Exhibit 10.5
REGISTRATION RIGHTS
AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of ___________ __, 1996 by Cabot Noble, Inc. a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxx ("Xxxx")
WHEREAS, Haft and Phar-Mor, Inc., a Pennsylvania corporation
("Phar-Mor") had entered into that certain Registration Rights Agreement dated
as of September 11, 1995 concerning certain shares of common stock of Par-Mor
issued or issuable to Haft through the exercise of certain options or
otherwise;
WHEREAS, the Company, Phar-Mor and ShopKo Stores, Inc., a Minnesota
corporation ("ShopKo") have entered into a certain Agreement and Plan of
Reorganization, dated as of September 7, 1996, as amended and restated as of
October 9, 1996 (the "Reorganization Agreement"), pursuant to which the existing
shareholders of ShopKo and Phar-Mor shall exchange their shares of ShopKo common
stock and Phar-Mor common stock, respectively, for shares of the Company's
Common Stock (the "Reorganization"); and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the Reorganization Agreement.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereby agree as follows:
SECTION 1. Definitions.
The terms set forth below are used herein as so defined:
"Commission" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Exchange Act or the Securities Act.
"Common Stock" means the common stock, par value $0.01 per share, of the
Company.
"Company" means Cabot Noble, Inc., a Delaware corporation.
"Demand Registration" means a registration requested pursuant to the
terms of Section 3 hereof.
"Effective Date" means the date the Reorganization becomes effective, as
set forth in the Reorganization Agreement.
"Eligible Transferee" means any successor or permitted transferee, in a
single transaction, of at least 33 1/3% of the Registrable Shares and (if
unexercised, but only to the extent (if any) that transfer may be permitted
under the terms of the Option) the Option held by a Holder (including a Holder
that is itself an Eligible Transferee) on the date of such transfer.
"Exchange Act" means the Securities Exchange of 1934, or any successor
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect from time to time.
"Expiration Date" means the date one year after the first to occur of
the expiration of the Option or the complete exercise of the Option.
"Form S-4" means the Registration Statement on Form S-4 filed by the
Company with the Commission that includes the joint proxy statement/prospectus
to be distributed to shareholders of Phar-Mor and Shopko in connection with the
Reorganization.
"Holder" means Haft or the Eligible Transferees.
"Indemnified Person" has the meaning assigned to that term in Section
9(a) hereof.
"Inspectors" has the meaning assigned to that term in Section 7(e)
hereof.
"Option" means the option to purchase 256,250 Shares of Common Stock
received by Haft pursuant to the terms of the Reorganization Agreement.
"Participating Holder" means any Holder that has Registrable Shares
registered for sale pursuant to a Registration Statement.
"Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization, or other entity.
"Records" has the meaning assigned to that term in Section 7(e) hereof.
"Registrable Shares" mans the shares of Common Stock issued or issuable
upon exercise of the Option (to the extent exercisable at the time of
determination or within sixty (60) days thereafter) and held by the Holder from
time to time. A share of Common Stock will cease to be a Registrable Share when
(a) a registration statement covering a Registrable Share has been declared
effective by the Commission and such share has been disposed of by a Holder
pursuant to such effective registration statement, (b) the Registrable Share or
the Option (in respect thereof) is transferred to a Person other than an
Eligible Transferee, (c) such share (after initial issuance) or the Option (in
respect thereof) is held by the Company or one of its subsidiaries or otherwise
ceases to be outstanding, or (d) the share of Common Stock may be traded without
restriction pursuant to paragraph (k) or Rule 144, if applicable.
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"Registration Expenses" has the meaning assigned that term in Section 8
hereof.
"Registration Statement" means any registration statement or comparable
document under the Securities Act through which a public sale or disposition of
the Registrable Shares may be registered, including the prospectus, amendments
and supplements to such registration statement, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
Registration Statement.
"Requesting Holders" has the meaning assigned to that term in Section 3(a)
of this Agreement.
"Requisite Holders" means Holders holding at least 25% of the total number
of Registrable Shares.
"Rule 144" means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the Commission providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"Selling Holder" means a Holder who is selling Registrable Shares pursuant
to a Registration Statement under this Agreement.
"Shelf Expiration Date" means the date which is the second anniversary of
the Effective Date.
"Shelf Registration" has the meaning assigned to that term is Section 2(a)
of this Agreement.
Section 2. Shelf Registration.
