EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
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This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of the 25th day of October, 1996, by and among New World Coffee,
Inc., a Delaware corporation (the "Company"), with offices at 000 Xxxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 and Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxxx, both of
Branford, Connecticut (collectively, the "Shareholders").
R E C I T A L S
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WHEREAS, the Shareholders have sold all of the capital stock of
Xxxxxxxxxx'x Incorporated ("Xxxxxxxxxx'x") to the Company for cash, shares of
the Company's $.01 par value common stock (the "Common Stock"), promissory notes
convertible into Common Stock for other valuable consideration, all pursuant to
a Stock Purchase Agreement dated as of October 21, 1996 by and among
Xxxxxxxxxx'x, the Shareholders and the Company (the "Purchase Agreement"). The
Common Stock which the Shareholders may or will acquire pursuant to the Purchase
Agreement is hereafter referred to as the "Shares."
WHEREAS, the Shareholders were appointed executive officers of the
Company pursuant to the Purchase Agreement.
WHEREAS, the Company desires to grant to the Shareholders jointly and
severally certain registration rights relating to the Shares and the
Shareholders desire to obtain such registration rights jointly and severally,
subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above premises expressly
incorporated herein and the representations, warranties and conditions
hereinafter set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Definitions and References. For purposes of this Agreement,
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in addition to the definitions set forth above and elsewhere herein, the
following terms shall have the following meanings:
(a) The term "Commission" shall mean the Securities and Exchange
Commission and any successor agency.
(b) The terms "register", "registered" and "registration" shall refer
to a registration effected by preparing and filing a registration statement or
similar
document in compliance with the 1933 Act (as herein defined) and the declara
tion or ordering of effectiveness of such registration statement or document.
(c) For purposes of this Agreement, the term "Registrable Stock" shall
mean (i) the Shares, (ii) any shares of the Common Stock issued as (or issuable
upon the conversion or exercise of any warrant, right, option or other convert
ible security which is issued as) a dividend or other distribution with respect
to, or in exchange for, or in replacement of, the Shares, and (iii) any Common
Stock issued by way of a stock split of the Shares. For purposes of this
Agreement, any Registrable Stock shall cease to be Registrable Stock when (w) a
registration statement covering such Registrable Stock has been declared
effective and such Registrable Stock has been disposed of pursuant to such
effective registration statement, (x) such Registrable Stock is sold pursuant to
Rule 144 (or any similar provision then in force) under the 1933 Act, (y) such
Registrable Stock has been otherwise transferred, no stop transfer order
affecting such stock is in effect and the Company has delivered new certificates
or other evidences of ownership for such Registrable Stock not bearing any
legend indicating that such shares have not been registered under the 1933 Act,
or (z) such Registrable Stock is sold by a person in a transaction in which the
rights under the provisions of this Agreement are not assigned.
(d) The term "Holder" shall mean the Shareholders severally or any
transferee or assignee thereof to whom the rights under this Agreement are
assigned in accordance with Section 8 hereof, provided that the Shareholders or
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such transferee or assignee shall then own the Registrable Stock.
(e) The term "1933 Act" shall mean the Securities Act of 1933, as
amended.
(f) An "affiliate of such Holder" shall mean a person who controls, is
controlled by or is under common control with such Holder, or the spouse or
children (or a trust exclusively for the benefit of the spouse and/or children)
of such Holder, or, in the case of a Holder that is a partnership, its partners.
(g) The term "Person" shall mean an individual, corporation,
partnership, trust, limited liability company, unincorporated organization or
association or other entity, including any governmental entity.
(h) References in this Agreement to any rules, regulations or forms
promulgated by the Commission shall include rules, regulations and forms
succeeding to the functions thereof, whether or not bearing the same designa
tion.
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2. Incidental Registration. Commencing six (6) months after the date
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of the closing of the Purchase Agreement, if the Company determines that it
shall file a registration statement under the 1933 Act (other than a
registration statement on a Form S-4 or S-8 or filed in connection with an
exchange offer or an offering of securities solely to the Company's existing
stockholders) on any form that would also permit the registration of the
Registrable Stock and such filing is to be on its behalf and/or on behalf of
selling holders of its securities for the general registration of its common
stock to be sold for cash, at each such time the Company shall promptly give
each Holder written notice of such determination setting forth the date on which
the Company proposes to file such registration statement, which date shall be no
earlier than forty (40) days from the date of such notice, and advising each
Holder of its right to have Registrable Stock included in such registration.
