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Exhibit 10.5
REGISTRATION RIGHTS AGREEMENT
This Agreement is made and entered into as of the 1st day of
July, 1997, by and between NATIONAL RECORD MART, INC., a Delaware corporation
(hereinafter called the "Company"), and XXXXXXX X. XXXXXXXXXX ("Xxxxxxxxxx"),
for himself and his successors and assigns.
WHEREAS, Xxxxxxxxxx and the Company are parties to a Stock
Option Agreement of even date herewith (the "Option Agreement") pursuant to
which the Company has granted Xxxxxxxxxx options to purchase 200,000 shares of
the Company's Common Stock, which vest over a 20 year period (the "Options");
and
WHEREAS, the Options have been, and the Shares (as defined
below) will be, issued to Xxxxxxxxxx without registration under the securities
Act of 1933, as amended (the "Securities Act") and applicable state securities
laws, and the Company and Xxxxxxxxxx desire to provide hereunder for the
possible registration of shares of Stock issuable upon exercise of Options
(hereinafter "Shares");
NOW, THEREFORE, the parties hereto agree as follows:
1. CERTAIN OTHER DEFINITIONS. As used in this Agreement the
following terms shall have the following respective meanings:
"Commission" shall mean the United States Securities
and exchange Commission and any successor federal agency
having similar powers.
"Common Stock" means the Common Stock, par value
$.01, of the Company.
"Holder" Shall mean Xxxxxxxxxx and his successors
and registered assigns of any Options.
"Option Agreement" shall mean the Stock Option
Agreement dated as of the date hereof by and between the
Company and Xxxxxxxxxx.
The terms "register", "registered" and "registration"
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act,
and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean Shares which
previously have not been sold to the public pursuant to a
registration statement and which have been issued or are
issuable upon exercise of Options.
"Registration Expenses" shall mean all expenses
incurred in connection with the Company's complying with
Section 2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and
expenses and accountants expenses including without
limitation, any special audits or "comfort" letters incidental
to or required by any such registration, any fees and
disbursements of underwriters customarily paid by issuers or
sellers of securities (but excluding underwriting discounts
and commissions and the reasonable fees and disbursements of
special counsel retained by holders of the Registrable
Securities being registered, except for the compensation of
regular employees of the Company, which shall be paid in any
event by the Company).
"Requesting Holder" shall mean any Holder who shall
request registration of registable securities pursuant to this
Agreement.
"Shares" means the shares of Common Stock of the
Company issued by the Company upon exercise of Options.
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All other capitalized terms not defined herein shall have the meaning as set
forth in the Option Agreement.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1 Registration Rights.
(a) Right to Include Registrable Securities. If, at any time
hereafter, the Company proposes to register any of its equity securities under
the Securities Act, whether or not for sale for its own account, on a form and
in a manner which would permit registration of Registrable Securities of the
Company for sale to the public under the Securities Act, it will each such time
give prompt written notice to Xxxxxxxxxx and all holders of Registrable
Securities of its intention to do so, describing such securities and specifying
the form and manner and other relevant facts involved in such proposed
registration. Upon the written request of Teitelbuam or any other Holder
delivered to the Company within ten (10) business days after the giving of any
such notice (which request shall specify the Registrable Securities intended to
be disposed of by Xxxxxxxxxx or such Holder and the intended method or methods
of disposition thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all registrable Securities which the
Company has been so requested to register to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered, provided that:
(i) If, at any time after giving such written notice
of its intention to register any of its securities and prior
to the effective date of the registration statement filed in
connection with such registration, the Company shall determine
for any reason not to register such securities, the Company
may, at its election, give written notice of such
determination to each holder of Registrable Securities and
thereupon shall be relieved of its obligation to register any
Registrable Securities in connection with such registration
(but not from its obligation to pay the Registration Expenses
in connection therewith as provided herein);
(ii) If (A) the registration so proposed by the
Company involves an underwritten offering of the securities so
being registered and (B) the managing underwriter of such
underwritten offering shall advise the Company in writing
that, in its good faith judgment, all the Registrable
Securities and all the shares to be offered by the Company are
greater than can be accommodated without interfering with the
successful marketing of all the securities to be then offered
publicly for the account of the Company, then the managing
underwriter or underwriters, subject to any applicable
contractual limitation, shall reduce of eliminate the
securities (including the Registrable Securities) proposed to
be sold to a number deemed satisfactory by the managing
underwriter or underwriters; and
(iii) For purposes of this Section 2.1(a), the term
"best efforts" shall not require the Company to reduce the
amount or sales price of such securities proposed to be
distributed by or through such underwriters except as
otherwise required by this Section 2.1.
