majority of the Registrable Securities held by the Demanding
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holders, subject to approval of counsel to the Company in its reasonable
judgment, promptly incorporate in a prospectus, supplement or
post-effective amendment to the registration statement such information
concerning underwriters and the plan of distribution of the Registrable
Securities as such managing underwriter or underwriters or such holders
reasonably shall furnish to the Company in writing and request be included
therein, including, without limitation, with respect to the number of
Registrable Securities being sold by such holders to such underwriter or
underwriters, the purchase price being paid therefor by such underwriter or
underwriters and with respect to any other terms of the underwritten
offering of the Registrable Securities to be sold in such offering; and
make all required filings of such prospectus, supplement or post-effective
amendment as soon as possible after being notified of the matters to be
incorporated in such prospectus, supplement or post-effective amendment;
(vii) use its reasonable best efforts to register
or qualify such Registrable Securities under such securities or "blue
sky" laws of such jurisdictions as the holders of a majority of
Registrable Securities sought to be registered reasonably request and
do any and all other acts and things which may be reasonably necessary
or advisable to enable the holders of a majority of Registrable
Securities sought to be registered to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such holders
and keep such registration or qualification in effect for so long as
the registration statement remains effective under the Securities Act
(provided that the Company shall not be required to (x) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph, (y) subject
itself to taxation in any such jurisdiction where it would not
otherwise be subject to taxation but for this paragraph or (z) consent
to the general service of process in any jurisdiction where it would
not otherwise be subject to general service of process but for this
paragraph);
(viii) notify each seller of such Registrable
Securities, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, upon the discovery that, or
of the happening of any event as a result of which, the registration
statement covering such Registrable Securities, as then in
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effect, contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or any fact necessary to
make the statements therein not misleading, and promptly prepare and
furnish to each such seller a supplement or amendment to the prospectus
contained in such registration statement so that such Registration
Statement shall not, and such prospectus as thereafter delivered to the
purchasers of such Registrable Securities shall not, contain an untrue
statement of a material fact or omit to state any material fact required to
be stated therein or any fact necessary to make the statements therein not
misleading;
(ix) use its reasonable best efforts to cause all
such Registrable Securities to be listed on the New York Stock
Exchange and/or any other securities exchange and included in each
established over-the-counter market on which or through which similar
securities of the Company are listed or traded and, if not so listed
or traded, to be listed on the NASD automated quotation system
("Nasdaq") and if listed on Nasdaq, use its reasonable efforts to
secure designation of all such Registrable Securities covered by such
registration statement as a Nasdaq "national market system security"
within the meaning of Rule 11Aa2-1 under the Securities Exchange Act
of 1934, as amended, or, failing that, to secure Nasdaq authorization
for such Registrable Securities;
(x) make available for inspection by any seller
of Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter
all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers,
directors, employees, attorneys and independent accountants to supply
all information reasonably requested by any such sellers,
underwriters, attorneys, accountants or agents in connection with such
registration statement. Information which the Company determines, in
good faith, to be confidential shall not be disclosed by such persons
unless (x) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in such registration statement, or
(y) the release of such information is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction. Each seller of
Registrable Securities agrees, on its own behalf and on behalf of all
its
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underwriters, accountants, attorneys and agents, that the information
obtained by it as a result of such inspections shall be deemed confidential
and shall not be used by it as the basis for any market transactions in the
securities of the Company unless and until such is made generally available
to the public. Each seller of Registrable Securities further agrees, on
its own behalf and on behalf of all its underwriters, accountants,
attorneys and agents, that it will, upon learning that disclosure of such
information is sought in a court of competent jurisdiction, give notice to
the Company and allow the Company, at its expense, to undertake appropriate
action to prevent disclosure of the information deemed confidential;
(xi) use its reasonable best efforts to comply
with all applicable laws related to such registration statement and
offering and sale of securities and all applicable rules and