Upon the written request of any Holder received by the Company no later than
twenty (20) days after the date of the Company's notice, the Company shall use
its best efforts to cause to be registered under the 1933 Act all of the
Registrable Stock that each such Holder has so requested to be registered. If,
in the written opinion of the managing underwriter or underwriters (or, in the
case of a non-underwritten offering, in the written opinion of the placement
agent, or if there is none, the Company), the total amount of such securities to
be so registered, including such Registrable Stock, will exceed the maximum
amount of the Company's securities which can be marketed (i) at a price
reasonably related to the then current market value of such securities, or (ii)
without otherwise materially and adversely affecting the entire offering, then
the amount of Registrable Stock to be offered for the accounts of Holders shall
be reduced pro rata to the extent necessary to reduce the total amount of
securities to be included in such offering to the recommended amount; provided,
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that if securities are being offered for the account of other Persons as well as
the Company, such reduction shall not represent a greater fraction of the number
of securities intended to be offered by Holders than the fraction of similar
reductions imposed on such other Persons other than the Company over the amount
of securities they intended to offer.
3. Holdback Agreement - Restrictions on Public Sale by Holder.
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(a) To the extent not inconsistent with applicable law, each Holder
whose Registrable Stock is included in a registration statement agrees not to
effect any public sale or distribution of the issue being registered or a
similar security of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to
Rule 144 under the 1933 Act, during the fourteen (14) days prior to, and during
the ninety (90) day period beginning on, the effective date of such registration
statement (except as part of the registration), if and to the extent requested
by the Company in the case of a non-underwritten public offering or if and to
the extent requested by the managing underwriter or underwriters in the case of
an underwritten public offering.
(b) Restrictions on Public Sale by the Company and Others. The
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Company agrees (i) not to effect any public sale or distribution of any
securities similar to
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those being registered, or any securities convertible into
or exchange able or exercisable for such securities, during the fourteen (14)
days prior to, and during the ninety (90) day period beginning on, the effective
date of any registration statement in which Holders are participating (except as
part of such registration), if and to the extent requested by the Holders in the
case of a non-underwritten public offering or if and to the extent requested by
the managing underwriter or underwriters in the case of an underwritten public
offering; and (ii) that any agreement entered into after the date of this
Agreement pursuant to which the Company issues or agrees to issue any securities
convertible into or exchangeable or exercisable for such securities (other than
pursuant to an effective registration statement) shall contain a provision under
which holders of such securities agree not to effect any public sale or
distribution of any such securities during the periods described in (i) above,
in each case including a sale pursuant to Rule 144 under the 1933 Act.
4. Expenses of Registration. All expenses incurred in connection
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with each registration pursuant to Section 2 of this Agreement, excluding
underwriters' discounts and commissions, but including, without limitation, all
registration, filing and qualification fees, word processing, duplicating,
printers' and accounting fees (including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance), exchange listing fees or National Association of Securities Dealers
fees, messenger and delivery expenses, all fees and expenses of complying with
securities or blue sky laws, fees and disbursements of counsel for the Company,
and the reasonable fees and disbursements of one (1) counsel for the selling
Holders shall be paid by the Company. The selling Holders shall bear and pay
the underwriting commissions and discounts applicable to the Registrable Stock
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Agreement.
5. Indemnification and Contribution.
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(a) Indemnification by the Company. The Company agrees to indemnify,
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to the full extent permitted by law, each Holder, and if a corporation its
officers, directors and agents, and each Person who controls such Holder (within
the meaning of the 0000 Xxx) 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 omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein (in case of a
prospectus or preliminary prospectus, in the light of the circumstances under
which they were made) not misleading. The Company will also indemnify any
underwriters of the Registrable Stock, their officers and directors
and each Person who controls such
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underwriters (within the meaning of the 0000 Xxx) to the same extent as provided
above with respect to the indemnifica tion of the selling Holders.
(b) Indemnification by Holders. In connection with any registration
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statement in which a Holder is participating, each such Holder will furnish to
the Company in writing such information with respect to such Holder as the
Company reasonably requests for use in connection with any such registration
statement or prospectus and agrees to indemnify, to the extent permitted by law,
the Company, its directors and officers and each Person who controls the Company
(within the meaning of the 0000 Xxx) against any losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of
material fact with respect to such Holder or any omission or alleged omission of
a material fact with respect to such Holder required to be stated in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or necessary to make the statements therein (in
the case of a prospectus or preliminary prospectus, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information with respect to such Holder so furnished in writing by such Holder
for use in the registration statement, prospectus, preliminary prospectus or any
amendment thereof. The liability of a Holder under this Section 5(b) shall be
limited to an amount equal to the initial public offering price of the
Registrable Stock sold by such Holder, unless such liability arises out of or is
based on willful misconduct of such Holder.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
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indemnification hereunder agrees to give prompt written notice to the indemni
fying party after the receipt by such Person of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which such Person will claim indemnification or contribu
tion pursuant to this Agreement and, unless in the reasonable judgment of such
indemnified party, a conflict of interest may exist between such indemnified
party and the indemnifying party with respect to such claim, permit the
indemnifying party to assume the defense of such claims with counsel reason ably
satisfactory to such indemnified party. Whether or not such defense is assumed
by the indemnifying party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent will not
be unreasonably withheld). Failure by such Person to provide said notice to the
indemnifying party shall itself not create liability except to the extent of any
injury caused thereby. No indemnifying party will consent to entry of any
judgment or enter into any settlement which 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 of such claim or litigation. If the
indemnifying party is not entitled to, or elects not to, assume
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the defense of a claim, it will not be obligated to pay the fees and expenses of
more than one (1) counsel 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 such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such additional counsel or counsels.