(b) Expenses. The Company will pay all Registration Expenses
in connection with each registration of Registrable Securities requested
pursuant to this Section 2.1.
2.2 Registration Procedures. If and whenever the Company is
required to effect the registration of any Registrable Securities under the
Securities Act as provided in section 2.1, the Company will promptly:
(a) prepare and file with the Commission (unless withdrawn by
the Company) a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective, such registration statement to comply as to form and content
and all material respects with the Commission's forms, rules and regulations;
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(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities and other securities covered by such
registration statement until the earlier of such time as all of such Registrable
Securities and other securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set froth in
such registration statement or the expiration of forty-five (45) days after such
registration statement becomes effective, and will furnish to each such seller
prior to the filing thereof a copy of any amendment or supplement to such
registration statement or prospectus;
(c) furnish to each seller of such Registrable Securities such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits) and such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus and any summary prospectus) in conformity
with the requirements of the Securities Act; such documents, if any,
incorporated by reference in such registration statement or prospectus; and such
other documents, in each case, as such seller may reasonably request;
(d) use its best efforts (subject to the Company's right to
withdraw its registration) to register or qualify all Registrable Securities and
other securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the company shall
reasonably determine, to keep such registration or qualification in effect for
so long as such registration statement remains in effect, and do any and all
other reasonable acts and things which may be necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of its
Registrable Securities covered by such registration statement, except that the
Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not but
for the requirements of this subdivision (d) be obligated to be so qualified, or
to subject itself to taxation in any such jurisdiction, or to consent to general
service of process in any such jurisdiction or to agree to any restrictions on
the ownership or sale of the shares of Common Stock owned by the Company's
existing shareholders; and
(e) immediately notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the discovery of the happening of any event as a result of which,
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and at the request
of any such seller, prepare and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances then
existing.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company within ten (10) days: (i)
an Opinion of qualified legal counsel as to the seller's title to the
Registrable Securities, (ii) the execution and delivery by the seller of the
underwriting agreement to be executed by the Company and each seller, and (iii)
such information regarding such seller and the distribution of such securities
as the Company may from time to time reasonably request in writing and as shall
be required by law or by the Commission in connection therewith.
2.3. Underwritten Offerings.
(a) Inclusion of Registrable Securities. If the Company is
requires to effect the registration of any Registrable Securities pursuant to
Section 2.1, the holders of Registrable Securities to be distributed by such
underwriters shall be parties to the underwriting agreement between the Company
and such underwriters and the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters, shall also be made to and for the benefit of such holders of
Registrable Securities, and the Company will cooperate with such holders of
Registrable Securities to the end that the conditions precedent to the
obligations of such holders of Registrable
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Securities under such underwriting agreement shall not include conditions that
are not customary in underwriting agreements with respect to combined primary
and secondary distributions.
(b) Selection of Underwriters. If the Company at any time
proposes to register any of its securities under the Securities Act for sale for
its own account and such securities are to be distributed by or through one or
more underwriters, the selection of the managing underwriter(s) shall be made by
the Company and notice of the selection thereof delivered to the holders of all
Registrable Securities eligible to participate in such registration.
(c) Holdback Agreements. If any registration pursuant to
Section 2.1 shall be in connection with an underwritten public offering, each
holder of Registrable Securities agrees by acquisition of such Registrable
Securities, if so required by the managing underwriter, not to effect any public
sale or distribution of Registrable Securities (other than as part of such
underwritten public offering) within seven (7) days prior to the effective date
of such registration statement or one hundred eighty (180) days after the
effective date of such registration statement.
