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EXHIBIT 99.5
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 1, 1999 (this
"Agreement"), by and between PawnMart, Inc., a Delaware corporation (the
"Company"), and XXXXX X. XXXXXXXX, Trustee of TRUST C of THE XXXXXXXXX X.
XXXXXXXX FAMILY TRUST DATED 10/14/1994 (the "Investor").
1. Background. The Company and the Investor have entered into that
certain PawnMart, Inc. 8% Convertible Preferred Stock and Warrant Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"). In order to
induce the Investor to enter into and consummate the transactions contemplated
by the Purchase Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this
Registration Rights Agreement is a condition to the execution and delivery of,
and Closing under, the Purchase Agreement.
2. Definitions. Capitalized terms used but not defined herein shall
have the respective meanings given to them in the Purchase Agreement. As used
herein, unless the context otherwise requires, the following terms have the
following respective meanings:
"Incidental Registration" is defined in Section 3.2.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 3, including, without limitation, all
registration, filing and applicable fees of the Commission, stock exchange or
NASD registration and filing fees and all listing fees and fees with respect to
the inclusion of securities in NASDAQ (as defined in Section 3.3(j)), all fees
and expenses of complying with state securities or blue sky laws (including fees
and disbursements of counsel to the underwriters or the Investor in connection
with "blue sky" qualification of the Registrable Securities and determination of
their eligibility for investment under the laws of the various jurisdictions),
all word processing, duplicating and printing expenses, all messenger and
delivery expenses, the fees and disbursements of counsel for the Company and of
its independent public accountants including the expenses of "cold comfort"
letters required by or incident to such registration, all fees and disbursements
of underwriters customarily paid by issuers or sellers of securities, all
transfer taxes, and the fees and expenses of one counsel to the Investor;
provided, however, that Registration Expenses shall exclude and the Investor
shall pay underwriters' fees and underwriting discounts and commissions in
respect of the Registrable Securities being registered.
"Registrable Securities" means any Warrant Shares and any Common
Shares issued upon conversion of of the Preferred Shares. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
(a) when a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (b) when
such securities shall have been otherwise transferred, new certificates for them
not bearing a legend restricting
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further transfer under the Securities Act shall have been delivered by the
Company and subsequent public distribution of them shall not require
registration of them under the Securities Act, (c) when such securities are sold
pursuant to Rule 144 (or similar rule adopted by the Commission) under the
Securities Act, or (d) when such securities cease to be outstanding.
"Requested Registration" is defined in Section 3.1(a).
"Requisite Percentage of Investor" means Investor of Registrable
Securities who hold a majority of the total Warrant Shares and Primary Shares
(counted as a single group) that are then be held by all Investor (assuming that
the then exercisable portion of the First Option (if any) and the then
exercisable portion of the Second Option (if any) had been exercised for Warrant
Shares).
"Warrant Shares" means the shares of Common Stock or other equity
securities issued or issuable upon exercise of Common Stock Warrants.
3. Registration Under Securities Act, etc.
3.1 Requested Registrations.
(a) Request for Registration. Subject to the limitations
imposed by Sections 3.1(c), on one occasion, the Investor shall have the right
to require the Company to file a registration statement under the Securities Act
covering all or any part of their respective Registrable Securities, by
delivering a written request therefor to the Company specifying the number and
amount of Registrable Securities and the intended method of distribution
thereof. Any such request pursuant to this Section 3.1(a) is referred to herein
as a "Requested Registration." Once the investor has exercised his The Company
shall give prompt written notice of each Requested Registration to all other
holders of record of Registrable Securities, and thereupon the Company shall use
its best efforts to effect the registration under the Securities Act so as to
permit promptly the sale, in accordance with the intended method of
distribution, of the Registrable Securities which the Company has been so
requested to register in the Requested Registration and all other Registrable
Securities which the Company has been requested to register by the holders
thereof by written request given to the Company within 30 days after the giving
of such written notice by the Company.
(b) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 3.1 in connection with an
underwritten offering by the Investor of Registrable Securities, no securities
other than Registrable Securities shall be included among the securities covered
by such registration unless (i) Investor shall have consented in writing to the
inclusion therein of such other securities and (ii) such inclusion shall be
permitted only to the extent that it is pursuant to and subject to the terms of
the underwriting agreement or arrangements and the inclusion of such securities
will not have a material adverse effect on the offering (including, without
limitation, on the pricing of the offering).