regulations of governmental authorities in connection therewith
(including, without limitation, the Securities Act and the Exchange
Act) and make generally available to its security holders as soon as
practicable (but in any event not later than fifteen (15) months after
the effectiveness of such registration statement) an earnings
statement of the Company and its subsidiaries complying with Section
11(a) of the Securities Act;
(xii) permit any Stockholder, which Stockholder,
in its sole and exclusive judgment, might be deemed to be an
underwriter or controlling person of the Company, to participate in
the preparation of such registration statement and to require the
insertion therein of material, furnished to the Company in writing,
which in the reasonable judgment of such holder and such holder's
counsel should be included;
(xiii) use its reasonable best efforts to furnish
to each seller of Registrable Securities a signed counterpart of (x)
an opinion of counsel for the Company and (y) a "comfort" letter
signed by the independent public accountants who have certified the
Company's financial statements included or incorporated by reference
in such registration statement, covering such matters with respect to
such registration statement and, in the case of the accountants'
comfort letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of
issuer's counsel
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and in accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities for the account of, or on
behalf of, an issuer of common stock, such opinion and comfort letters to
be dated the date of such opinions and comfort letters are customarily
dated in such transactions, and covering in the case of such legal opinion,
such other legal matters and, in the case of such comfort letter, such
other financial matters, as the holders of a majority of the Registrable
Securities being sold may reasonably request; and
(xiv) take all such other actions as the holders
of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
(b) Underwriting. Without limiting any of the foregoing, in the event
that the offering of Registrable Securities is to be made by or through an
underwriter, the Company shall enter into an underwriting agreement with a
managing underwriter or underwriters containing representations, warranties,
indemnities and agreements customarily included (but not inconsistent with the
agreements contained herein) by an issuer of common stock in underwriting
agreements with respect to offerings of common stock for the account of, or on
behalf of, such issuers. In connection with the sale of Registrable Securities
hereunder, any seller of such Registrable Securities may, at its option, require
that any and all representations and warranties by, and indemnities and
agreements of, the Company to or for the benefit of such underwriter or
underwriters (or which would be made to or for the benefit of such an
underwriter or underwriter if such sale of Registrable Securities were pursuant
to a customary underwritten offering) be made to and for the benefit of such
seller and that any or all of the conditions precedent to the obligations of
such underwriter or underwriters (or which would be so for the benefit of such
underwriter or underwriters under a customary underwriting agreement) be
conditions precedent to the obligations of such seller in connection with the
disposition of its securities pursuant to the terms hereof (it being agreed that
in connection with any Demand Registration, without limiting any rights or
remedies of the Stockholders, in the event any such condition precedent shall
not be satisfied and, if not so satisfied, shall not be waived by the holders of
a majority of the Registrable Securities to be included in such Demand
Registration, such Demand Registration shall not be counted as a permitted
Demand hereunder). In connection with any offering of Registrable Securities
registered pursuant to this Agreement, the Company shall (x) furnish to the
underwriter, if any (or, if no underwriter, the sellers of such Registrable
Securities), unlegended certificates representing ownership of the Registrable
Securities being sold, in such denominations as requested and (y) instruct any
transfer agent and registrar of the Registrable Securities to release any stop
transfer order with respect thereto.
14
(c) Return of Prospectuses. Each seller of Registrable Securities
hereunder agrees that upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.06(a)(viii), such
seller shall forthwith discontinue such seller's disposition of Registrable
Securities pursuant to the applicable registration statement and prospectus
relating thereto until such seller's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 2.06(a)(viii) and, if so directed
by the Company, deliver to the Company all copies, other than permanent file
copies, then in such seller's possession of the prospectus current at the time
of receipt of such notice relating to such Registrable Securities. In the event
the Company shall give such notice, the ninety (90)-day period during which such
registration statement must remain effective pursuant to this Agreement shall be
extended by the number of days during the period from the date of giving of a
notice regarding the happening of an event of the kind described in Section
2.06(a)(viii) to the date when all such sellers shall receive such a
supplemented or amended prospectus and such prospectus shall have been filed
with the Commission.
Section 2.07. Registration Expenses.
