Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of this 7th day of October, 1997 by and among TRACK 'N TRAIL, INC., a
Delaware corporation ("Track 'n Trail"), and XXXXX X. XXXXXXXXX, XX. AND XXXXXX
XXXXXXXXX, Trustees of The Xxxxxxxxx Family Trust (the "Trust"), XXXXXXX
XXXXXXXXX, and XXXXXXX X. XXXXXXXXX (collectively, the "Suechtings"),
RECITALS
A. TRACK 'N TRAIL. Track 'n Trail is an existing corporation duly
organized and in good standing under the laws of the State of Delaware, with its
principal executive offices located in El Dorado Hills, California.
B. THE SUECHTINGS. Together the Suechtings currently own all of the
outstanding Common Stock of Track 'n Trail.
C. CORPORATE AND TRUST APPROVAL. Track 'n Trail has obtained all
necessary corporate approvals for the execution and delivery of this Agreement.
The Trust has obtained all necessary approvals for the execution and delivery of
this Agreement.
D. ARM'S LENGTH RELATIONSHIP. The parties to this Agreement intend to
conduct their relationships hereunder on an arm's length basis.
E. THE OFFERING. Track 'n Trail is contemplating the issuance of shares
of its Common Stock, $.01 par value per share (the "Common Stock"), in an
initial public offering pursuant to a Registration Statement on Form S-1
(Registration No. 333-23195) (the "Offering").
F. REGISTRATION RIGHTS. In conjunction with the Offering, the Suechtings
and Track 'n Trail desire to enter into this Agreement to provide the Suechtings
with certain registration rights as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following respective meanings:
"Affiliate" of a specified Person shall mean any Person that directly or
indirectly controls, is controlled by, or is under common control with such
specified Person. A Person
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shall be deemed to control another Person if such Person owns fifty percent
(50%) or more of any equity interest in the "controlled" Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
stock or partnership interests, by contract, agreement or understanding (whether
oral or written), or otherwise.
"Designated Transferee" shall have the meaning set forth in Section 10
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Holders" shall mean Xxxxxxx Xxxxxxxxx, the Trust and Xxxxxxx X. Xxxxxxxxx,
any Affiliate of Xxxxxxx Xxxxxxxxx, the Trust and/or Xxxxxxx X. Xxxxxxxxx and
any Designated Transferees who are holders of record of any Registrable Shares,
and any combination of one or more such Holders.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Other Holders" shall mean Persons other than the Holders who are holders
of record of equity securities of Track 'n Trail to whom Track 'n Trail grants
registration rights pursuant to a written agreement.
"Person" shall mean any individual, corporation, association, partnership,
group (as defined in Section 13(d)(3) of the Exchange Act), limited liability
company, joint venture, business trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Registrable Shares" shall mean (i) 4,107,608 shares of Common Stock owned
by the Holders on the date hereof, representing all of the currently outstanding
Common Stock of Track 'n Trail, and (ii) any shares of Common Stock acquired by
a Holder directly or upon exercise of conversion of any equity securities of
Track 'n Trail issued or distributed after the date of this Agreement to a
Holder in respect of Registrable Shares by way of any stock dividend, stock
split or other distribution or any recapitalization or reclassification. As to
any particular Registrable Share, such Registrable Share shall cease to be a
Registrable Share when (w) it shall have been sold, transferred or otherwise
disposed of or exchanged pursuant to a registration statement under the
Securities Act, including sales in the Offering; (x) it shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act; (y) it shall have been sold or transferred to a Person
other than a Designated Transferee in a private transaction effected other than
pursuant to a registration statement; or (z) it shall have been sold,
transferred or otherwise disposed of in violation of this Agreement.
"Registration Expenses" shall have the meaning set forth in Section 7(a)
hereof.