(c) Limitations on Requested Registrations; Expenses. The
rights of the holder of Registrable Securities to request Requested
Registrations pursuant to Section 3.1(a) are
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subject to the following limitations: (i) the Company shall not be obligated to
effect a Requested Registration having an aggregate anticipated offering price
of less than U.S.$2,000,000 unless such offering shall cover all remaining
Registrable Securities; (ii) the offering of Registrable Securities requested to
be registered pursuant to Section 3.1(a) shall be pursuant to a firm commitment
underwritten offering; (iii) the Company shall not be obligated to effect a
Requested Registration within six months after the effective date of any other
registration of securities (other than pursuant to a registration on Form S-8 or
any successor or similar form which is then in effect); (iv) the Company will
pay all Registration Expenses only in connection with the Requested Registration
of Registrable Securities pursuant to this Section 3.1 that have become
effective under the Securities Act; n any particular jurisdiction in which the
Corporation would be required to execute, and (v) after the Corporation has
initiated one such registration pursuant to this section (counting for these
purposes only registrations which have been declared or ordered effective).
(d) Registration Statement Form. Registrations under this
Section 3.1 shall be on Form S-3 or any successor form, if permitted, or such
appropriate registration form of the Commission as shall be selected by the
Company and as shall be reasonably acceptable to the Requisite Percentage of
Investor. The Company agrees to include in any such registration statement all
information which, in the opinion of counsel to the Investor and counsel to the
Company, is required to be included.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 3.1 shall not be deemed to have been effected
(including for purposes of paragraph (c) of this Section 3.1) (i) unless a
registration statement with respect thereto has become effective and has been
kept continuously effective for a period of at least 90 days (or such shorter
period which shall terminate when all the Registrable Securities covered by such
registration statement have been sold pursuant thereto), (ii) if, after it has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other Governmental
Authority or court for any reason not attributable to the Investor and has not
thereafter become effective, or (iii) if the conditions to closing specified in
the underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure on
the part of the Investor.
(f) Selection of Underwriters. The managing underwriter or
underwriters of each underwritten offering of the Registrable Securities so to
be registered shall be selected by the Investor (and shall be reasonably
acceptable to the Company).
(g) Cutbacks in Requested Registration. If the managing
underwriter of any underwritten offering shall advise the Investor in such
offering that the Registrable Securities covered by the registration statement
cannot be sold in such offering within a price range acceptable to the Investor,
then the Investor shall have the right to notify the Company in writing that
they have determined that the registration statement be abandoned or withdrawn,
in which event the Company shall abandon or withdraw such registration statement
(and, at the option of the Investor, he shall either (i) reimburse the Company
for its expenses incurred in connection with such abandoned or
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withdrawn registration statement or (ii) allow the Company to count such
abandoned or withdrawn registration statement as one of the three Requested
Registrations under Section 3.1(c)(iv)). If the managing underwriter of any
underwritten offering shall advise the Company in writing (with a copy to each
Participating Holder) that, in its opinion, the number of securities requested
to be included in such registration exceeds the number which can be sold in such
offering within a price range acceptable to the Investor, the Company will
include in such registration, to the extent of the number which the Company is
so advised can be sold in such offering, Registrable Securities requested to be
included in such registration, pro rata among the Investor requesting such
registration in accordance with the number of Warrant Shares held by (or
issuable to) the Investor so requested to be registered, and any securities of
the Company included in such registration pursuant to Section 3.1(b) shall be
reduced proportionately.
(h) Postponement. The Company shall be entitled once in any
six-month period to postpone for a reasonable period of time (but not exceeding
90 days) the filing of any registration statement required to be prepared and
filed by it pursuant to this Section 3.1 if the Company determines, in its
reasonable judgment, that such registration and offering would interfere with
any financing, corporate reorganization or other material transaction or
development involving the Company or any subsidiary or would require premature
disclosure thereof, and promptly gives the holders of Registrable Securities
requesting registration thereof pursuant to this Section 3.1 written notice of
such determination, containing a statement of the reasons for such postponement
and an approximation of the anticipated delay. If the Company shall so postpone
the filing of a registration statement, the Investor shall have the right to
withdraw the request for registration by giving written notice to the Company
within 20 days after receipt of the notice of postponement and, in the event of
such withdrawal, such request shall not be counted toward the number of
Requested Registrations (including for purposes of paragraph (c) of this Section
3.1).