All expenses incident to the Company's performance of, or compliance
with, its obligations under this Agreement including, without limitation, all
registration and filing fees, all fees and expenses of compliance with
securities and "blue sky" laws (including, without limitation, the fees and
expenses of counsel for underwriters or placement or sales agents in connection
therewith), all printing and copying expenses, all messenger and delivery
expenses, all fees and expenses of underwriters and sales and placement agents
in connection therewith (excluding discounts and commissions), all fees and
expenses of the Company's independent certified public accountants and counsel
(including, without limitation, with respect to "comfort" letters and opinions)
(collectively, the "Registration Expenses") shall be borne by the Company;
provided, however, that in the case of a Piggyback Registration, all incremental
costs resulting from applicable federal and blue sky registration and filing
fees, National Association of Securities Dealers filing fees, the expenses and
fees for listing the securities to be registered on each securities exchange and
included in each established over-the-counter market on which similar securities
issued by the Company are then listed or traded or for listing on Nasdaq and
underwriting discounts and commissions allocable to each Stockholder selling
Registrable Securities shall be borne by such Stockholder. The Company shall be
responsible for the fees and expenses of one (1) legal counsel retained by all
of the Stockholders in the aggregate in connection with the sale of Registrable
Securities. Notwithstanding the foregoing, the Company shall not be responsible
for the fees and expenses of any additional counsel, or any of the accountants,
agents or experts retained by the Stockholders in connection with the sale of
Registrable Securities. The Company will pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties, the expense of any annual audit and the
expense of any liability insurance) (collectively,
15
"Internal Expenses") and the expenses and fees for listing the securities to be
registered on each securities exchange and included in each established
over-the-counter market on which similar securities issued by the Company are
then listed or traded or for listing on Nasdaq.
Section 2.08. Indemnification.
(a) By the Company. The Company agrees to indemnify, to the fullest
extent permitted by law, each holder of Registrable Securities being sold, its
officers, directors, employees, shareholders, investment advisors, agents and
Affiliates and each Person who controls (within the meaning of the Securities
Act) such holder (a "Control Person") or such an other indemnified Person, and
each such Affiliate's or Control Person's officers, directors, shareholders,
investment advisors and agents against all losses, claims, damages, liabilities
and expenses (collectively, the "Losses") caused by, resulting from or relating
to any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or a fact necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering and without limiting any of
the Company's other obligations under this Agreement, the Company shall
indemnify such underwriters, their officers, directors, employees, shareholders,
investment advisors, agents and Affiliates and each Control Person of such
underwriters or such an other indemnified Person, and each such Affiliate's or
Control Person's officers, directors, shareholders, investment advisors and
agents, to the same extent as provided above with respect to the indemnification
of the holders of Registrable Securities being sold.
(b) By the Stockholders. In connection with any registration
statement in which a holder of Registrable Securities is participating, each
such holder will furnish to the Company in writing information regarding such
holder's ownership of Registrable Securities and its intended method of
distribution thereof and, to the extent permitted by law, shall indemnify the
Company, its directors, officers, employees and agents and each Person who
controls (within the meaning of the Securities Act) the Company or such an other
indemnified Person against all Losses caused by, resulting from or relating to
any untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
caused by and contained in such information so furnished in writing by such
holder; provided, however, that each holder's obligation to
16
indemnify the Company hereunder shall be apportioned between each holder based
upon the net amount received by each holder from the sale of Registrable
Securities, as compared to the total net amount received by all of the holders
of Registrable Securities sold pursuant to such registration statement, no such
holder being liable to the Company in excess of such apportionment.
(c) Notice. Any Person entitled to indemnification hereunder shall
give prompt written notice to the indemnifying party of any claim with respect
to which its seeks indemnification; provided, however, the failure to give such
notice shall not release the indemnifying party from its obligation, except to
the extent that the indemnifying party has been materially prejudiced by such
failure to provide such notice.
(d) Defense of Actions. In any case in which any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof the indemnifying party will not (so long as it shall
continue to have the right to defend, contest, litigate and settle the matter in
question in accordance with this paragraph) be liable to such indemnified party
hereunder for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, supervision and monitoring (unless such indemnified
party reasonably objects to such assumption on the grounds that there may be
defenses available to it which are different from or in addition to the defenses
available to such indemnifying party, in which event the indemnified party
shall be reimbursed by the indemnifying party for the expenses incurred in
connection with retaining separate legal counsel). An indemnifying party shall
not be liable for any settlement of an action or claim effected without its
consent. The indemnifying party shall lose its right to defend, contest,
litigate and settle a matter if it shall fail to diligently contest such matter
(except to the extent settled in accordance with the next following sentence).
No matter shall be settled by an indemnifying party without the consent of the
indemnified party (which consent shall not be unreasonably withheld).