"SEC" shall mean the Securities and Exchange Commission or any successor
agency thereto.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
2. INCIDENTAL REGISTRATIONS
(a) RIGHT TO INCLUDE REGISTRABLE SHARES. Each time Track 'n Trail shall
determine to file a registration statement under the Securities Act in
connection with a proposed offer and sale for cash of any equity securities
(other than an offering of debt securities that are convertible into equity
securities, an offering of equity securities in an amount not in excess of five
percent (5%) of the number of shares of Common Stock outstanding at such time,
or an offering of equity securities solely pursuant to an employee stock option
plan or other employee benefit plan registered on Form S-8 or any similar form
under the Securities Act) either by it or by any holders of its outstanding
equity securities, Track 'n Trail will give prompt written notice of its
determination to each Holder and of such Holder's rights under this Section 2,
at least thirty (30) days prior to the anticipated filing date of such
registration statement. Upon the written request of each Holder made within
twenty-one (21) days after the receipt of any such notice from Track 'n Trail
(which request shall specify the Registrable Shares intended to be disposed of
by such Holder), Track 'n Trail will use its best efforts to effect the
registration under the Securities Act of all Registrable Shares that Track 'n
Trail has been so requested to register by the Holders thereof, to the extent
required to permit the disposition of the Registrable Shares so to be
registered; PROVIDED, HOWEVER, that (i) if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
Track 'n Trail shall determine for any reason not to proceed with the proposed
registration of the securities to be sold by it, Track 'n Trail may, at its
election, give written notice of such determination to each Holder of
Registrable Shares and thereupon shall be relieved of its obligation to register
any Registrable Shares in connection with such registration (but not from its
obligation to pay the Registration Expenses in connection therewith), and
(ii) if such registration involves an underwritten offering, all Holders of
Registrable Shares requesting to be included in Track 'n Trail's registration
must sell their Registrable Shares to the underwriters on the same terms and
conditions as apply to Track 'n Trail, with such differences, including any with
respect to indemnification and liability insurance, as may be customary or
appropriate in combined primary and secondary offerings. If a registration
requested pursuant to this Section 2(a) involves an underwritten public
offering, any Holder of Registrable Shares requesting to be included in such
registration may elect, in writing prior to the effective date of the
registration statement filed in connection with such registration, not to
register such securities in connection with such registration. No registration
effected under this Section 2 shall relieve Track 'n Trail of its obligations to
effect registrations upon request under Section 4 hereof.
(b) PRIORITY IN INCIDENTAL REGISTRATION. If a registration pursuant to
this Section 2 involves an underwritten offering and the managing underwriter(s)
in good faith advise(s) Track 'n Trail in writing that, in its opinion, the
number of securities that Track 'n Trail, the Holders and any other Persons
intend to include in such registration exceeds the largest number of securities
that can be sold in such offering without having an adverse effect on such
offering (including the price at which such securities can be sold), then Track
'n Trail will include in such registration (i) first, if the registration
pursuant to this Section 2 was
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initiated by Other Holders exercising demand registration rights, one hundred
percent (100%) of the securities such Other Holders propose to sell (except to
the extent the terms of such Other Holders' registration rights provide
otherwise); (ii) second, one hundred percent (100%) of the securities Track 'n
Trail proposes to sell for its own account; and (iii) third, to the extent that
the number of securities that such Other Holders exercising demand registration
rights and Track 'n Trail propose to sell is less than the number of securities
that Track 'n Trail has been advised can be sold in such offering without having
the adverse effect referred to above, such number of Registrable Shares that the
Holders have requested to be included in such registration pursuant to Section
2(a) hereof and such number of securities that Other Holders exercising
incidental or "piggyback" registration rights of equal priority have requested
to be included in such registration and which collectively, in the opinion of
such managing underwriter(s), can be sold without having the adverse effect
referred to above (provided that if the number of Registrable Shares requested
to be registered pursuant to Section 2(a) hereof plus the number of securities
requested to be registered by Other Holders exercising such incidental or
"piggyback" registration rights exceeds the number that Track 'n Trail has been
advised can be sold in such offering without having the adverse effect referred
to above, the number of such Registrable Shares and other securities to be
included in such registration by the Holders and such Other Holders shall be
allocated pro rata (based on Common Stock equivalents) among such Holders and
such Other Holders on the basis of the relative number of Registrable Shares or
other securities that each such Holder and Other Holder has requested to be
included in such registration).
(c) INITIAL PUBLIC OFFERING. The parties agree that the Offering is a
registration effected in accordance with Section 2 and not Section 4 hereof for
all purposes under this Agreement, and that the number of Registrable Shares to
be included by each Holder in the Offering, and the conditions and terms of any
sale of such shares, as set forth in the Underwriting Agreement among Track 'n
Trail, the Holders and the underwriters named therein with respect to the
Offering, shall be deemed to comply for all purposes with the requirements of
Section 2 and 8 hereof.
3. HOLDBACK AGREEMENTS.
(a) If any registration of Registrable Shares shall be in connection with
an underwritten public offering, the Holders shall not effect any public sale or
distribution (except in connection with such public offering), of any equity
securities of Track 'n Trail, or of any security convertible into or
exchangeable or exercisable for any equity security of Track 'n Trail (in each
case, other than as part of such underwritten public offering), during the
ninety- (90-) day period (or such lesser period as the managing underwriter(s)
may permit) beginning on the effective date of such registration, if, and to the
extent, the managing underwriter(s) of any such offering determine(s) such
action is necessary or desirable to effect such offering; PROVIDED, HOWEVER,
that each Holder has received the written notice required by Section 2(a)
hereof; PROVIDED, HOWEVER, that each Holder shall not be obligated to comply
with such restrictions arising as a result of an underwritten public offering
subject to Section 2 hereof more than once in any 12-month period; and PROVIDED,
FURTHER, that no Holder owning less than five percent (5%) of the outstanding
shares of
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Track 'n Trail shall be obligated to comply with such restrictions if such
Holder is not including shares for sale in such offering.