3.2 Incidental Registration.
(a) Incidental Registration. If, at any time, the Company
proposes or is required to register any of its equity securities or securities
convertible into or exchangeable for equity securities under the Securities Act
(other than pursuant to registrations on such form or similar form(s) solely for
registration of securities in connection with an employee benefit plan or
dividend reinvestment plan) (an "Incidental Registration"), the Company will
give prompt written notice to all holders of record of Registrable Securities of
its intention to so register its securities and of such holders' rights under
this Section 3.2. Upon the written request of any holder of Registrable
Securities made within 20 days following the receipt of any such written notice
(which request shall specify the maximum number of Registrable Securities
intended to be disposed of by such holder and the intended method of
distribution 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 by the holders thereof together with
any other securities the Company is obligated to register pursuant to incidental
registration rights of other security holders of the Company. No registration
effected under this Section 3.2 shall relieve the Company of its obligation to
effect any Requested Registration under Section 3.1.
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(b) Abandonment or Delay. If, at any time after the Company
has giving written notice of its intention to register any securities and prior
to the effective date of the registration statement filed in connection with
such registration, the Company shall determine not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination and its reasons therefor to all holders of record
of Registrable Securities and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection therewith) , without
prejudice, however, to the rights of any holder or holders of Registrable
Securities entitled to do so to request that such registration be effected as a
registration under Section 3.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other securities.
(c) Holder's Right to Withdraw. Each holder of Registrable
Securities shall have the right to withdraw its request for inclusion of its
Registrable Securities in any registration statement pursuant to this Section
3.2 at any time by giving written notice to the Company of its request to
withdraw.
(d) Unlimited Number of Registrations; Expenses. There is
no limitation on the number of Incidental Registrations which the Company is
obligated to effect pursuant to this Section 3.2. The Company will pay all
Registration Expenses in connection with any registration of Registrable
Securities requested pursuant to this Section 3.2.
(e) Underwriters' Cutback in Incidental Registrations. If
the managing underwriter of any underwritten offering shall inform the Company
by letter of its belief that the number of Registrable Securities requested to
be included in such registration would materially adversely affect such
offering, then the Company will include in such registration, first, the
securities proposed by the Company to be sold for its own account and, second,
the Registrable Securities and all other securities of the Company to be
included in such registration to the extent of the number and type which the
Company is so advised can be sold in (or during the time of) such offering, pro
rata among the Investor and such other holders requesting such registration in
accordance with the number of Warrant Shares held by (or issuable to) the
Investor and each such other holder so requested to be registered.
(f) Plan of Distribution. Any participation by holders of
Registrable Securities in a registration by the Company shall be in accordance
with the Company's plan of distribution.
3.3 Registration Procedures. If and whenever the Company is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 3.1 or 3.2 hereof, the Company
will as expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect such
registration (and shall include all financial statements required by
the Commission to be filed therewith) and thereafter
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use its best efforts to cause such registration statement to become
effective; provided, however, that before filing such registration
statement (including all exhibits) or any amendment or supplement
thereto or comparable statements under securities or blue sky laws
of any jurisdiction, the Company shall furnish such documents to the
Investor, their counsel, and each underwriter, if any, participating
in the offering of the Registrable Securities and its counsel; and
provided, further, however, that the Company may discontinue any
registration of its securities which are not Registrable Securities
at any time prior to the effective date of the registration
statement relating thereto;
(b) notify each Participating Holder of the Commission's
requests for amending or supplementing the registration statement
and the prospectus, and 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 covered by such registration statement
for such period as shall be required for the disposition of all of
such Registrable Securities, provided, that such period need not
exceed 90 days;
(c) furnish, without charge, to each Participating Holder
such number of conformed copies of such registration statement and
of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with
the requirements of the Securities Act, and such other documents, as
such Participating Holder may reasonably request;
(d) use its best efforts (i) to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such securities or blue sky laws of
such States of the United States of America where an exemption is
not available and as the Investor shall reasonably request, (ii) to
keep such registration or qualification in effect for so long as
such registration statement remains in effect, and (iii) to take any
other action which may be reasonably necessary or advisable to
enable such Investor to consummate the disposition in such
jurisdictions of the securities to be sold by such Investor, 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
subsection (d) be obligated to be so qualified or to consent to
general service of process in any such jurisdiction;
(e) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered
with or approved by such other federal or state or foreign
governmental agencies or authorities as may be necessary in the
opinion
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of counsel to the Company and counsel to the Investor to consummate
the disposition of such Registrable Securities;
(f) furnish to the Investor and each underwriter, if any,
