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EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
DATED AS OF
NOVEMBER 11, 1999
AMONG
CROWN BOOKS CORPORATION
AND
ROYALTY BOOKS ASSOCIATES, LLC
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND USAGE......................................................................1
Section 1.1 Definitions...........................................................................1
Section 1.2 Usage.................................................................................4
ARTICLE II DEMAND AND SHELF REGISTRATION STATEMENTS...................................................5
Section 2.1 Demand Registration Statements........................................................5
Section 2.2 Shelf Registration Statements.........................................................6
Section 2.3 Limitation on Demand Registration.....................................................6
Section 2.4 Manner of Sale........................................................................7
Section 2.5 Withdrawal............................................................................7
ARTICLE III PIGGYBACK REGISTRATION STATEMENTS..........................................................7
Section 3.1 Piggyback Registration Statements.....................................................7
Section 3.2 Priority in Registrations.............................................................8
ARTICLE IV REGISTRATION PROCEDURES AND EXPENSES.......................................................9
Section 4.1 Registration Procedures...............................................................9
Section 4.2 Holders' Obligations.................................................................12
Section 4.3 Registration Expenses................................................................13
ARTICLE V INDEMNIFICATION AND CONTRIBUTION..........................................................14
Section 5.1 Indemnification by the Company.......................................................14
Section 5.2 Indemnification by the Selling Holders...............................................14
Section 5.3 Notice of Claims, etc................................................................15
Section 5.4 Contribution.........................................................................16
Section 5.5 Survival.............................................................................16
ARTICLE VI RULE 144 AND RULE 144A....................................................................17
Section 6.1 Reports, etc.........................................................................17
Section 6.2 Rule 144 Information.................................................................17
Section 6.3 Rule 144A Information................................................................17
ARTICLE VII MISCELLANEOUS.............................................................................17
Section 7.1 Amendment, Modification and Waivers; Further Assurances..............................17
Section 7.2 Assignment...........................................................................18
Section 7.3 Invalid Provisions...................................................................18
Section 7.4 Nominees for Beneficial Owners.......................................................18
Section 7.5 Governing Law........................................................................19
Section 7.6 Notices..............................................................................19
Section 7.7 Entire Agreement; Integration........................................................20
Section 7.8 Injunctive Relief....................................................................20
Section 7.9 Section Headings.....................................................................20
Section 7.10 Counterparts.........................................................................20
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 7.11 Filing...............................................................................20
Section 7.12 Termination..........................................................................20
Section 7.13 Attorneys' Fees......................................................................20
Section 7.14 No Third Party Beneficiaries.........................................................20
Section 7.15 Requisite Holders....................................................................21
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REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of November 11, 1999 by and
between Crown Books Corporation, a Delaware corporation (the "Company"), and
Royalty Books Associates, LLC, a New York limited liability company ("Royalty").
RECITALS
WHEREAS, in connection with the reorganization of the Company, certain
creditors of the Company will acquire shares of Common Stock (as defined in
Article I); and
WHEREAS, the Plan (as defined in Article I) requires the Company to
provide certain rights to the holders of its securities issued under the Plan to
cause the securities so issued to be registered pursuant to the Securities Act
(as defined in Article I);
NOW, THEREFORE, in consideration of good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Section 1.1 Definitions. As used in this Agreement:
Affiliate. "Affiliate" shall mean (a) when used with reference to any
partnership, any Person that, directly or indirectly through one or more
intermediaries, owns or controls 10% or more of either the capital or profit
interests of such partnership or is a general partner of such partnership or is
a Person in which such partnership has a 10% or greater direct or indirect
equity interest, and (b) when used with reference to any corporation, any Person
that, directly or indirectly, owns or controls 10% or more of the outstanding
voting securities of such corporation or is a Person in which such corporation
has a 10% or greater direct or indirect equity interest. In addition, the term
"Affiliate," when used with reference to any Person, also means any other Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person. As used in the
preceding sentence, (i) the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of the entity referred to, whether through ownership of voting
securities, by contract, or otherwise, and (ii) the terms "controlling" and
"controls" shall have meanings correlative to the foregoing.
Agreement. "Agreement" shall mean this Registration Rights Agreement, as
the same may be amended from time to time.
Bankruptcy Court. "Bankruptcy Court" shall mean the United States
Bankruptcy Court for the District of Delaware, which Court has entered an Order
confirming the Plan.
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Commission. "Commission" shall mean the United States Securities and
Exchange Commission, or any successor governmental agency or authority thereto.
Common Stock. "Common Stock" shall mean (a) the common stock, par value
$0.01 per share, of the Company, and (b) shares of capital stock of the Company
issued by the Company in respect of or in exchange for shares of such common
stock in connection with any stock dividend or distribution, stock split-up,
recapitalization, recombination or exchange by the Company generally of shares
of such common stock.
Continuously Effective. "Continuously Effective," with respect to a
specified registration statement, shall mean that it shall not cease to be
effective and available for Transfers of Registrable Securities thereunder for
longer than either (a) any ten consecutive business days, or (b) an aggregate of
fifteen business days during the period specified in the relevant provision of
this Agreement.
Demand Registration Request. "Demand Registration Request" shall have the
meaning set forth in Section 2.1(a).
Demand Registration Statement. "Demand Registration Statement" shall have
the meaning set forth in Section 2.1(a).
Demanding Holders. "Demanding Holders" shall have the meaning set forth
in Section 2.1(a).
Effective Date. "Effective Date" shall have the meaning set forth in the
Plan.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
Holders. "Holders" shall mean Royalty and any Person to whom the rights
granted under this Agreement are validly transferred by Royalty, and their
Permitted Transferees (as defined in Section 7.2 hereof) pursuant to Section 7.2
hereof.
Person. "Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
Piggyback Registration Statement. "Piggyback Registration Statement"
shall have the meaning set forth in Section 3.1.
Plan. "Plan" shall mean the First Amended Joint Chapter 11 Plan of
Reorganization of the Company and its affiliated debtors, as confirmed by an
order of the United States Bankruptcy Court for the District of Delaware, dated
October 7, 1999.
Register, Registered and Registration. "Register", "registered", and
"registration" shall refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities
Act, and the declaration or ordering by the Commission of effectiveness of such
registration statement or document.
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Registrable Securities. "Registrable Securities" shall mean (a) the
Shares owned by the Holders on any date of determination; (b) any shares of
Common Stock or other securities issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange by the Company generally
for, or in replacement by the Company generally of, such Shares; and (c) any
securities issued in exchange for such Shares in any merger, recapitalization or
reorganization of the Company. As to any particular Registrable Securities, once
issued such securities will cease to be Registrable Securities (a) when a
registration statement with respect to the resale of such securities has become
effective under the Securities Act and such securities shall have been disposed
of in accordance with the plan of distribution set forth in such registration
statement, or (b) when such securities are eligible to be sold to the public in
compliance with Rule 144 or any similar rule promulgated by the Commission
pursuant to the Securities Act, and such securities shall have been transferred
pursuant to Rule 144 to a third party who is not an Affiliate of the Company,
and new certificates evidencing such securities without legends restricting
further transfer shall have been delivered by the Company, and the Holders shall
have received an opinion of Company counsel that, in the opinion of such
counsel, subsequent public distribution of such securities shall neither require
registration under the Securities Act or qualification (or any similar filing)
under any state securities or blue sky law then in effect nor the use of an
applicable exemption from such registration qualification.
Registration Expenses. "Registration Expenses" shall mean all expenses
incident to the Company's performance of or compliance with this Agreement,
including, without limitation, (a) all registration, filing, securities exchange
listing, rating agency and National Association of Securities Dealers, Inc.
fees, (b) all registration, filing, qualification and other fees and expenses of
complying with securities or blue sky laws of all jurisdictions in which the
securities are to be registered and the reasonable legal fees and expenses
incurred in connection with the blue sky qualifications of the Registrable
Securities and the determination of their eligibility for investment under the
laws of all such jurisdictions, (c) all word processing, duplicating, printing,
messenger and delivery expenses incurred by the Company, (d) the fees and
disbursements of counsel for the Company and of its independent public
accountants, including, without limitation, the expenses of any special audits
or "cold comfort" letters required by or incident to such performance and
compliance, (e) the reasonable fees and disbursements incurred for one counsel
or firm of counsel selected by the Requisite Holders of the Registrable
Securities, (f) premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable Securities
being registered to the extent the Company elects to obtain such insurance, (g)
any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities (but excluding underwriting discounts, concessions,
allowances and commissions and transfer taxes, if any, relating to the
Registrable Securities being registered), and (h) fees and expenses of other
Persons retained or employed by the Company.
Requisite Holders. "Requisite Holders" shall mean any Holder or Holders
of a majority in interest of the Registrable Securities requested to be included
in a registration or other relevant action, as the case may be.
Rule 144. "Rule 144" shall mean Rule 144 promulgated by the Commission
under the Securities Act, and any successor provision thereto.
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Rule 144A. "Rule 144A" shall mean Rule 144A promulgated by the Commission
under the Securities Act, and any successor provision thereto.
Securities Act. "Securities Act" shall mean the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
Selling Holders. "Selling Holders" shall mean, with respect to a
specified registration pursuant to this Agreement, Holders whose Registrable
Securities are included in such registration.
Shares. "Shares" shall mean the shares of Common Stock distributed
pursuant to the Plan.
Shelf Registration Statement. "Shelf Registration Statement" shall have
the meaning set forth in Section 2.2(a).
Transfer. "Transfer" shall mean and include the act of selling, giving,
transferring, creating a trust (voting or otherwise), assigning or otherwise
disposing of (other than pledging, hypothecating or otherwise transferring as
collateral security for an underlying obligation) (and correlative words shall
have correlative meanings); provided, however, that any transfer or other
disposition upon foreclosure or other exercise of remedies of a secured creditor
after an event of default under or with respect to a pledge, hypothecation or
other transfer as collateral security shall constitute a "Transfer."
Underwriters' Representative. "Underwriters' Representative" shall mean
the managing underwriter, or, in the case of a co-managed underwriting, the lead
manager, within the meaning of Rule 12b-2 under the Exchange Act.
Violation. "Violation" shall have the meaning set forth in Section 5.1.
Section 1.2 Usage. (a) References to a Person are also references to
its assigns and successors in interest (by any means whatever, including merger,
consolidation or sale of all or substantially all the assets of such Person or
otherwise, as the case may be).
(b) References to Registrable Securities "owned" by a Holder
shall include Registrable Securities beneficially owned by such Person but which
are held of record in the name of a nominee, trustee, custodian, or other agent,
but shall exclude shares of Common Stock held by a Holder in a fiduciary
capacity for customers of such Person.
(c) References to a document are to it as amended, waived and
otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
(d) References to Sections, Articles or Schedules are to
sections or articles hereof or schedules hereto, unless the context otherwise
requires.
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(e) The definitions set forth herein are equally applicable
both to the singular and plural forms and the feminine, masculine and neuter
forms of the terms defined.
(f) The term "including" and correlative terms shall be deemed
to be followed by "without limitation" whether or not followed by such words or
words of like import.
(g) The term "hereof" and similar terms refer to this Agreement
as a whole.
(h) The "date of" any notice or request given pursuant to this
Agreement shall be determined in accordance with Section 7.6.
ARTICLE II
DEMAND AND SHELF REGISTRATION STATEMENTS
Section 2.1 Demand Registration Statements. (a) At any time during the
period commencing on the Effective Date and ending on the fifth anniversary
thereof, one or more Holders of more than 10% of the Registrable Securities
outstanding on the Effective Date (the "Demanding Holder") may at their option
make a written request (a "Demand Registration Request") to the Company
requesting that the Company file with the Commission a registration statement on
an appropriate form under the Securities Act (a "Demand Registration Statement")
to register all or such number of such Demanding Holders' Registrable Securities
as the Demanding Holders shall request in writing; provided, however, that no
request may be made pursuant to this Section 2.1 if the Registrable Securities
that the Demanding Holders request be included in the Demand Registration
Statement and that other Holders request be included in the Demand Registration
pursuant to Section 2.1(c) hereof do not constitute at least 10% of the
aggregate amount of Registrable Securities then outstanding.
After an effective Demand Registration Request is made, the Company
shall, within 90 days of the date of such Demand Registration Request, file with
the Commission the Demand Registration Statement. Any Demand Registration
Statement shall provide for an underwritten offering (whether on a "firm," "best
efforts" or "all reasonable efforts" basis or otherwise) or an offering on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act. Any
Demand Registration Request made pursuant to this Section 2.1 shall be addressed
to the attention of the Secretary of the Company and shall specify the number of
Registrable Securities to be registered, the intended methods of disposition
thereof and that the request is for a Demand Registration Statement pursuant to
this Section 2.1. The Company shall keep any Demand Registration Statement
current for a period of 270 days following the execution date thereof.
(b) The Company shall be entitled to postpone for up to 120
days the filing of any Demand Registration Statement otherwise required to be
prepared and filed pursuant to this Section 2.1 if (i) the Board of Directors of
the Company determines, in its good faith reasonable judgment, that such
registration and the Transfer of Registrable Securities contemplated thereby
would materially interfere with, or require the premature disclosure of, any
financing, acquisition or reorganization involving the Company or any of its
subsidiaries or would otherwise require
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the premature disclosure of any other material nonpublic information as to which
the Company has a bona fide business purpose for maintaining its
confidentiality, and (ii) the Company promptly gives the Demanding Holders
notice of such determination (which notice need not disclose the fact, event or
information); provided, however, that the Company shall not have, within the
twelve months prior to the date of the postponement, postponed pursuant to this
Section 2.1(b) the filing of any other Demand Registration Statement that was
subsequently abandoned because the Demand Registration Request relating thereto
was withdrawn.
(c) Whenever the Company receives a demand pursuant to Section
2.1(a) to effect the registration of any Registrable Securities, the Company
shall promptly give written notice of such proposed registration to all Holders.
Any such Holder may, within ten days after receipt of such notice, request in
writing that all of such Holder's Registrable Securities, or any portion thereof
designated by such Holder, be included in the registration.
Section 2.2 Shelf Registration Statements. As soon as practicable but
no later than 90 days after the Effective Date, the Company shall file with the
Commission a registration statement on Form S-1 or Form S-3 (if use of such form
is then available) or such other appropriate form in accordance with the
Securities Act for an offering or offerings by the Holders of the Registrable
Securities on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act (each, a "Shelf Registration Statement"). The Company shall use
its reasonable best efforts to have each Shelf Registration Statement declared
effective within 180 days following the Effective Date. Subject to compliance
with the provisions of Section 4.2, the Holders shall be entitled to have all or
a portion of such Holders' Registrable Securities included in the applicable
Shelf Registration Statement. The Company shall keep any effective Shelf
Registration Statement current for a period of two years following the effective
date thereof.
Section 2.3 Limitation on Demand Registration. The Company shall be
obligated to effect no more than three Demand Registration Statements pursuant
to this Agreement for the Holders of the Registrable Securities. For purposes of
the preceding sentence, a Demand Registration Statement shall not be deemed to
have been effected (a) unless a registration statement with respect thereto has
become effective, (b) if after such registration statement has become effective,
such registration or the related offer, sale or distribution of Registrable
Securities thereunder is interfered with by any stop order, injunction or other
order or requirement of the Commission or other governmental agency or court for
any reason not attributable to any of the Selling Holders and such interference
is not thereafter eliminated, or (c) if the conditions to closing specified in
any underwriting agreement containing usual and customary terms entered into in
connection with such registration are not satisfied or waived, other than by
reason of a failure on the part of any of the Selling Holders. The Company's
obligation to effect a given Demand Registration pursuant to Section 2.1 shall
be deemed to have been satisfied upon the earlier of (i) the date as of which
all of the Registrable Securities included therein shall have been disposed of
pursuant to the Demand Registration Statement, and (ii) the date as of which
such Demand Registration Statement shall have been Continuously Effective for a
period of 270 days.
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Section 2.4 Manner of Sale. The Holders shall, in connection with a
Demand Registration Statement, be entitled, in their sole and absolute
discretion, to select the manner in which their Registrable Securities are sold,
including, but not limited to, the selection of underwriters or brokers through
whom such securities will be sold and the purchasers for such securities,
subject solely in the case of underwriters, to the Company's prior approval of
such underwriters or brokers, which approval shall not be unreasonably withheld
or delayed. In connection therewith, the Company shall take such actions as are
reasonably requested by such underwriters or brokers in order to facilitate the
registration and disposition of the Registrable Securities in accordance with
this Agreement, including, but not limited to, cooperating in the performance of
any reasonable due diligence investigation by a Holder or Holders'
representative or any underwriter, including making available for inspection and
discussion, respectively, necessary corporate documents and records and company
personnel, subject to the receipt of an executed confidentiality agreement in a
form reasonably satisfactory to the Company.
Section 2.5 Withdrawal. Any Holder participating in a registration
pursuant to this Agreement shall be permitted to withdraw all or part of its
Registrable Securities from such registration at any time (but not later than
two business days) prior to the effective date of the registration statement
covering such securities; provided that, in the event of a withdrawal from a
registration effected pursuant to Section 2.1 hereof, such registration shall be
deemed to have been effected for purposes of the first sentence of Section 2.3
hereof except as otherwise provided in Section 2.3 hereof.
ARTICLE III
PIGGYBACK REGISTRATION STATEMENTS
Section 3.1 Piggyback Registration Statements. (a) If at any time the
Company proposes to register equity securities or securities convertible or
exchangeable into equity securities under the Securities Act in connection with
a public offering solely for cash (other than by a registration on Form S-4 or
S-8 or any successor or similar forms or filed in connection with an exchange
offer or any offering of securities solely to the Company's existing
stockholders or otherwise pursuant to a dividend reinvestment plan or a dividend
reinvestment and stock purchase plan, and other than pursuant to Article II),
the Company shall promptly give each Holder of Registrable Securities written
notice of such proposed registration (a "Piggyback Registration Statement").
Upon the written request of each Holder receiving such notice given within
twenty days following the date of such notice (which request shall state the
number of Registrable Securities to be registered and the intended method of
distribution of such Registrable Securities), the Company shall cause to be
included in such registration statement and use its best efforts to be
registered under the Securities Act all the Registrable Securities that each
such Holder shall have requested to be registered; provided, however, that the
Company shall have the right to postpone or withdraw any registration effected
pursuant to this Section 3.1 without obligation or liability to any Holder,
subject to Section 3.1(b) hereof.
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(b) If at any time after giving written notice of its intention
to register any of its securities pursuant to Section 3.1(a), and prior to the
effective date of the Piggyback Registration Statement filed in connection with
such Registration, the Company shall determine for any reason not to register or
to delay the Registration of such securities, the Company shall also give
written notice of such determination to each Holder of Registrable Securities
contemplated to be included in such registration. If the Company shall elect not
to register such securities, the Company shall be relieved of its obligation to
register any Registrable Securities in connection therewith (but not from its
obligation, if any, to pay the Registration Expenses in connection therewith).
In the event of an election by the Company not to register such securities, such
non-registration shall not count as an exercised piggyback registration right
pursuant to this Section 3.1 hereof.
(c) Until the seventh anniversary of the date hereof, each
Holder shall be entitled to have its Registrable Securities included in an
unlimited number of Piggyback Registration Statements pursuant to this Section
3.1.
Section 3.2 Priority in Registrations. (a) If the Company's offering
pursuant to which a Piggyback Registration Statement is proposed to be filed is
underwritten, the Holders shall sell the Registrable Securities to be sold
pursuant to such offering to or through the underwriter or underwriters of the
securities being registered for the account of the Company upon terms generally
comparable to the terms applicable to the Company and for the account of the
Holders, and if the lead underwriter reasonably determines in writing that the
number of securities included in the registration statement exceeds the number
(the "Saleable Number") that can be sold in an orderly fashion within a price
range reasonably acceptable to the Company, then the number of securities that
the Company and the Holders will be permitted to include in such Registration
Statement will be allocated as follows: (i) first, all the securities to be sold
by the Company for its own account pursuant to Section 3.1(a), and (ii) second,
the difference between the Saleable Number and the number, if any, to be
included pursuant to clause (i) hereof, allocated among the Holders pro rata on
the basis of the relative number of Registrable Securities held by each of them.
(b) If as a result of the proration provisions of this Section
3.2, any Holder of Registrable Securities is not entitled to include all such
Registrable Securities in such registration (a "Cutback"), such Holder may,
subject to Section 2.5 hereof, elect to withdraw his, her or its request to
include any Registrable Securities in such registration (a "Withdrawal
Election"); provided, however, that a Withdrawal Election shall be irrevocable
and any Holder of Registrable Securities who has made a Withdrawal Election
shall no longer have any right to include any Registrable Securities in the
registration as to which such Withdrawal Election was made. The number of
securities required to satisfy any underwriters' overallotment option shall be
allocated pro rata among the Company and all Holders on the basis of the
relative number of securities otherwise to be included by each of them in the
registration.
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ARTICLE IV
REGISTRATION PROCEDURES AND EXPENSES
Section 4.1 Registration Procedures. Whenever required under Article II
or Article III to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as practicable (but subject to the 90 day
periods set forth in Sections 2.1(a) and 2.2(a):
(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use the Company's best
efforts to cause such registration statement to become effective, in each
instance giving due regard to the need to prepare current financial statements,
conduct due diligence and complete other actions that are reasonably necessary
to effect a registered public offering; provided, however, that before filing a
registration statement or prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the initial filing of the
registration statement and prior to effectiveness thereof, the Company shall
furnish to one firm of legal counsel for the Selling Holders (selected by the
Requisite Holders) copies of all such documents in the form substantially as
proposed to be filed with the Commission at least two days prior to filing for
review and comment by such counsel.
(b) (i) Use the Company's best efforts to keep the relevant
registration statement Continuously Effective (A) if a Demand Registration
Statement, for up to 270 days or until such earlier date as of which all the
Registrable Securities under the Demand Registration Statement shall have been
disposed of in the manner described in the Demand Registration Statement, and
(B) if a Shelf Registration Statement, subject to the immediately following
sentence, for two years. As soon as reasonably practicable after the occurrence
of any fact or event that makes untrue any statement of a material fact made in
the Shelf Registration Statement or that requires the making of any additions to
or changes in the Shelf Registration Statement in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
the Company shall prepare and file a supplement or amendment to the Shelf
Registration Statement or related prospectus, or a document incorporated therein
by reference, so that such Shelf Registration Statement and related prospectus
shall not contain any such untrue statement of a material fact or any such
omission of a material fact; provided, however, that if the Board of Directors
of the Company determines, in its good faith reasonable judgment, that the
Transfer of Registrable Securities pursuant to the Shelf Registration Statement
would materially interfere with, or require the premature disclosure of, any
financing, acquisition or reorganization involving the Company or any of its
subsidiaries or otherwise would require premature disclosure of any other
material nonpublic information as to which the Company has a bona fide business
purpose for maintaining its confidentiality, then for so long as such
circumstances or such business purpose continues to exist (provided that, the
number of days of any such suspension may not exceed an aggregate of 120 days in
any 360-day period), the Company shall not be required to prepare or file any
such supplement, amendment or document.
(ii) Each Holder agrees by acquisition of a Registrable
Security that, upon receipt of any notice from the Company of the existence of
any fact or event of the kind
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described in Section 2.1(b) or 4.1(b)(i) (which notice need not disclose the
fact, event or information), such Holder will forthwith discontinue the
disposition of any Registrable Securities pursuant to the Demand Registration
Statement or Shelf Registration Statement, as the case may be, until such
Holder's receipt of the copies of a supplemented or amended prospectus as
contemplated by Section 4.1(b)(i), or until it is advised in writing by the
Company that the use of the prospectus related to such Demand Registration
Statement or Shelf Registration Statement may be resumed, and has received
copies of any additional or supplemental filings that are incorporated by
reference in such prospectus. If so directed by the Company, each Holder will
deliver to the Company all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities that
was current at the time of receipt of such notice.
(iii) Notwithstanding the foregoing, if, in the case of a
Demand Registration Statement, the filing of a registration statement is
postponed as permitted by Section 2.1(b), or, in the case of a Shelf
Registration Statement, the preparation and filing of a supplement, amendment or
incorporated document is postponed as permitted by Section 4.1(b)(i) or Section
4.1(b)(ii), the five-year period for filing a Demand Registration Statement or
the two-year period of effectiveness of the Shelf Registration Statement, as the
case may be, shall be extended by the aggregate number of days of such
postponement.
(c) Subject to Section 4.1(b)(i) prepare and file with the
Commission such amendments, supplements or incorporated documents to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement. If the registration statement is for an underwritten
offering, the Company shall amend the registration statement or supplement the
prospectus whenever required by the terms of the underwriting agreement entered
into pursuant to Section 4.1(f). In the event that any Registrable Securities
included in a registration statement subject to, or required by, this Agreement
remain unsold at the end of the period during which the Company is obligated to
use its best efforts to maintain the effectiveness of such registration
statement, the Company may file a post-effective amendment to the registration
statement for the purpose of removing such securities from registered status.
(d) Furnish to each Selling Holder of Registrable Securities
copies of the registration statement, any pre-effective or post-effective
amendment thereto, the prospectus, including each preliminary prospectus and any
amendments or supplements thereto, in each case in conformity with the
requirements of the Securities Act.
(e) Use the Company's best efforts (i) to register and qualify
the securities covered by such registration statement under the securities or
Blue Sky laws of such states or jurisdictions as shall be reasonably requested
by the Underwriters' Representative (or if inapplicable, the Requisite Holders),
and (ii) to obtain the withdrawal of any order suspending the effectiveness of a
registration statement, or the lifting of any suspension of the qualification
(or exemption from qualification) of the offer and transfer of any of the
Registrable Securities in any jurisdiction, at the earliest practicable moment;
provided, however, that the Company shall
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not be required in connection therewith or as a condition thereto to qualify to
do business, subject itself to taxation or to file a general consent to service
of process in any states or Jurisdictions where it is not now so subject.
(f) In the event of Demand Registration Statement, enter into
and perform the Company's obligations under an underwriting or agency agreement
(including indemnification and contribution obligations of underwriters or
agents), in usual and customary form, with the managing underwriter or
underwriters of or agents for such offering. The Company shall also cooperate
with the Requisite Holders and the Underwriters' Representative for such
offering in the marketing of the Registrable Securities, including making
reasonably available the Company's officers, accountants, counsel, premises, and
books and records for such purpose.
(g) Promptly notify each Selling Holder of any stop order
issued or threatened to be issued by the Commission in connection therewith (and
take all actions required to prevent the entry of such stop order or to remove
it if entered).
(h) Make generally available to the Company's security holders
an earnings statement satisfying the provisions of Section 11(a) of the
Securities Act no later than 90 days following the end of the 12-month period
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of each registration statement filed pursuant to this
Agreement.
(i) Make reasonably available for inspection by any Selling
Holder, any underwriter participating in such offering and the representatives
of such Selling Holder and Underwriter (but not more than one firm of legal
counsel to such Selling Holders), all financial and other information as shall
be reasonably requested by them, and provide the Selling Holder, any underwriter
participating in such offering and the representatives of such Selling Holder
and Underwriter the opportunity to discuss the business affairs of the Company
with its principal executives and independent public accountants who have
certified the audited financial statements included in such registration
statement, in each case to the extent necessary to enable them to exercise their
due diligence responsibility under the Securities Act; provided, however, that
information that the Company determines, in good faith, to be confidential and
which the Company advises such Person in writing, is confidential shall not be
disclosed unless such Person signs a confidentiality agreement reasonably
satisfactory to the Company.
(j) In the event of a Demand Registration Statement, use the
Company's best efforts to obtain a "comfort letter" from its independent public
accountants and legal opinions of counsel to the Company addressed to the
Selling Holders and each underwriter or agent, in customary form and covering
such matters of the type customarily covered by such letters and in a form that
shall be reasonably satisfactory to the Requisite Holders and the Underwriters'
Representative. The Company shall furnish to each Selling Holder and each
underwriter or agent a signed counterpart of any such comfort letter or legal
opinion. Delivery of any comfort letter shall be subject to the recipient
furnishing such written representations or acknowledgments as are customarily
provided by selling stockholders, underwriters or agents who receive such
comfort letters under SAS No. 72. Nothing in the immediately preceding
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sentence shall be deemed to require a Selling Holder, underwriter or agent to
make representations and warranties if the Selling Holder, underwriter or agent
is willing to receive a letter in the form to be provided to selling
stockholders, underwriters or agents not making representations and warranties
under SAS No. 76.
(k) Provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement.
(l) Use all reasonable efforts to cause the Registrable
Securities, if the Common Stock is then listed on a national securities exchange
or included for quotation in a recognized trading market, to continue to be so
listed or included to ensure that the Registrable Securities are freely
tradeable thereon.
(m) Provide a CUSIP number for all Registrable Securities
covered by such registration statement not later than the effective date of such
registration statement.
Section 4.2 Holders' Obligations. (a) Each Selling Holder shall:
(i) furnish to the Company such information regarding
such Selling Holder and its affiliates, the number of Registrable Securities
owned and proposed to be sold by it, the intended method of disposition of such
securities and any other information as shall be required to effect the
registration of such Selling Holder's Registrable Securities, and cooperate with
the Company in preparing such registration statement and in complying with the
requirements of the Securities Act;
(ii) agree to sell its Registrable Securities to the
underwriters at the same price and on substantially the same terms and
conditions as the Company or the other Persons on whose behalf the registration
statement was being filed have agreed to sell their securities, and execute the
underwriting agreement agreed to by the Company and the Requisite Holders and
customary custody arrangements, lock-up letters, indemnities, questionnaires and
other documents reasonably required by the underwriters or agents and agreed to
by the Requisite Holders.
(b) In the event that a Demand Registration Statement or a
Piggyback Registration Statement becomes effective, if and to the extent
requested by the managing underwriter or lead agent for the offering relating
thereto, no Holder shall offer, sell or agree to sell or otherwise dispose of or
transfer any Registrable Securities or securities convertible into or
exchangeable or exercisable for any Registrable Securities (other than, in the
case of the Selling Holders under the Demand Registration Statement or Piggyback
Registration Statement, pursuant to such Demand Registration Statement or
Piggyback Registration Statement, as the case may be), or exercise any right to
register any such securities, during the period commencing ten days prior to the
anticipated effective date of such registration statement and ending 90 days
from the effective date of such registration statement. In order to enforce the
foregoing
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agreement, the Company shall be entitled to impose stop-transfer instructions
with respect to the Registrable Securities of each Holder until the end of such
period.
(c) Each Selling Holder of Registrable Securities agrees that,
upon receipt of any notice from the Company of (i) any request by the Commission
for amendments or supplements to a Registration Statement or related prospectus
covering any of such Selling Holder's Registrable Securities, (ii) the issuance
by the Commission of any stop order suspending the effectiveness of a
registration statement covering any of such Selling Holder's Registrable
Securities or the initiation of any proceedings for that purpose, (iii) the
receipt by the Company of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (iv) the happening
of any event that requires the making of any changes in the registration
statement covering any of such Selling Holder's Registrable Securities so that
it will not contain any 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 or that any related prospectus will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (v) the Company's good faith
reasonable determination that a post-effective amendment to a registration
statement covering any of such Selling Holder's Registrable Securities or a
supplement to any related prospectus is required under the Securities Act; such
Selling Holder will forthwith discontinue disposition of such Registrable
Securities until it is advised in writing by the Company that the use of the
applicable prospectus (as amended or supplemented, as the case may be) and
disposition of the Registrable Securities covered thereby pursuant thereto may
be resumed; provided, however, (x) that such Selling Holder shall not resume its
disposition of Registrable Securities pursuant to such registration statement or
related prospectus unless it has received notice from the Company that such
registration statement or amendment has become effective under the Securities
Act and has received a copy or copies of the related prospectus (as then amended
or supplemented, as the case may be) unless the Registrable Securities are then
listed on a national securities exchange and the Company has advised such
Selling Holder that the Company has delivered copies of the related prospectus,
as then amended or supplemented, in transactions effected upon such exchange,
subject to any subsequent receipt by such Selling Holder from the Company of
notice of any of the events contemplated by clauses (i) through (v) of this
paragraph, and (y) if so directed by the Company, such Selling Holder will
deliver to the Company all copies, other than permanent file copies then in such
Selling Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
Section 4.3 Registration Expenses. Expenses in connection with
registrations pursuant to this Agreement shall be allocated and paid as follows:
(a) With respect to each Shelf Registration Statement and
Demand Registration Statement, the Company shall bear and pay all of the
Registration Expenses incurred in connection with the registration and offering
of Registrable Securities with respect to such Shelf Registration Statement or
Demand Registration Statement, as the case may be; provided, however, that the
Selling Holders shall pay (i) underwriting discounts and commissions relating to
the Registrable Securities sold by them pursuant to any such registration
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statement and (ii) all fees and disbursements of any additional counsel not
required to be paid by the Company and any other advisors to the Selling
Holders.
(b) The Company shall bear and pay all Registration Expenses
incurred in connection with any Piggyback Registration Statements pursuant to
Article III, other than (i) underwriting discounts and commissions relating to
Registrable Securities, (ii) the portion of any filing fees allocable to the
Registrable Securities included in such registration by the Selling Holders, and
(iii) the fees and disbursements of any additional counsel not required to be
paid by the Company and other advisors to the Selling Holders (each of which
expenses in clauses (i) and (ii) shall be paid on a pro rata basis by the
Selling Holders of Registrable Securities included in such Piggyback
Registration Statement and which expenses in clause (iii) shall be paid on a pro
rata basis by the Selling Holders for which the expenses are incurred).
ARTICLE V
INDEMNIFICATION AND CONTRIBUTION
Section 5.1 Indemnification by the Company. If any Registrable
Securities are included in a registration statement under this Agreement, to the
extent permitted by applicable law, the Company shall indemnify and hold
harmless each Selling Holder, its directors, officers, shareholders, employees,
investment advisors, agents and Affiliates, either direct or indirect (and each
such Affiliate's directors, officers, shareholders, employees, investment
advisors and agents) and each other Person, if any, who controls such Selling
Holder (within the meaning of the Securities Act) against any and all losses,
claims, damages, liabilities and expenses, including attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, to which any
of the foregoing Persons may become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein, or any amendments or supplements thereto, or the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading (collectively, a
"Violation"); provided, however, that the indemnification required by this
Section 5.1 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or expense to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished to the Company by the indemnified party expressly for use
in connection with such registration.
Section 5.2 Indemnification by the Selling Holders. If any Registrable
Securities are included in a registration statement under this Agreement, to the
extent permitted by applicable law, each Selling Holder shall indemnify and hold
harmless the Company, its directors, officers, shareholders, employees,
investment advisors, agents and Affiliates, either direct or indirect (and
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each such Affiliate's directors, officers, shareholders, employees, investment
advisors and agents) and each other Person, if any, who controls the Company
within the meaning of the Securities Act, any other Selling Holder and any
controlling Person of any such other Selling Holder against any and all losses,
claims, damages, liabilities and expenses, including attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, to which any
of the foregoing Persons may otherwise become subject under the Securities Act,
the Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished by such
Selling Holder expressly for use in connection with such registration statement;
provided, however, that (a) the indemnification required by this Section 5.2
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if settlement is effected without the consent of the
relevant Selling Holder of Registrable Securities, which consent shall not be
unreasonably withheld, (b) in no event shall the amount of any indemnity under
this Section 5.2 and of the contribution obligation of a Selling Holder under
Section 5.4 exceed the net proceeds from the applicable offering received by
such Selling Holder, and (c) the obligation to provide indemnification hereunder
shall be several, and not joint and several, among the indemnifying parties.
Section 5.3 Notice of Claims, etc. Promptly after receipt by an
indemnified party under this Article V of notice of the commencement of any
action, suit, proceeding, investigation or threat thereof made in writing for
which such indemnified party may make a claim under this Article V, such
indemnified party shall deliver to the indemnifying party a written notice of
the commencement thereof. The failure to deliver written notice to the
indemnifying party shall not relieve such indemnifying party of any liability to
the indemnified party under this Article V. Any fees and expenses incurred by
the indemnified party (including any fees and expenses incurred in connection
with investigating or preparing to defend such action or proceeding) shall be
paid to the indemnified party, as incurred, within thirty days of written notice
thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder). Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding, and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (a) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding, or (b) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by its counsel that there may be
one or more legal defenses available to it which are different from or in
addition to those available to the indemnifying party and that the assertion of
such defenses would create a conflict of interest such that counsel employed by
the indemnifying party could not represent the indemnified party (in which case,
if such indemnified party notifies the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action, claim or proceeding on behalf of such indemnified party; it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same
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jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for all such
indemnified parties, unless the indemnified party shall have been advised by its
counsel that a conflict of interest may exist between such indemnified party and
any other of such indemnified parties with respect to such action, claim or
proceeding such that the counsel could not represent the indemnified party and
any other of such indemnified parties, in which event the indemnifying party
shall be obligated to pay the fees and expenses of such additional counsel or
counsels). No indemnifying party shall be liable to an indemnified party for any
settlement of any action, proceeding or claim without the written consent of the
indemnifying party, which consent shall not be unreasonably withheld.
Section 5.4 Contribution. If the indemnification required by this
Article V from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to in this Article V:
(a) The indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any Violation has been committed by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such Violation. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 5.1 and Section 5.2, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
(b) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 were determined by pro
rata allocation or by any other method of allocation, which does not take into
account, the equitable considerations referred to in Section 5.4(a). 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.
Section 5.5 Survival. The obligations of the Company and the Selling
Holders of Registrable Securities under this Article V shall survive the
completion of any offering of Registrable Securities pursuant to a registration
statement under this Agreement.
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ARTICLE VI
RULE 144 AND RULE 144A
Section 6.1 Reports, etc. The Company will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations promulgated by the Commission thereunder and will take such further
action as any Holder may reasonably request, to the extent required from time to
time to enable the Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by (a)
Rule 144, (b) Rule 144A, or (c) any similar rule or regulation hereafter adopted
by the Commission. Upon the request of any Holder, the Company will deliver to
that Holder a written statement as to whether it has complied with such
requirements, a copy of the most recent annual or quarterly report of the
Company, and such other reports or documents so filed as a Holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
a Holder to sell any such securities without registration.
Section 6.2 Rule 144 Information. If at any time the Company is not
required to file reports in compliance with either Section 13 or Section 15(d)
of the Exchange Act, the Company at its expense will, forthwith upon the request
of any Holder, make available adequate current public information with respect
to the Company within the meaning of paragraph (c)(2) of Rule 144.
Section 6.3 Rule 144A Information. If at any time the Company is not
required to file reports in compliance with either Section 13 or Section 15(d)
of the Exchange Act, the Company at its expense will, forthwith upon the request
of any Holder or prospective purchaser, provide to the Holder and any
prospective purchaser reasonably current information with respect to the Company
within the meaning of paragraph (d)(4) of Rule 144A.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendment, Modification and Waivers; Further Assurances.
(a) This Agreement may be amended with the consent of the Company, and the
Company may amend this Agreement or take any action herein prohibited, or omit
to perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such amendment, action or omission to
act of Holders owning Registrable Securities possessing two-thirds in number of
the Registrable Securities then outstanding (and, in the case of any amendment,
action or omission to act that adversely affects any Holder or group of Holders
differently from any of the other Holders, the written consent of such Holder or
group of Holders).
(b) No waiver of any terms or conditions of this Agreement
shall operate as a waiver of any other breach of such terms and conditions or
any other term or condition, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other
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provision hereof. No written waiver hereunder, unless it by its own terms
explicitly provides to the contrary, shall be construed to effect a continuing
waiver of the provisions being waived, and no such waiver in any instance shall
constitute a waiver in any other instance or for any other purpose or impair the
right of the party against whom such waiver is claimed in all other instances or
for all other purposes to require full compliance with such provision.
(c) Each of the parties hereto shall execute all such further
instruments and documents and take all such further action as any other party
hereto may reasonably require in order to effectuate the terms and purposes of
this Agreement.
Section 7.2 Assignment. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties and their respective
successors and permitted assigns of Registrable Securities. The rights and
obligations of a Holder under this Agreement may collectively be transferred or
assigned (in whole or in part) to one or more Persons who is a transferee of
Registrable Securities; provided, however, that any such transferee of
Registrable Securities agrees in writing, in form and substance satisfactory to
the Company, to be bound by all of the terms and provisions hereof and to join
this Agreement as a party hereto; and provided, further, that no such assignment
of rights and obligations shall be effective with respect to Registrable
Securities that, as a result of such transfer, have ceased to be Registrable
Securities by reason of the second sentence of the definition of Registrable
Securities set forth in Section 1.1 (such transferee, a "Permitted Transferee").
Section 7.3 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
(a) such provision will be fully severable, (b) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom, and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.
Section 7.4 Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election, be treated as the Holder of
such Registrable Securities for purposes of request or other action by any
Holder or Holders pursuant to this Agreement or any determination of any amount
of shares of Registrable Securities held by any Holder or Holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities. For purposes of this Agreement, "beneficial ownership" and
"beneficial owner" refer to beneficial ownership as defined in Rule 13d-3
(without regard to the 60-day provision in paragraph (d)(1)(i) thereof) under
the Exchange Act.
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Section 7.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
Section 7.6 Notices. All notices and requests given pursuant to this
Agreement shall be in writing and shall be made by hand-delivery, first-class
mail (registered or certified, return receipt requested), confirmed facsimile or
overnight air courier guaranteeing next business day:
(a) If to the Company, to:
Crown Books Corporation
0000 00xx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: President and Chief Executive Officer
With a copy to:
Xxxxx X. Xxxxxx, Xx., Esq.
Young Xxxxxxx Stargatt & Xxxxxx, LLP
Xxxxxx Square North, 11th Floor
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Facsimile Number: (000) 000-0000
If to Royalty, to:
Royalty Book Associates, LLC
c/o Shenkman Capital Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
General Counsel
With a copy to:
Xxxxxxxx X. Xxxxx, Esq.
Xxxx Marks & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile Number: (000) 000-0000
(b) If to a Permitted Transferee, to the address for such
Permitted Transferee set forth on Schedule 7.6, as may be amended from time to
time.
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Except as otherwise provided in this Agreement, the date of each such notice and
request shall be deemed to be, and the date on which each such notice and
request shall be deemed given shall be: (i) at the time delivered, if personally
delivered or mailed; (ii) when receipt is acknowledged, if sent by facsimile;
and (iii) the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next business day delivery.
Section 7.7 Entire Agreement; Integration. This Agreement supersedes
all prior agreements between or among any of the parties hereto with respect to
the subject matter contained herein, and this Agreement embodies the entire
understanding among the parties relating to such subject matter.
Section 7.8 Injunctive Relief. Each of the parties hereto acknowledges
that in the event of a breach by any of them of any material provision of this
Agreement, the aggrieved party may be without an adequate remedy at law. Each of
the parties therefore agrees that in the event of such a breach hereof the
aggrieved party may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach hereof. By seeking or obtaining any such relief, the aggrieved
party shall not be precluded from seeking or obtaining any other relief to which
it may be entitled.
Section 7.9 Section Headings. Section headings are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement,
Section 7.10 Counterparts. This Agreement maybe executed in any number
of counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not be on
the same counterpart.
Section 7.11 Filing. A copy of this Agreement and of all amendments
thereto shall be filed at the principal executive office of the Company with the
Secretary of the Company.
Section 7.12 Termination. This Agreement may be terminated at any time
by a written instrument signed by the Company and all of the Holders of
Registrable Securities. Unless sooner terminated in accordance with the
immediately preceding sentence, the parties' obligations under this Agreement
(other than Articles V and VI hereof) shall terminate in their entirety on the
tenth anniversary of the date hereof.
Section 7.13 Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, the successful party shall be entitled
to recover reasonable attorneys' fees (including any fees incurred in any
appeal) in addition to its costs and expenses and any other available remedy.
Section 7.14 No Third Party Beneficiaries. Nothing herein expressed or
implied is intended to confer upon any Person, other than the parties hereto or
their respective permitted assigns, successors, heirs and legal representatives,
or any indemnified party hereunder, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
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Section 7.15 Requisite Holders. Each of the parties hereto agrees that
the Company may, in connection with the taking of any action permitted to be
taken hereunder with the consent or approval of the Requisite Holders of the
Registrable Securities, rely in good faith on a certificate from any such holder
or holders stating that it holds or is acting on behalf of a majority in
interest of the Registrable Securities.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
Crown Books Corporation
By: /s/ Xxxxxx X. Xxxx
----------------------------------------------
Xxxxxx X. Xxxx
Vice President of Operating and Acting CEO
Royalty Books Associates, LLC
By: Xxxxxxxx Capital Management, L.L.C., its
Managing Member
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxx
Managing Member
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