(b) If any registration of Registrable Shares shall be in connection with
any underwritten public offering, Track 'n Trail shall not effect any public
sale or distribution (except in connection with such public offering) of any of
its equity securities or of any security convertible into or exchangeable or
exercisable for any of its equity securities (in each case other than as part of
such underwritten public offering) during the ninety- (90-) day period (or such
lesser period as the managing underwriter(s) may permit) beginning on the
effective date of such registration, and Track 'n Trail shall use its best
efforts to cause each member of the management of Track 'n Trail who holds any
equity security and each other holder of five percent (5%) or more of the
outstanding shares of any equity security, or of any security convertible into
or exchangeable or exercisable for any equity security, of Track 'n Trail
purchased from Track 'n Trail (at any time other than in a public offering) to
so agree.
4. REGISTRATION ON REQUEST.
(a) REQUEST BY HOLDERS. Upon the written request of the Holders of at
least ten percent (10%) of the Registrable Shares (based on the number in clause
(i) of the definition thereof) that Track 'n Trail effect the registration under
the Securities Act of all or part of such Holders' Registrable Shares, and
specifying the amount (which shall not be less than ten percent (10%) of the
Registrable Shares (based on the number in clause (i) of its definition) in the
aggregate) and the intended method of disposition thereof, Track 'n Trail will
promptly give notice of such requested registration to all other Holders of
Registrable Shares and, as expeditiously as possible, use its best efforts to
effect the registration under the Securities Act of: (i) the Registrable Shares
that Track 'n Trail has been so requested to register by Holders of at least ten
percent (10%) of the Registrable Shares; and (ii) all other Registrable Shares
that Track 'n Trail has been requested to register by any other Holder thereof
by written request received by Track 'n Trail within twenty-one (21) days after
the giving of such written notice by Track 'n Trail (which request shall specify
the intended method of disposition of such Registrable Shares); PROVIDED,
HOWEVER, that Track 'n Trail shall not be required to effect more than three (3)
registrations pursuant to this Section 4; PROVIDED, FURTHER, that Track 'n Trail
shall not be obligated to file a registration statement relating to a
registration request under this Section 4 (x) if the registration request is
delivered after delivery of a notice by Track 'n Trail of an intended
registration and prior to the effective date of the registration statement
referred to in such notice, (y) within a period of ninety (90) days after the
effective date of any other registration statement of Track 'n Trail requested
by a Holder pursuant to this Section 4 or pursuant to which any Holder included
Registrable Shares, or (z) if the Board of Directors of Track 'n Trail
determines in good faith that, in view of the advisability of deferring public
disclosure of material corporate developments, such registration and the
disclosure required to be made in connection therewith would not be in the best
interests of Track 'n Trail at such time or that, in light of other factors and
considerations (including without limitation the pendency of a presently
effective registration statement initiated by Track 'n Trail), such registration
would be seriously detrimental to Track 'n Trail (in which event Track 'n
Trail's obligation
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to file a registration statement under this Section 4 shall be deferred for a
period not to exceed ninety (90) days from the receipt of the registration
request). The Holders initially requesting a registration pursuant to this
Section 4 may, at any time prior to the effective date of the registration
statement relating to such registration, revoke such request by providing a
written notice to Track 'n Trail revoking such request; PROVIDED, HOWEVER, that,
in the event the Holders shall have made a written request for a demand
registration (I) that is subsequently withdrawn by the Holders after Track 'n
Trail has filed a registration statement with the SEC in connection therewith
but prior to such demand registration being declared effective by the SEC or
(II) that is not declared effective solely as a result of the failure of Holders
to take all actions reasonably required in order to have the registration and
the related registration statement declared effective by the SEC, then, in any
such event, such demand registration shall be counted as a demand registration
for purposes of this Section 4(a). Promptly after the expiration of the
twenty-one- (21-) day period referred to in clause (ii) above, Track 'n Trail
will notify all the Holders to be included in the registration of the other
Holders and the number of shares of Registrable Shares requested to be included
therein.
(b) REGISTRATION STATEMENT FORM. If any registration requested pursuant
to this Section 4 that is proposed by Track 'n Trail to be effected by the
filing of a registration statement on Form S-3 (or any successor or similar
short-form registration statement) shall be in connection with an underwritten
public offering, and if the managing underwriter(s) shall advise Track 'n Trail
in writing that, in its opinion, the use of another form of registration
statement is of material importance to the success of such proposed offering,
then such registration shall be effected on such other form.
(c) EFFECTIVE REGISTRATION STATEMENT. A registration requested pursuant
to this Section 4 will not be deemed to have been effected unless it has become
effective under the Securities Act and has remained effective for two hundred
seventy (270) days or such shorter period as all the Registrable Shares included
in such registration have actually been sold thereunder. In addition, if within
one hundred eighty (180) days after it has become effective, the offering of
Registrable Shares pursuant to such registration is interfered with by any stop
order, injunction or other order or requirement of the SEC or other governmental
agency or court, such registration will be deemed not to have been effected for
purposes of this Section 4.
(d) PRIORITY IN REQUESTED REGISTRATIONS. If a requested registration
pursuant to this Section 4 involves an underwritten offering and the managing
underwriter(s) in good faith advise(s) Track 'n Trail in writing that, in its
opinion, the number of securities requested to be included in such registration
(including securities of Track 'n Trail that are not Registrable Shares) exceeds
the largest number of securities that can be sold in such offering without
having an adverse effect on such offering (including the price at which such
securities can be sold), then Track 'n Trail will include in such registration
(i) first, one hundred percent (100%) of the Registrable Shares requested to be
registered pursuant to Section 4(a) hereof (provided that if the number of
Registrable Shares requested to be registered pursuant to Section 4(a) hereof
exceeds the number that Track 'n Trail has been advised can be sold in such
offering without having the adverse effect referred to above, the
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number of such Registrable Shares to be included in such registration by the
Holders shall be allocated pro rata among such Holders on the basis of the
relative number of Registrable Shares each such Holder has requested to be
included in such registration); (ii) second, to the extent that the number of
Registrable Shares requested to be registered pursuant to Section 4(a) hereof is
less than the number of securities that Track 'n Trail has been advised can be
sold in such offering without having the adverse effect referred to above, such
number of shares of equity securities Track 'n Trail requests to be included in
such registration, and (iii) third, to the extent that the number of Registrable
Shares requested to be included in such registration pursuant to Section 4(a)
hereof and the securities that Track 'n Trail proposes to sell for its own
account are, in the aggregate, less than the number of equity securities that
Track 'n Trail has been advised can be sold in such offering without having the
adverse effect referred to above, such number of other securities proposed to be
sold by any Other Holder that, in the opinion of such managing underwriter(s),
can be sold without having the adverse effect referred to above (provided that
if the number of such securities of such Other Holder requested to be registered
exceeds the number that Track 'n Trail has been advised can be sold in such
offering without having the adverse effect referred to above, the number of such
securities to be included in such registration pursuant to this Section 4(d)
shall be allocated pro rata among all such Other Holders on the basis of the
relative number of securities each such Other Holder has requested to be
included in such registration).
(e) ADDITIONAL RIGHTS. If Track 'n Trail at any time grants to any other
holders of equity securities of Track 'n Trail any rights to request Track 'n
Trail to effect the registration of any such shares of equity securities on
terms more favorable to such holders than the terms set forth in this Section 4
and in Section 5 hereof, the terms of this Section 4 and of Section 5 hereof
shall be deemed amended or supplemented to the extent necessary to provide the
Holders such more favorable rights and benefits. In no event shall Track 'n
Trail grant to any Person any rights to request Track 'n Trail to effect the
registration of any shares of equity securities of Track 'n Trail on terms that
are adverse to rights of the Holders set forth in Section 2 and this Section 4
(it being understood that granting additional incidental registration rights
shall not be deemed adverse to the rights of the Holders set forth in Section 2
so long as such additional rights do not have priority over the rights of the
Holders in an incidental registration).
5. REGISTRATION PROCEDURES.
(a) If and whenever Track 'n Trail is required by the provisions of
Section 2 or 4 hereof to use its best efforts to effect or cause the
registration of Registrable Shares, Track 'n Trail shall as expeditiously as
possible:
(i) prepare and, in any event within sixty (60) days after the end
of the period within which a request for registration may be given to Track
'n Trail, file with the SEC a registration statement with respect to such
Registrable Shares and use its best efforts to cause such registration
statement to become effective;
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(ii) 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 keep such registration statement effective for a
period not in excess of 270 days and to comply with the provisions of the
Securities Act, the Exchange Act, and the rules and regulations promulgated
thereunder with respect to the disposition of all the securities covered by
such registration statement during such period in accordance with the
intended methods of disposition by the Holders thereof set forth in such
registration statement; PROVIDED, HOWEVER, that (A) before filing a
registration statement (including an initial filing) or prospectus, or any
amendments or supplements thereto, Track 'n Trail will furnish to one
counsel selected by the Holders of a majority of the Registrable Shares
covered by such registration statement copies of all documents proposed to
be filed, which documents will be subject to the review and comment of such
counsel, and (B) Track 'n Trail will notify each Holder of Registrable
Shares covered by such registration statement of any stop order issued or
threatened by the SEC, any other order suspending the use of any
preliminary prospectus or of the suspension of the qualification of the
registration statement for offering or sale in any jurisdiction, and take
all reasonable actions required to prevent the entry of such stop order,
other order or suspension or to remove it if entered;
(iii) furnish to each Holder and each underwriter, if applicable, of
Registrable Shares covered by such registration statement such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as each Holder
of Registrable Shares covered by such registration statement may reasonably
request in order to facilitate the disposition of the Registrable Shares by
such Holder;
(iv) use its best efforts to register or qualify such Registrable
Shares covered by such registration statement under the state securities or
blue sky laws of such jurisdictions as each Holder of Registrable Shares
covered by such registration statement and, if applicable, each
underwriter, may reasonably request, and do any and all other acts and
things that may be reasonably necessary to consummate the disposition in
such jurisdictions of the Registrable Shares owned by such Holder, except
that Track 'n Trail shall not for any purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction
where, but for the requirements of this clause (iv), it would not be
obligated to be so qualified;
(v) use its best efforts to cause such Registrable Shares covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
Holders thereof to consummate the disposition of such Registrable Shares;
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(vi) if at any time when a prospectus relating to the Registrable
Shares is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus as then in
effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, immediately give written notice
thereof to each Holder and the managing underwriter or underwriters, if
any, of such Registrable Shares and prepare and furnish to each such Holder
a reasonable number of copies of an amended or supplemental prospectus as
may be necessary so that, as thereafter delivered to the purchasers of such
Registrable Shares, such prospectus shall not include an untrue statement
of material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(vii) use its best efforts to list any portion of such Registrable
Shares not already listed on any securities exchange on which similar
securities of Track 'n Trail are then listed, and enter into customary
agreements including a listing application and indemnification agreement in
customary form, provided that the applicable listing requirements are
satisfied, and provide a transfer agent and registrar for such Registrable
Shares covered by such registration statement not later than the effective
date of such registration statement;
(viii) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other actions as each Holder of
Registrable Shares being sold or the underwriter or underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
such Registrable Shares, including customary indemnification and opinions;
(ix) use its best efforts to obtain a "cold comfort" letter or
letters from Track 'n Trail's independent public accountants in customary
form and covering matters of the type customarily covered by "cold comfort"
letters as the Holders of the Registrable Shares being sold or the
underwriters retained by such Holders shall reasonably request;
(x) make available for inspection by representatives of any Holder
of Registrable Shares covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by such Holders or any such underwriter, all financial and other
records pertinent corporate documents and properties of Track 'n Trail and
its subsidiaries' officers, directors and employees to supply all
information and respond to all inquiries reasonably requested by such
Holders or any such representative, underwriter, attorney, accountant or
agent in connection with such registration statement;
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(xi) promptly prior to the filing of any document that is to be
incorporated by reference into the registration statement or the prospectus
(after initial filing of the registration statement), provide copies of
such document to counsel to the Holders of Registrable Shares covered by
such registration statement and to the managing underwriter(s), if any,
make Track 'n Trail's representatives available for discussion of such
document and make such changes in such document prior to the filing thereof
as counsel for such Holders or underwriter(s) may reasonably request;
(xii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable after the effective date of the
registration statement, an earning statement that shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and
regulations promulgated thereunder;
(xiii) not later than the effective date of the applicable
registration statement, use its best efforts to provide a CUSIP number for
any portion of such Registrable Shares not already included in a CUSIP
number for similar securities of Track 'n Trail, and provide the applicable
transfer agents with printed certificates for the Registrable Shares that
are in a form eligible for deposit with the Depository Trust Company;
(xiv) notify counsel for the Holders of Registrable Shares included in
such registration statement and the managing underwriter or underwriters,
if any, immediately and confirm the notice in writing, (A) when the
registration statement, or any post-effective amendment to the registration
statement, shall have become effective, or any supplement or amendment to
the prospectus shall have been filed, (B) of the receipt of any comments
from the SEC and (C) of any request of the SEC to amend the registration
statement or amend or supplement the prospectus or for additional
information; and
(xv) cooperate with each seller of Registrable Shares and each
underwriter, if any, participating in the disposition of such Registrable
Shares and their respective counsel in connection with any filings required
to be made with the NASD.
(b) Each Holder of Registrable Shares hereby agrees that, upon receipt of
any notice from Track 'n Trail of the happening of any event of the type
described in Section 5(a)(vi) hereof, such Holder shall forthwith discontinue
disposition of such Registrable Shares covered by such registration statement or
related prospectus until such Holder's receipt of the copies of the supplemental
or amended prospectus contemplated by Section 5(a)(vi) hereof, and, if so
directed by Track 'n Trail, such Holder will deliver to Track 'n Trail (at Track
'n Trail's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Shares at the
time of receipt of such notice. In the event Track 'n Trail shall give any such
notice, the period
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mentioned in Section 5(a)(ii) hereof shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 5(a)(vi) hereof and including the date when such Holder
shall have received the copies of the supplemental or amended prospectus
contemplated by Section 5(a)(vi) hereof. If for any other reason the
effectiveness of any registration statement filed pursuant to Section 4 hereof
is suspended or interrupted prior to the expiration of the time period regarding
the maintenance of the effectiveness of such Registration Statement required by
Section 5(a)(ii) hereof so that Registrable Shares may not be sold pursuant
thereto, the applicable time period shall be extended by the number of days
equal to the number of days during the period beginning with the date of such
suspension or interruption to and ending with the date when the sale of
Registrable Shares pursuant to such registration statement may be recommenced.