participating in the offering of the securities covered by such
registration statement, a signed counterpart of
(i) an opinion of outside counsel (or inside
counsel if satisfactory to each underwriter) for the
Company, and
(ii) a "comfort" letter signed by the independent
public accountants who have certified the Company's
financial statements included or incorporated by reference
in such registration statement,
covering substantially the same matters with respect to
such registration statement (and the prospectus included therein)
and, in the case of the accountants' comfort letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates
such opinions and comfort letters are customarily dated) and, in the
case of the legal opinion, such other legal matters, and, in the
case of the accountants' comfort letter, such other financial
matters, as the Investor, or the underwriters, may reasonably
request;
(g) promptly notify the Investor and each managing
underwriter, if any, participating in the offering of the securities
covered by such registration statement (i) when such registration
statement, any pre-effective amendment, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
such registration statement has been filed, and, with respect to
such registration statement or any post-effective amendment, when
the same has become effective; (ii) of any request by the Commission
for amendments or supplements to such registration statement or the
prospectus related thereto or for additional information; (iii) of
the issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of
any proceedings for that purpose; (iv) of the receipt by the Company
of any notification with respect to the suspension of the
qualification of any of the Registrable Securities for sale under
the securities or blue sky laws of any jurisdiction or the
initiation of any proceeding for such purpose; (v) at any time when
a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon 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 the light of the circumstances under
which they were made, and in the case of this clause (v), at the
request of the Investor, promptly prepare and furnish
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to it and each managing underwriter, if any, participating in the
offering of the Registrable Securities 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
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 the light of the circumstances under which they were
made; and (vi) at any time when the representations and warranties
of the Company contemplated by Section 3.4(a) hereof cease to be
true and correct;
(h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the
first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder, and promptly furnish to the Investor a copy
of any amendment or supplement to such registration statement or
prospectus;
(i) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement from
and after a date not later than the effective date of such
registration;
(j) use its best efforts to cause all Registrable
Securities covered by such registration statement to be listed on a
national securities exchange or to secure designation of all such
Registrable Securities as a National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") "national market
system security" within the meaning of Rule 11Aa2-1 of the
Commission, in each case to the extent the shares of the Company's
Common Stock are so listed or designated;
(k) deliver promptly to counsel to the Investor and each
underwriter, if any, participating in the offering of the
Registrable Securities, copies of all correspondence between the
Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff
with respect to such registration statement;
(1) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the registration
statement; and
(m) make available its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking
into account the needs of the Company's businesses) in their
marketing of Registrable Securities.
The Company may require the Investor as to the Registrable Securities of whom
any registration is
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being effected to furnish the Company such information regarding such holder and
the distribution of such securities as the Company may from time to time
reasonably request in writing.
Each holder of Registrable Securities agrees that upon receipt
of any notice from the Company of the happening of any event of the kind
described in subsection (g) (iii) or (v) of this Section 3.3, the Participating
Holder will forthwith discontinue such holder's disposition of Registrable
Securities pursuant to the registration statement relating to such Registrable
Securities until, in the case of subsection (g)(iii) of this Section 3.3, such
stop order is removed or proceedings therefor terminated, and, in the case of
subsection (g)(v) of this Section 3.3, such holder's receipt of the copies of
the supplemented or amended prospectus contemplated by subsection (g)(v) of this
Section 3.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
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3.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by Investor pursuant to a
registration requested under Section 3.1, the Company will use its best efforts
to enter into an underwriting agreement with such underwriters for such
offering, such agreement to be reasonably satisfactory in substance and form to
the Company, each such holder and the underwriters and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of that type, including, without limitation,
indemnities to the effect and to the extent provided in Section 3.6 hereof. The
Investor will cooperate with the Company in the negotiation of the underwriting
agreement and will give consideration to the reasonable suggestions of the
Company regarding the form thereof. The Investor shall be party to such
underwriting agreement and may, at his option, require that any or all of 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 the Investor and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of the Investor. The Investor shall not
be required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder, such holder's ownership of and title to the Registrable
Securities, such holder's intended method of distribution and any other
representations required by law, and any liability of the Investor to any
underwriter or other person under such underwriting agreement shall be limited
to liability arising from misstatements in or omissions from its representations
and warranties and shall be limited to an amount equal to the net proceeds that
the Investor derives from such registration.
