Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of this _______ day of ___________, 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 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 who are holders of record of equity
securities of Track 'n Trail who subsequent to the date hereof acquire more
than five percent (5%) of the outstanding shares of Common Stock pursuant to
a transaction with Track 'n Trail and to whom Track 'n Trail grants
registration rights pursuant to a written agreement in connection with such
transaction.
"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.
"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 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; 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 which, 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 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 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); and (iv) fourth, to the extent that the number of securities
that are to be included in such registration pursuant to clauses (i), (ii)
and (iii) is, in the aggregate, 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 other securities requested
to be included in the offering for the account of any Other Holders 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 2(b) 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).
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 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 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 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.
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;
(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;
(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;
(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 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 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 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 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 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; 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 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 ofrce 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 the parties relating to the subject matter hereof (other than that
certain Stockholders' Agreement of even date herewith among the Suechtings).
Any and all previous agreements and understandings between or among the
parties hereto 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
-----------------------------------------
Name
--------------------------------------
Title
--------------------------------------
XXXXX X. XXXXXXXXX, XX., AND XXXXXX
XXXXXXXXX, CO-TRUSTEES OF THE
XXXXXXXXX FAMILY TRUST
---------------------------------------
Xxxxx X. Xxxxxxxxx, Xx., Trustee
---------------------------------------
Xxxxxx Xxxxxxxxx, Trustee
--------------------------------------------
Xxxxxxx Xxxxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxxxx
