REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
August 31, 1999 among XXXXXX XXXXXXXXXX, INC., a Delaware corporation (the
"Purchaser") and PERFUMANIA, INC., a Florida corporation (the "Company").
WHEREAS, Purchaser and the Company are parties to a Stock Purchase
Agreement, dated as of August 31, 1999 pursuant to which the Purchaser has
agreed to purchase 1,512,406 shares of Common Stock of the Company (the "Stock")
and
WHEREAS, as condition to such purchase, the Company has agreed to grant
to the Purchaser certain registration rights with respect to the Stock.
NOW, THEREFORE, the parties hereto agree as follows:
1. Demand Registrations.
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(a) Requests for Registration. At any time from and after February 29,
2000 the Purchaser may request registration under the Securities Act of all of
the Stock under the registration requirements of the Securities Act. The
registration requested pursuant to this paragraph 1(a) is referred to herein as
"Demand Registration." Such registration may be effected using any form that is
available to the Company for the purpose of effecting the Demand Registration.
The request for a Demand Registration shall specify the approximate number of
shares of the Stock requested to be registered and the requested per share price
range, if any, for such offering. Notwithstanding any registration request
pursuant to this Section 1(a), the Board of Directors of the Company can choose
to delay any registration in good faith for a period of sixty days. The Company
can only delay registration for one sixty day period.
(b) Long-Form Registration. The Purchaser will be entitled to request
one Demand Registration, in which the Company will pay all Registration Expenses
(as hereinafter defined) until all of the Stock has been distributed provided
that the Demand Registration requested was with respect to all of the Stock. The
Purchaser's demand registration right hereunder shall not be satisfied until one
or more registration statements under the Securities Act shall have been
declared effective with respect to all of the Stock and the requirements of
Section 3 hereof shall have been satisfied.
(c) Selection of Underwriters. The Purchaser will have the right to
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select the investment banker(s) and manager(s) to administer any future offering
of the Stock.
2. Holdback Agreements.
(a) The Purchaser agrees not to effect any public sale or distribution
(including sales pursuant to Rule 144) of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to and the 90-day period beginning on
the effective date of any underwritten Demand Registration in which the Stock is
included (except as part of such underwritten registration), unless the
underwriters managing the registered public offering otherwise agree.
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 90-day period beginning on the effective date of any underwritten
Demand Registration (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or any successor form), unless the
underwriters managing the registered public offering otherwise agree, and (ii)
to use reasonable efforts to cause each holder of at least 5% (on a
fully-diluted basis) of its common stock (other than the Purchaser), or any
securities convertible into or exchangeable or exercisable for common stock,
purchased from the Company at any time after the date of this Agreement (other
than in a registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
3. Registration Procedures. Whenever the Purchaser has requested that
any Stock be registered pursuant to this Agreement, the Company will use its
best efforts to effect the registration and the sale of the Stock in accordance
with the intended method of disposition thereof and pursuant thereto the Company
will as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to the Stock and use its best efforts to
cause such registration statement to become effective (provided that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to the counsel selected by the Purchaser
copies of all such documents proposed to be filed, which documents will be
subject to the review and comment of such counsel);
(b) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than six months and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
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(c) furnish to each seller and each underwriter of the Stock such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Stock owned by such seller
or to be disposed of by such underwriter;
(d) use its best efforts to register or qualify the Stock under blue
sky laws of such jurisdictions the Purchaser reasonably requests and do any and
all other acts and things which may be reasonably necessary or advisable to
enable the Purchaser to consummate the disposition in such jurisdictions of the
Stock; provided, that the Company will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction;
(e) notify the Purchaser, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, and, at the request of
any such seller, the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of the Stock, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(f) cause all the Stock to be listed on each securities exchange on
which similar securities issued by the Company are then listed and, if not so
listed, to be listed on the NASD automated quotation system and, if listed on
the NASD automated quotation system, use its best efforts to secure designation
of all the Stock covered by such registration statement as a NASDAQ "national
market system security" within the meaning of Rule 11Aa2-1 of the Securities and
Exchange Commission or, failing that, to secure NASDAQ authorization for the
Stock and, without limiting the generality of the foregoing, to arrange for at
least two market makers to register as such with respect to the Stock with the
NASD;
(g) provide a transfer agent and registrar for all the Stock not later
than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the Purchaser
may reasonably request in order to expedite or facilitate the disposition of the
Stock;
(i) make available for inspection by the Purchaser, any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such seller or underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
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(j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Securities and Exchange Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit the Purchaser when, in its judgment, it might be deemed to
be an underwriter or a controlling person of the Company, to participate in the
preparation of such registration or comparable statement and to require the
insertion therein of material, furnished to the Company in writing, which in the
reasonable judgment of the Purchaser and its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company will use its best efforts promptly to obtain the
withdrawal of such order;
(m) obtain a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters as the Purchaser, may reasonably request;
(n) obtain an opinion of counsel from the Company's independent counsel
in customary form and covering such matters, such as effectiveness of
registration statement, of the type customarily covered by an issuer's counsel
opinion.
4. Registration Expenses.
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(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other persons retained by the Company
(all such expenses being herein called "Registration Expenses"), will be borne
as provided in this Agreement, except that the Company will, in any event, pay
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit or quarterly review, the expense of any liability
insurance and the expenses and fees for listing the securities to be registered
on each securities exchange on which similar securities issued by the Company
are then listed or on the NASD automated quotation system.
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(b) In connection with the Demand Registration, the Company will
reimburse the Purchaser for the reasonable fees and disbursements of one counsel
chosen by the Purchaser.
5. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by law,
the Purchaser, its officers and directors against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
the Purchaser expressly for use therein or by the Purchaser's failure to deliver
a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the Purchaser.
(b) In connection with any registration statement in which the
Purchaser is participating, the Purchaser will furnish to the Company in writing
such powers of attorney, custody agreements and letters of direction and other
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, will only have to indemnify the Company, its directors and
officers against any losses, claims, damages, liabilities and expenses resulting
from any untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder; provided, that the obligation to indemnify will be limited to the net
amount of proceeds received by the Purchaser from the sale of the Stock pursuant
to such registration statement.
(c) Any person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld or delayed). An indemnifying party who is not
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entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.
(d) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling person of such
indemnified party and will survive the transfer of securities described herein.
The Company also agrees to make such provisions, as are reasonably requested by
any indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
6. Participation in Underwritten Registrations. No person may
participate in any registration hereunder which is underwritten unless such
person (i) agrees to sell such person's securities on the basis provided in any
underwriting arrangements approved by the person or persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided that shall
not be required to make any representations or warranties to the Company or the
underwriters other than representations and warranties regarding the Purchaser=s
intended method of distribution.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the Purchaser in this Agreement.
(b) Adjustments Affecting the Stock. The Company will not take any
action, or permit any change to occur, with respect to its securities which
would materially adversely affect the ability of the Purchaser to include the
Stock in a registration undertaken pursuant to this Agreement or which would
materially adversely affect the marketability of the Stock in any such
registration (including, without limitation, effecting a stock split or a
combination of shares).
(c) Remedies. Any person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
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(d) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and the Purchaser.
(e) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of the
Purchaser are also for the benefit of, and enforceable by, any subsequent holder
of the Stock.
(f) Entire Agreement. Except as otherwise expressly set forth herein,
this document embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
IN WITNESS WHEREOF the parties hereto have or have caused this
Agreement to be duly executed as of the date first above written.
PERFUMANIA, INC.
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: President
XXXXXX XXXXXXXXXX, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxxx
Title: Executive VP and CFO
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