(d) Contribution. If for any reason the indemnity provided for in
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this Section 5 is unavailable to, or is insufficient to hold harmless, an
indemnified party, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, or provides a lesser sum to
the indemnified party than the amount hereinafter calculated, in such proportion
as is appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied for the preliminary prospectus,
prospectus or registration statement by, such indemnifying party or indemnified
parties and caused losses or damages; and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
losses or damages. 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(b) and
5(c), any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribu tion pursuant to this Section 5 (d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) which caused losses or damages, shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 5, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
Sections 5(a)
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and (b) without regard to the relative fault of said indemnifying party or
indemnified party or any other equitable consideration provided for in this
Section 5.
This Section 5 is not intended to limit in any way the Company's
obligation to indemnify the Holders, as executive officers of the Company, to
the fullest extent permitted by the General Corporation Law of the State of
Delaware.
6. Participation in Underwritten Registrations. No Holder may
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participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Holders entitled hereunder to approve
such arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
7. Rule 144. The Company covenants that it will file the reports
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required to be filed by it under the 1933 Act and the Securities Exchange Act of
1934, as amended, and the rules and regulations adopted by the Commission
thereunder; and it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Stock without registration under the 1933 Act within the
limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
8. Transfer of Registration Rights. The registration rights of any
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Holder under this Agreement with respect to any Registerable Stock may be
transferred to any transferee of such Registrable Stock; provided that such
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transfer may otherwise be effected in accordance with applicable securities
laws; provided further, that the transferring Holder shall give the Company
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written notice at or prior to the time of such transfer stating the name and
address of the transferee and identifying the securities with respect to which
the rights under this Agreement are being transferred; provided further, that
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such transferee shall agree in writing, in form and substance satisfactory to
the Company, to be bound as a Holder by the provisions of this Agreement; and
provided further, that such assignment shall be effective only if immediately
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following such transfer the further disposition of such securities by such
transferee is restricted under the 1933 Act. Except as set forth in this Section
8, no transfer of Registrable Stock shall cause such Registrable Stock to lose
such status.
9. Miscellaneous.
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(a) No Inconsistent Agreements. The Company will not hereafter
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enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Holders in this Agreement.
(b) Remedies. Each Holder, in addition to being entitled to exercise
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all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive (to the extent permitted by law) the defense in any action for
specific performance that a remedy of law would be adequate.
(c) Amendments and Waivers. The provisions of this Agreement may not
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be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of the Holders of at least a majority of the Registrable Stock
then outstanding affected by such amendment, modification, supplement, waiver or
departure.
(d) Successors and Assigns. Except as otherwise expressly provided
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herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties hereto.
Nothing in this Agreement, express or implied, is intended to confer upon any
Person other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(e) Governing Law. This Agreement shall be governed by and construed
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in accordance with the internal laws of the State of New York applicable to
contracts made and to be performed wholly within that state, without regard to
the conflict of law rules thereof.
(f) Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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(g) Headings. The headings in this Agreement are used for convenience
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of reference only and are not to be considered in construing or interpreting
this Agreement.
(h) Notices. Any notice required or permitted under this Agreement
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shall be given in writing and shall be delivered in person or by telecopy or by
overnight courier guaranteeing no later than second business day delivery,
directed to (i) the Company at the address set forth below its signature hereof
or (ii) to a Holder at the address therefor as set forth in the Company's
records. Any party may change its address for notice by giving ten (10) days
advance written notice to the other parties. Every notice or other
communication hereunder shall be deemed to have been duly given or served on the
date on which personally delivered, or on the date actually received, if sent by
telecopy or overnight courier service, with receipt acknowledged.
(i) Severability. In the event that any one or more of the provisions
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contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the Holders
shall be enforceable to the fullest extent permitted by law.
(j) Entire Agreement. This Agreement is intended by the parties as a
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final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
only of the registration rights contained herein. There are no restrictions,
promises, warranties or undertakings pertaining to registration rights other
than those set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such
registration rights.
(k) Enforceability. This Agreement shall remain in full force and
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effect notwithstanding any breach or purported breach of, or relating to, the
Purchase Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
NEW WORLD COFFEE, INC.
By:__________________________________________________
Name:
Title:
New World Coffee, Inc.
000 Xxxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXX X. XXXXXX
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XXXXXX X. XXXXXXXX
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