(b) Incidental Underwritten Offerings. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 3.2 hereof and such securities are to be distributed by
or through one or more underwriters, the Company will, if requested by the
Investor, use its best efforts to arrange for such underwriters to include all
the Registrable Securities to be offered and sold by the Investor among the
securities of the Company to be distributed by such underwriters. The Investor
shall be party to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of 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 Investor and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such Investor. The Investor shall not
be required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder, such holder's ownership of and title to the Registrable
Securities, such holder's intended method of distribution and any other
representations required by law, and any liability of the Investor to any
underwriter or other person under such underwriting agreement shall be limited
to liability arising from misstatements in or omissions from its representations
and warranties and shall be limited to an amount equal to the net proceeds that
the Investor derives from such registration.
3.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing
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of each registration statement under the Securities Act pursuant to this
Agreement, the Company will give the Investor, their underwriters, if any, and
their respective counsel and accountants the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and, to the extent practicable, each amendment
thereof or supplement thereto, and give each of them such access to its books
and records and such opportunities to discuss the business of the Company with
its officers and employees and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
3.6 Indemnification.
(a) Indemnification by the 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, to the fullest
extent permitting by law, the Investor, its directors, officers, partners,
agents and affiliates or general and limited partners (and the directors,
officers, employees, stockholders and affiliates thereof), and each other Person
who participates as an underwriter in the offering or sale of such securities
and each other Person, if any, who controls the Investor or any such underwriter
within the meaning of the Securities Act, against any losses, claims, damages,
or liabilities, joint or several (or actions or proceedings, whether commenced
or threatened) to which the Investor or any such director, officer, partner,
agent or affiliate or underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities, joint or several (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon 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, together
with the documents incorporated by reference therein, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances in which
they were made not misleading, and the Company will reimburse the Investor and
each such director, officer, partner, agent or affiliate, or general or limited
partner, underwriter 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 action or proceeding in respect thereof) or expense 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 in conformity with written information furnished
to the Company through an instrument duly executed by or on behalf of the
Investor or underwriter, as the case may be, specifically stating that it is for
use in the preparation thereof; and provided, further, that the Company shall
not be liable to any Person who participates as an underwriter in the offering
or sale of Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out
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of such Person's failure to send or give a copy of the final prospectus, as the
same may be then supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such final prospectus.
Such indemnity shall remain in full force regardless of any investigation made
by or on behalf of the Investor or any such director, officer, partner, agent or
affiliate or controlling Person and shall survive the transfer of such
securities by the Investor.
(b) Indemnification by the Investor. As a condition to
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking satisfactory to it from the Investor to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in subsection (a) of this Section 3.6) the Company, each director and
officer of the Company, and each other Person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any statement or
alleged statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, but only if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by the Investor specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the liability of such indemnifying party
under this Section 3.6(b) shall be limited to the amount of net proceeds
received by such indemnifying party in the offering giving rise to such
liability. 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 the Investor.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subsections of this Section 3.6,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action or proceeding; provided, however, 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 subsections of this
Section 3.6, except to the extent that the indemnifying party is materially
prejudiced by such failure to give notice, and shall not relieve the
indemnifying party from any liability which it may have to the indemnified party
otherwise than under this Section 3.6. In case any such action or proceeding is
brought against an indemnified party, the indemnifying party shall be entitled
to participate therein and, unless in the opinion of outside counsel to the
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
or proceeding include both the indemnified party and the indemnifying party and
if in the opinion of outside counsel to the indemnified party there may be legal
defenses available to such indemnified party and/or other indemnified parties
which are different from or in addition to those available to the
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13
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action or proceeding on behalf of such
indemnified party or parties, provided, further, that the indemnifying party
shall be obligated to pay for only one counsel for all indemnified parties.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by the indemnified party
of such counsel, the indemnifying party shall not be liable to such indemnified
party for any legal expenses subsequently incurred by the latter in connection
with the defense thereof other than reasonable costs of investigation (unless
the first proviso in the preceding sentence shall be applicable). No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent. 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 the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in
this Section 3.6 shall for any reason be held by a court to be unavailable to an
indemnified party under subsection (a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under subsection (a) or (b) hereof, the indemnified
party and the indemnifying party under subsection (a) or (b) hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative fault of
the Company and the Investor which resulted in such loss, claim, damage or
liability, or action in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as shall be appropriate to reflect not only the relative
fault but also the relative benefits received by the Company and the Investor
from the offering of the securities covered by such registration statement as
well as any other relevant equitable considerations. The parties hereto agree
that it would not be just and equitable if contributions pursuant to this
Section 3.6(d) were to be determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to above. 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. The Investor's obligations to contribute as provided in this
subsection (d) are several and not joint in proportion to the relative value of
their respective Registrable Securities covered by such registration statement.
In addition, no Person shall be obligated to contribute hereunder any amounts in
payment for any settlement of any action or claim effected without such Person's
consent, which consent shall not be unreasonably withheld. Notwithstanding
anything in this subsection (d) to the contrary, no indemnifying party (other
than the Company) shall be required to contribute any amount in excess of the
net proceeds received by such party from the sale of the Registrable Securities
in the offering to which the losses, claims, damages or liabilities of the
indemnified parties relate.
(e) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding subsections of this Section 3.6 (with
appropriate modifications) shall
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be given by the Company and the Investor with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority other than the Securities Act. The
indemnification agreements contained in this Section 3.6 shall be in addition to
any other rights to indemnification or contribution which any indemnified party
may have pursuant to law or contract and shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the transfer of any of the Registrable
Securities by the Investor.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 3.6 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.
3.7 Certain Rights of the Investor If Named in a Registration Statement.
If any statement contained in a registration statement under the Securities Act
or in any filing under the state securities laws of any jurisdiction refers to
the Investor by name or otherwise as the holder of any securities of the
Company, then the Investor shall have the right to require (i) the insertion
therein of language, in form and substance satisfactory to the Investor, to the
effect that the holding by the Investor of such securities does not necessarily
make the Investor a "controlling person" of the Company within the meaning of
the Securities Act and is not to be construed as a recommendation by the
Investor of the investment quality of the Company's debt or equity securities
covered thereby and that such holding does not imply that the Investor will
assist in meeting any future financial requirements of the Company or (ii) in
the event that such reference to the Investor by name or otherwise is not, in
the reasonable judgment of the Investor as advised by its counsel, required by
the Securities Act or any of the rules and regulations promulgated thereunder,
or any state securities laws of any jurisdiction, the deletion of the reference
to such Investor.
3.8 Unlegended Certificates. In connection with the offering of any
Registrable Securities registered pursuant to this Article 3, the Company shall
(i) facilitate the timely preparation and delivery to Investor and the
underwriters, if any, participating in such offering, of unlegended certificates
representing ownership of such Registrable Securities being sold in such
denominations and registered in such names as requested by such Investor or such
underwriters and (ii) instruct any transfer agent and registrar of such
Registrable Securities to release any stop transfer orders with respect to any
such Registrable Securities.
3.9 Limitation on Sale or Distribution of Other Securities. The Company
hereby agrees that, if it shall previously have received a request for
registration pursuant to Section 3.1 or 3.2 hereof, and if such previous
registration shall not have been withdrawn or abandoned, (i) the Company shall
not effect any public or private offer, sale or other distribution of its
securities or effect any registration of any of its equity securities under the
Securities Act (subject to the provisions of Section 3.2 hereof) (other than a
registration on Form S-8 or any successor or similar form which is then in
effect), whether or not for sale for its own account, until a period of 90 days
(or such shorter period as the Investor shall agree) shall have elapsed from the
effective date of such previous registration (and the Company shall so provide
in any registration rights agreements
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15
hereafter entered into with respect to any of its securities); and (ii) the
Company shall use its best efforts to cause each holder of its equity securities
purchased from the Company at any time after the date of this Agreement other
than in a public offering to agree not to effect any public sale or distribution
of any such securities during such period, including a sale pursuant to Rule 144
under the Securities Act.