2.4. Indemnification.
(a) Indemnification by Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless the seller of any
Registrable Securities covered by such registration statement, its directors,
trustees and officers and each other person, if any, who controls such seller
within the meaning of the Securities Act, in each case, against any losses,
claims, damages, liabilities or expenses, joint or several (including, without
limitation, the costs and expenses of investigating, preparing for and defending
any legal proceeding, including reasonable attorney's fees), to which such
seller or any such director, trustee or officer or controlling person may become
subject under the securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings in respect thereof)
arise out of or are based upon (x) any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any document incorporated by reference
therein, or (y) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and the Company will reimburse such seller and each such
director, trustee, officer and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense (or action or proceeding in respect
thereof) arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and conformity with information furnished to the
Company by or on behalf of such seller or any such director, trustee officer or
controlling person of such seller. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such seller or
any such director, trustee, officer or controlling person and shall survive the
transfer of such securities by such seller. The Company shall agree to make
provision for contribution in lieu of any such indemnity that may be disallowed
as shall be reasonably requested by any seller.
(b) Indemnification by the Sellers. In the event of any
securities of the Company under the Securities Act pursuant to which a holder of
Registrable Securities sells Registrable Securities covered by such registration
statement, such seller of Registrable Securities will, and hereby does,
indemnify and hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this Section 2.4) the Company, each director of the
Company, each officer of the Company who shall sign such registration statement
and each other person, if any, who controls the Company within the meaning of
the Securities act, with respect to any statement in or omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus included therein, or any amendment or supplement hereto, if such
statement or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of such seller. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
person and shall survive the transfer of such securities by such
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seller. The seller shall agree to make provision for contribution in lieu of any
such indemnity that may be disallowed as shall be reasonably requested by the
Company.
(c) Notice of Claims, Etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action proceeding
involving a claim referred to in the preceding subdivisions of this Section,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to he latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section except to the extent that the
indemnifying party is damaged by such failure. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof a release from all liability in respect to such claim or litigation by
the claimant or plaintiff to such indemnified party.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section (with appropriate
modifications) shall be given by he Company and each seller or Registrable
Securities with respect to any required registration or other qualification of
such Registrable Securities under any federal or state law or regulation of a
governmental authority other than the Securities Act.
(e) Indemnification Payments. The indemnification required by
this Section shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
3. AMENDMENTS AND WAIVERS. This Agreement may be amended, and
the Company may 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 omissions to act of the holder
or holders of at least 75% or more of the shares of Registrable Securities (and,
in the case of any amendment, action or omission to act which adversely affects
any holder of Registrable Securities or a group of holders of Registrable
Securities, the written consent of each such holder or each member of such
group).
4. NOTICES. Notices and other communications under this
Agreement shall be in writing and shall be sent by registered mail, postage
prepaid, addressed:
(a) to any holder of Registrable Securities at the address
shown on the stock or warrant transfer books of the Company unless such holder
has advised the Company in writing of a different address as to which notices
shall be sent under this Agreement; and
(b) if to the Company at 000 Xxxxxx Xxxxxx, Xxxxxxxx, XX
00000, to the attention of its President, or to such other address as the
Company shall have furnished to each holder of Registrable Securities at the
time outstanding.
5. MISCELLANEOUS. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, whether so expressed or not, and, in particular,
shall inure to the benefit of and be enforceable by any holder or holders of
Registrable Securities. This Agreement embodies the entire agreement and
understanding between the Company and the other parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
relating to the subject matter hereof. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
The headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof. This Agreement may be executed in
any number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
ATTEST: NATIONAL RECORD MART, INC.
By
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Title Xxxxxxx Xxxxxxx
Senior VP/CFO
[Corporate Seal]
WITNESS:
By
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Xxxxxxx X. Xxxxxxxxxx
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