(a) The Company shall cause the Form S-4, at the time it is declared
effective, to contain a form of prospectus that can be used by the Holders to
effect sales of Registrable Shares on a delayed basis after the Effective Date
and shall use its reasonable best efforts to cause, except as otherwise provided
for herein, such Form S-4, or as it may be subsequently amended to be a
Registration Statement on Form S-3 (the "Shelf Registration"), to be available
for resales of Registrable Shares for a period expiring on the date which is the
second anniversary of the Effective Date (the "Shelf Expiration Date"). This
Agreement shall constitute the consent of each Holder to the inclusion of such
Holder's Registrable Shares in the Shelf Registration upon its effectiveness,
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except with respect to those Registrable Shares the Holder of which notifies the
Company in writing no later than thirty (30) days following the Effective Date
that it does not want to be included in the Shelf Registration.
(b) The Company agrees that, if necessary, the Company will promptly
supplement or make amendments to the Shelf Registration, if required by the
registration form utilized by the Company for such Shelf Registration or by the
instructions applicable to such registration form or by the Securities Act or
the rules and regulations thereunder or as reasonably requested by a
Participating Holder in connection with any material change in the information
provided by such Participating Holder and the Company agrees to furnish to the
Participating Holders, on request, copies of any supplements or amendments. The
Company will pay all Registration Expenses in connection with such Shelf
Registration or any supplements or amendments thereto, whether or not it becomes
effective. The Shelf Registration may include securities other than Registrable
Shares.
(c) In connection with any underwritten offering of Registrable Shares
under the Shelf Registration, the Company shall have the right, with the consent
of the Holders of a majority in interest of the Registrable Shares to be offered
pursuant to such distribution (which consent shall not be unreasonably
withheld), to designate an investment banker to act as managing underwriter with
respect to such offering.
Section 3. Demand Registration Rights.
(a) From and after the date which is 180 days from the Shelf Expiration
Date, Requisite Holders may by written notice to the Company request that the
Company register all or a portion of the Registrable Shares held by such Holders
under the Securities Act and, subject to the provisions of this Agreement, the
Company shall use its best efforts to effect such registration promptly;
provided, however, that the Company shall have no obligation under this Section
3(a) if the sale of the shares by the Holders is then covered under any other
Registration Statement that includes such shares on a continuing or other basis,
including a Shelf Registration filed pursuant to Section 2 hereof.
Each notice to the Company shall set forth (i) the names of the
Requisite Holders requesting registration ("Requesting Holders") and the number
of shares to be sold by each and (ii) the proposed manner of sale. Within ten
(10) days after receipt of notice from the Requisite Holders, the Company shall
notify any Holder who is not a party to the written notice served on the Company
and offer to them the opportunity to include their shares in such registration.
Each such Holder shall have 20 days following delivery of such notice to elect,
by notice to the Company, to have such Holder's Registrable Shares included in
such registration. The Company shall have no obligation to effect any Demand
Registration under this Section 3 unless the number of Registrable Shares in
such Demand Registration shall be equal to at least 250,000 shares or, if
lesser, the remaining Registrable Shares (including shares subject to the
Option) but not less than 125,000, each of such numbers to be subject to
adjustment as contemplated by Section 8 of the option (the "Anti-Dilutive
Adjustments"). The maximum number of such demands under this Section 3 shall be
two (2);
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provided, however, that no such demand may be made after the Expiration Date. A
Registration Statement will not count as a Demand Registration hereunder unless
it is declared effective by the Commission and remains effective for at least
ninety (90) days or such shorter period which shall terminate when all of the
Registrable Shares covered by such Demand Registration have been sold pursuant
to such Demand Registration; provided, however, that in the event a Registration
Statement is withdrawn at the request of the Requesting Holders (other than a
withdrawal pursuant to Section 3(c) of this Agreement), such Requesting Holders
will forfeit the demand registration rights granted pursuant to this Section 3.
These rights are in addition to, and shall not limit, the registration rights of
the Holders of Registrable Shares granted pursuant to Section 2 or 5 hereunder.
(b) If the managing underwriter of an underwritten offering under this
Section 3 advises the Company in writing that in its opinion the number of
shares requested to be included in such registration (including, without
limitation, shares to be included in such registration pursuant to incidental
or "piggyback" rights heretofore or hereafter granted by the Company) exceeds
the number which can be sold in such offering, the Company will include in such
registration only the number of shares which in the opinion of such underwriter
can be sold. If the number of shares which can be sold is less than the number
of shares proposed to be registered, the amount to be so registered shall be
allocated, (i) first, pro rata among the Holders of Registrable Shares desiring
to participate in such registration on the basis of the number of such Registra-
ble Shares initially proposed to be registered by such Holders and (ii) second,
among other holders of shares of the Company's Common Stock requested to be
included in such registration, in such proportions as the Company shall
determine.