3.10 No Required Sale. Nothing in this Agreement shall be deemed to
create an independent obligation on the part of any Participating Holder to sell
any Registrable Securities pursuant to any effective registration statement.
4. Rule 144. The Company shall take all actions reasonably necessary to
enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144, or (b) any similar rule or regulation hereafter
adopted by the Commission including, without limiting the generality of the
foregoing, filing on a timely basis all reports required to be filed by the
Exchange Act. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with the
consent of the Company and the Investor. The Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, in
each case only if the Company shall have obtained the written consent to such
action or omission to act of the Investor. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 5, whether or not such Registrable Securities shall
have been marked to indicate such consent.
6. 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 in writing delivered to the
Company (accompanied by a written acknowledgment of, and consent to, such
election by such nominee), be treated as the holder of such Registrable
Securities for purposes of any request or other action by any holder or holders
of Registrable Securities pursuant to this Agreement or any determination of any
number or percentage 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 to be treated as the
holder of such Registrable Securities, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities.
7. Notices. All communications provided for hereunder shall be
personally delivered or sent by telecopier (and confirmed by telephone) or by a
reputable overnight courier, and shall be addressed as follows:
(a) if to the Investor, addressed to it in the manner set forth in the
Purchase Agreement, or at such other address as it shall have furnished to the
Company in writing;
(b) if to any other holder of Registrable Securities, at the address
that such holder shall
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16
have furnished to the Company in writing, or, until any such other holder so
furnishes to the Company an address, then to and at the address of the last
holder of such Registrable Securities who has furnished an address to the
Company; or
(c) if to the Company, addressed to it in the manner set forth
in the Purchase Agreement, or at such other address as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by the
Company. This Agreement and/or the registration and other rights contained
herein (including these assignment rights) may be assigned by the Investor to
any one or more transferees or distributees of all or part of such Investor's
Registrable Securities. A holder of Registrable Securities shall be permitted,
in connection with a transfer or disposition of Registrable Securities, to
impose conditions or constraints on the ability of the transferee, as a holder
of Registrable Securities, to request a registration pursuant to Section 3.1 and
shall provide the Company with copies of such conditions or constraints and the
identity of such transferees. Notwithstanding the foregoing, this Agreement
and/or the registration and other rights contained herein may not be assigned to
a transferee or distributee who, immediately following such transfer or
distribution, owns less than one percent of the Company's outstanding Common
Stock.
9. Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights provided herein or 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 the defense in any
action for specific performance that a remedy at law would be adequate. In any
action or proceeding brought to enforce any provision of this Agreement
(including the indemnification provisions thereof), the successful party shall
be entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
10. No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The Company has not previously entered into any agreement with respect to its
securities granting any registration rights to any Person other than the
registration rights granted pursuant to this Agreement. The rights granted to
the holders of Registrable Securities hereunder do not in any way conflict with
and are not inconsistent with any other agreements to which the Company is a
party or by which it is bound. The Company further agrees that if any other
registration rights agreement entered into after the date of this Agreement with
respect to any of its securities contains terms which are more favorable to, or
less restrictive on, the other party thereto than the terms and conditions
contained in this Agreement are (insofar as they are applicable) to the
Investor, then the terms and conditions of this Agreement shall immediately be
deemed to have been amended without further action by the Company or any of the
holders of Registrable Securities so
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17
that such holders shall be entitled to the benefit of any such more favorable or
less restrictive terms or conditions.
11. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
12. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of Delaware,
without regard to the conflicts of laws principles thereof. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of Delaware and the United
States of America located in Wilmington, Delaware for any action or proceeding
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any action or proceeding relating thereto
except in such courts). Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action or
proceeding arising out of this Agreement or the transactions contemplated hereby
in the courts of the State of Delaware or the United States of America located
in Wilmington, Delaware, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action
or proceeding brought in any such court has been brought in an inconvenient
forum. The Company hereby waives any right it may have to a trial by jury in
respect of any action, proceeding or litigation directly or indirectly arising
out of, under or in connection with, this Agreement.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
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.
PAWNMART, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
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INVESTOR:
XXXXX X. XXXXXXXX TRUSTEE
TRUST C OF THE XXXXXXXXX X. XXXXXXXX
FAMILY TRUST DATED 10/14/1994
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Trustee
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