(c) Each Holder hereby agrees to provide Track 'n Trail, upon receipt of
its request, with such information about such Holder to enable Track 'n Trail to
comply with the requirements of the Securities Act and to execute such
certificates as Track 'n Trail may reasonably request in connection with such
information and otherwise to satisfy any requirements of law.
6. UNDERWRITTEN REGISTRATIONS. Subject to the provisions of Sections 2,
3 and 4 hereof, any of the Registrable Shares covered by a registration
statement may be sold in an underwritten offering at the discretion of the
Holder thereof. In the case of an underwritten offering pursuant to Section 2
hereof, the managing underwriter(s) that will administer the offering shall be
selected by Track 'n Trail; PROVIDED, HOWEVER, that such managing underwriter(s)
shall be reasonably satisfactory to the Holders of a majority of the Registrable
Shares to be registered. In the case of any underwritten offering pursuant to
Section 4 hereof, the managing underwriter(s) that will administer the offering
shall be selected by the Holders of a majority of the Registrable Shares to be
registered; PROVIDED, HOWEVER, that such underwriter(s) shall be reasonably
satisfactory to Track 'n Trail.
7. EXPENSES.
(a) Subject to Section 7(b), Track 'n Trail shall pay all fees, costs and
expenses of all registrations pursuant to Sections 2 or 4 hereof, including all
SEC and stock exchange or NASD registration and filing fees and expenses,
reasonable fees and expenses of any "qualified independent underwriter" and its
counsel as may be required by the rules of the NASD, fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel for the underwriters, if any, in connection with blue
sky qualifications of the Registrable Shares), rating agency fees, printing
expenses (including expenses of printing certificates for Registrable Shares and
prospectuses), messenger, telephone and delivery expenses, the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange or national market system on which similar securities
issued by Track 'n Trail are then listed, fees and disbursements of counsel for
Track 'n Trail and all independent certified public accountants (including the
expenses of any annual audit, special audit and "cold comfort" letters required
by or incident to such performance and compliance), the fees and disbursements
of the
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underwriters customarily paid by issuers or sellers of securities (including
expenses relating to "road shows" and other marketing activities), the
reasonable fees and expenses of special experts required to be retained by Track
'n Trail in connection with such registration, and the reasonable fees and
expenses of other Persons required to be retained by Track 'n Trail
(collectively, "Registration Expenses").
(b) The Holders shall pay the following: (i) any underwriting discounts or
commissions or transfer taxes, if any, attributable to the sale of Registrable
Shares by the Holders pursuant to this Agreement and (ii) all fees, costs and
expenses of counsel to the Holders in connection with any registration pursuant
to this Agreement.
8. INDEMNIFICATION.
(a) INDEMNIFICATION BY TRACK 'N TRAIL. In the event of any registration
of any securities of Track 'n Trail under the Securities Act pursuant to Section
2 or 4 hereof, Track 'n Trail will, and it hereby does, indemnify and hold
harmless, to the extent permitted by law, each of the Holders of any Registrable
Shares covered by such registration statement, each Affiliate of such Holder
(other than Track 'n Trail) and their respective directors and officers, each
other Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such Holder or any such
underwriter within the meaning of the Securities Act (collectively, the
"Indemnified Parties"), against any and all losses, claims, damages or
liabilities, joint or several, and expenses (including any amounts paid in any
settlement effected with Track 'n Trail's consent, which consent shall not be
unreasonably withheld) to which any Indemnified Party may become subject under
the Securities Act, state securities or blue sky laws, common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof, whether or not such Indemnified Party is a party
thereto) or expenses arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities Act,
any preliminary, final or summary prospectus contained therein, or any amendment
or supplement thereof, (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any violation by Track 'n Trail of any federal,
state or common law rule or regulation applicable to Track 'n Trail and relating
to action required of or inaction by Track 'n Trail in connection with any such
registration, and Track 'n Trail will reimburse such Indemnified Party for any
legal or any other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; PROVIDED, HOWEVER, that Track 'n Trail shall not be liable to any
Indemnified Party in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement or amendment or
supplement thereof or in any such preliminary, final or summary prospectus in
reliance upon and in conformity with written information with respect to such
Holder furnished to Track 'n Trail by such Holder specifically for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation
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made by or on behalf of such Holder or any Indemnified Party and shall survive
the transfer of such securities by such Holder.
(b) INDEMNIFICATION BY THE HOLDERS AND THE UNDERWRITERS. Track 'n Trail
may require, as a condition to including any Registrable Shares in any
registration statement filed in accordance with Section 2 or 4 hereof, that
Track 'n Trail shall have received an undertaking reasonably satisfactory to it
from the Holders of such Registrable Shares or any underwriter to indemnify and
hold harmless (in the same manner and to the same extent as set forth in Section
8(a) hereof) Track 'n Trail with respect to any statement or alleged statement
in or omission or alleged omission from such registration statement, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
with respect to the Holders of the Registrable Shares being registered or such
underwriter furnished to Track 'n Trail by such Holders or such underwriter
specifically for use in the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or supplement, or a
document incorporated by reference into any of the foregoing; PROVIDED, HOWEVER,
that no such Holder shall be liable for any indemnity claims in excess of the
amount of the net proceeds received by such Holder from the sale of Registrable
Shares. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of Track 'n Trail or any of the Holders, or
any of their respective Affiliates (other than Track 'n Trail), directors,
officers or controlling Persons, and shall survive the transfer of such
securities by such Holder.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 8, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; PROVIDED, HOWEVER, that the failure
of the indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Section 8, except to the extent
that the indemnifying party is actually materially prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, with counsel 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 be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation; PROVIDED, HOWEVER, that the indemnified party shall have the
right, at the sole cost and expense of the indemnifying party, to employ counsel
to represent the indemnified party and its respective controlling persons,
directors, officers, employees or agents who may be subject to liability arising
out of any claim in respect of which indemnity may be sought by the indemnified
party against such indemnifying party under this Section 8 if (i) the employment
of such counsel shall have been authorized in writing by such indemnifying party
in connection with the defense of such action, (ii) the indemnifying party shall
not have promptly employed counsel reasonably satisfactory to the indemnified
party to assume
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the defense of such action or counsel, or (iii) any indemnified party shall have
reasonably concluded that there may be defenses available to such indemnified
party or its respective controlling persons, directors, officers, employees or
agents which are in conflict with or in addition to those available to an
indemnifying party; PROVIDED, FURTHER, that the indemnifying party shall not be
obligated to pay for more than the expenses of one firm of separate counsel for
the indemnified party (in addition to the reasonable fees and expenses of one
firm serving as local counsel). No indemnifying party will consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to any indemnified party under Section 8(a) or 8(b) hereof
or is insufficient to hold it harmless in respect of any loss, claim, damage or
liability, or any action in respect of any loss, claim, damage or liability, or
any action in respect thereof referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the indemnified party and indemnifying party or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the indemnified party
and indemnifying party with respect to the statements or omissions that resulted
in such loss, claim, damage or liability, or action in respect thereof, as well
as any other relevant equitable considerations. Notwithstanding any other
provision of this Section 8(d), no Holder of Registrable Shares shall be
required to contribute an amount greater than the dollar amount of the net
proceeds received by such Holder with respect to the sale of any such
Registrable Shares. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding subdivisions of this Section 8 (with appropriate modifications)
shall be given by Track 'n Trail and each Holder of Registrable Shares with
respect to any required registration or other qualification of securities under
any federal or state law or regulation other than the Securities Act.
(f) NON-EXCLUSIVITY. The obligations of the parties under this Section 8
shall be in addition to any liability that any party may otherwise have to any
other party.
9. RULE 144. Track 'n Trail covenants that it will file in a timely
manner the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder (or, if Track
'n Trail is not required to file such reports, it will, upon the request of any
Holder of Registrable Shares, make publicly available such information), and it
will take such further action as any Holder of Registrable Shares may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Shares without registration under the Securities Act within the
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limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Shares, Track 'n Trail will deliver to such Holder a written
statement as to whether it has complied with such requirements.
10. ASSIGNABILITY. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. Except as provided herein, no party may assign any of its
rights or delegate any of its duties under this Agreement without the express
consent of the other parties hereto. The provisions of this Agreement that are
for the benefit of the parties hereto other than Track 'n Trail shall also be
for the benefit of and enforceable by any subsequent Holder of any Registrable
Shares, subject to the provisions contained herein. Any Holder may assign any
of its rights or delegate any of its duties under this Agreement, in whole or in
part, without any prior consent of Track 'n Trail only to a Person (a
"Designated Transferee") (a) who is a beneficiary of the Trust pursuant to the
terms thereof and who agrees in writing to be bound by the terms of this
Agreement or (b) who is a transferee (whether through purchase, share exchange,
bequest or otherwise) of at least 100,000 Registrable Shares (as presently
constituted and subject to subsequent adjustments for stock splits, stock
dividends, reverse stock splits and the like) and who agrees in writing to be
bound by the terms of this Agreement; PROVIDED in each case that written notice
is provided to Track 'n Trail at the time of or within a reasonable time after
such assignment, stating the name and address of such Designated Transferee and
identifying the Registrable Shares with respect to which such registration
rights are being assigned. Any purported assignment in violation of this
Section 10 shall be void.