(e) Survival. The indemnification provided for under this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified Person and will survive the transfer of the
Registrable Securities and the termination of this Agreement.
(f) Contribution. If recovery is not available under the foregoing
indemnification provisions for any reason or reasons other than as specified
therein, any Person who would
17
otherwise be entitled to indemnification by the terms thereof shall nevertheless
be entitled to contribution with respect to any Losses with respect to which
such Person would be entitled to such indemnification but for such reason or
reasons. In determining the amount of contribution to which the respective
Persons are entitled, there shall be considered the Persons' relative knowledge
and access to information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or omission,
and other equitable considerations appropriate under the circumstances. It is
hereby agreed that it would not necessarily be equitable if the amount of such
contribution were determined by pro rata or per capita allocation. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not found guilty of such fraudulent misrepresentation. Notwithstanding the
foregoing, no Stockholder shall be required to make a contribution in excess of
the net amount received by such holder from the sale of Registrable Securities.
ARTICLE III
Miscellaneous
(a) Headings. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
any provisions hereof.
(b) Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants, conditions or undertakings with respect
to the subject matter hereof, other than those expressly set forth or referred
to herein. This Agreement supersedes all prior agreements and understandings
between the parties hereto with respect to the subject matter hereof.
(c) Notices. All notices and other communications hereunder shall
be in writing and shall be delivered personally or by next-day courier or
telecopied with confirmation of receipt, at the address specified below (or
at such other address for a party as shall be specified by like notice;
provided that notices of change of address shall be effective only upon
receipt thereof). Any such notice shall be effective upon receipt, if
personally delivered or telecopied, or one day after delivery to a courier
for next-day delivery.
If to the Company: County Seat Stores, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopier: (000) 000-0000
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If to the Stockholders: c/o Xxxx Xxxxxx InterCapital, Inc.
Two World Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Vice President
(d) Applicable Law. The substantive laws of the State of Minnesota
shall govern the interpretation, validity and performance of the terms of this
Agreement, regardless of the law that might be applied under applicable
principles of conflicts of laws. THE PARTIES HERETO WAIVE THEIR RIGHT TO A JURY
TRIAL WITH RESPECT TO DISPUTES HEREUNDER.
(e) Severability. The invalidity, illegality or unenforceability of
one or more of the provisions of this Agreement in any jurisdiction shall not
affect the validity, legality or enforceability of the remainder of this
Agreement in such jurisdiction or the validity, legality or enforceability of
this Agreement, including any such provision, in any other jurisdiction, it
being intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
(f) Successors; Assigns. The provisions of this Agreement shall be
binding upon the parties hereto and their respective heirs, successors and
permitted assigns whether so expressed or not. In addition, whether or not any
express assignment has been made, the provisions of this Agreement which are for
the benefit of purchasers or holders of Registrable Securities are also for the
benefit of, and enforceable by, any subsequent holder of Registrable
Securities.
(g) Amendments. This Agreement may not be amended, modified or
supplemented unless such modification is in writing and signed by the Company
and the holders of at least 60% of the Registrable Securities outstanding on the
date thereof.
(h) Waiver. Any waiver (express or implied) of any default or breach
of this Agreement shall not constitute a waiver of any other or subsequent
default or breach.
[Intentionally blank]
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(i) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same Agreement.
IN WITNESS WHEREOF, the undersigned hereby agree to be bound by
the terms and provisions of this Registration Rights Agreement as of the date
first above written.
COUNTY SEAT STORES, INC.
By:
------------------------------------------
Name:
Its:
Each of:
XXXX XXXXXX HIGH YIELD SECURITIES, INC.
XXXX XXXXXX DIVERSIFIED INCOME TRUST
XXXX XXXXXX VARIABLE INVESTMENT
SERIES -- HIGH YIELD PORTFOLIO
HIGH INCOME ADVANTAGE TRUST
HIGH INCOME ADVANTAGE TRUST II
HIGH INCOME ADVANTAGE TRUST III
XXXX XXXXXX SELECT DIMENSIONS INVESTMENT
SERIES--THE DIVERSIFIED INCOME
PORTFOLIO
By:
------------------------------------------
Name: Xxxxx X. Xxxxxx
Their: Vice President
Address: c/o Xxxx Xxxxxx InterCapital, Inc.
Two World Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
20