11. NOTICES. Any and all notices, designations, consents, offers,
acceptances or any other communications shall be given in writing by either (a)
personal delivery to and receipted for by the addressee or by (b) telecopy or
registered or certified mail that shall be addressed, in the case of Track 'n
Trail, to: 0000-X Xxxxxxxx Xxxxx, Xx Xxxxxx Xxxxx, Xxxxxxxxxx 00000, attention:
Chief Financial Officer; in the case of Holders, to the address or addresses
thereof appearing on the books of Track 'n Trail or of the transfer agent and
registrar for its Common Stock. All such notices and communications shall be
deemed to have been duly given and effective: when delivered by hand, if
personally delivered; two business days after being deposited in the mail,
postage prepaid, if mailed; and when receipt is acknowledged, if telecopied.
12. NO INCONSISTENT AGREEMENTS. Track 'n Trail will not hereafter enter
into any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement.
13. SPECIFIC PERFORMANCE. Track 'n Trail acknowledges that the rights
granted to the Holders in this Agreement are of a special, unique and
extraordinary character, and that any breach of this Agreement by Track 'n Trail
could not be compensated for by damages. Accordingly, if Track 'n Trail
breaches its obligations under this Agreement, the Holders shall be entitled, in
addition to any other remedies that they may have, to enforcement of
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this Agreement by a decree of specific performance requiring Track 'n Trail to
fulfill its obligations under this Agreement. Track 'n Trail consents to
personal jurisdiction in any such action brought in the United States District
Court for the Northern District of California or any such other court and to
service of process upon it in the manner set forth in Section 11 hereof.
14. SEVERABILITY. If any provision of this Agreement or any portion
thereof is finally determined by a court of competent jurisdiction to be
unlawful or unenforceable, such provision or portion thereof shall in no way
affect any other provision of this Agreement, the application of any such
provision and any other circumstances, and any portion of such invalidated
provision that is not invalidated by such a determination shall remain in full
force and effect.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which,
together, shall constitute one and the same instrument.
16. DEFAULTS. A default by any party to this Agreement in such party's
compliance with any of the conditions or covenants hereof or performance of any
of the obligations of such party hereunder shall not constitute a default by any
other party.
17. AMENDMENTS, WAIVERS. This Agreement may not be amended, modified or
supplemented and no waivers of or consents to or departures from the provisions
hereof may be given unless consented to in writing by Track 'n Trail and the
holders of a majority of the Registrable Shares; PROVIDED, HOWEVER, that no such
amendment, supplement, modification or waiver shall deprive any Holder of any
rights under Section 2 or 4 hereof without the consent of such Holder.
18. CONSTRUCTION. The captions contained in this Agreement are for
reference purposes only and shall not constitute a part of this Agreement.
Unless the context requires otherwise, the use of the masculine shall include
the feminine, and the use of the singular shall include the plural. The word
"including" shall mean "including, without limitation."
19. ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
20. THIRD PARTY BENEFICIARIES. Except as expressly provided in this
Agreement, the parties hereto intend that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any person other than the
parties hereto.
21. ENTIRE AGREEMENT. This Agreement contains the entire agreement among
the parties hereto with respect to the transactions contemplated herein and
understandings among Track 'n Trail and the Suechtings relating to the subject
matter hereof. Any and all previous agreements and understandings between or
among Track 'n Trail and the
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Suechtings regarding the subject matter hereof are, whether written or oral,
superseded by this Agreement.
22. GOVERNING LAW. This Agreement is made pursuant to and shall be
construed in accordance with the laws of the State of Delaware without regard to
the conflicts of laws principles of that state.
IN WITNESS WHEREOF, the Suechtings have executed this Agreement, and
Track 'n Trail, Inc. has caused this Agreement to be executed by its duly
authorized officer, as of the date first written above.
TRACK 'N TRAIL, INC.
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name Xxxxxxx X. Xxxxxxx
------------------------------
Title President
-----------------------------
XXXXX X. XXXXXXXXX, XX. AND XXXXXX
XXXXXXXXX, CO-TRUSTEES OF THE
XXXXXXXXX FAMILY TRUST
/s/ Xxxxx X. Xxxxxxxxx, Xx.
--------------------------------
Xxxxx X. Xxxxxxxxx, Xx., Trustee
/s/ Xxxxxx Xxxxxxxxx
--------------------------------
Xxxxxx Xxxxxxxxx, Trustee
/s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxxx
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