(c) The Company shall not be obligated to effect any Demand Registration
within three (3) months after the effective date of a previous registration for
an underwritten offering under which the Holders had piggyback rights pursuant
to Section 5 hereof (irrespective of whether such rights were exercised). The
Company may (i) postpone for up to 120 days the filing or the effectiveness of
a Registration Statement for a Demand Registration if, based on the good faith
judgement of the Company's Board of Directors, such registration and offering
would materially interfere with any material financing, acquisition, corporate
reorganization, security offering or other material transaction, or such post-
ponement or withdrawal is necessary in order to avoid premature disclosure of
a matter the Board has determined would not be in the best interest of the
Company to be disclosed at such time or (ii) postpone the filing of a Demand
Registration for a period of not more than 120 days in the event the Company
shall be required to prepare audited financial statements as of a date other
than its fiscal year end (unless the Holders requesting such registration agree
to pay the expenses of such an audit); provided, however, that in no event shall
the Company withdraw a Registration Statement under clause (i) after such
Registration Statement has been declared effective; and provided, further, that
in any of the events described in clause (i) or (ii) above, the Holders
initiating the request for such Demand Registration shall be entitled to
withdraw such request (without expense to such Holders) and, if such request is
withdrawn, such Demand Registration shall not count as a permitted Demand
Registration. The Company shall provide prompt written notice to the Requesting
Holders of (x) any postponement or withdrawal of the filing or effectiveness of
a Registration Statement pursuant to this paragraph (c), (y) the Company's
decision to file or seek
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effectiveness of such Registration Statement following such withdrawal or
postponement and (z) the effectiveness of such Registration Statement.
(d) If any of the Registrable Shares covered by a Demand Registration
are to be sold in an underwritten offering, the Company shall have the right to
select the managing underwriter(s) to administer the offering, subject to the
approval of the Holders of a majority in interest of the Registrable Shares
initiating the request for registration, which approval shall not be
unreasonably withheld.
(e) Notwithstanding anything to the contrary contained in this Section
3, if the Company has effected a Shelf Registration in accordance with the
provisions of Section 2 of this Agreement, for so long as such Shelf
Registration remains effective, the Company shall have no obligation to effect a
Demand Registration pursuant to this Section 3 so long as such Shelf
Registration permits an underwritten sale by the Holders of the Registrable
Shares.
Section 4. Suspension of Effectiveness.
Nothing herein, including the Company's obligations under Sections 2(a)
and 3(a), shall restrict its ability to suspend the effectiveness of the Shelf
Registration or any Demand Registration, at any time, for such reasonable period
of time (not, in any instance, to exceed 45 days (a "Blackout Period")) which
the Company's Board of Directors determines is necessary to prevent the
premature disclosure of any events or information having a material effect on
the Company; provided that the Company may invoke a Blackout Period only two
(2) times in each twelve (12)-month period beginning on the Effective Date or
any anniversary thereof. In addition, the Company shall not be required to keep
the Shelf Registration or any Demand Registration, effective, or may, without
suspending such effectiveness, instruct the holders of Registrable Shares
included in the Shelf Registration or any Demand Registration, not to sell such
shares, during any period during which the Company is instructed, directed,
ordered or otherwise requested by any governmental agency or self-regulatory
organization to stop or suspend such trading or sales.
Section 5. Incidental Registration Rights.
(a) If the Company, at any time prior to the Expiration Date, proposes
to register any Common Stock under the Securities Act (other than pursuant to
Sections 2 or 3 of this Agreement or pursuant to a registration statement on a
form exclusively for the sale or distribution of securities by the Company to
employees of the Company or its subsidiaries or for use exclusively in
connection with a business combination) whether or not for sale for its own
account, and the registration form to be used may be used for the registration
of Registrable Shares, it will give prompt written notice to all Holders of the
Company's intention to effect such a registration and include in such
registration all Registrable Shares with respect to which the Company has
received written notice for inclusion therein within 20 days after the date of
the Company's notice; provided that:
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(i) if, at any time after giving written notice of its intention to
register any shares 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 shares, the Company may,
at its election, give written notice of such determination to each
Holder requesting inclusion therein, and, thereupon, the Company shall
be relieved of its obligation to register any Registrable Shares in
connection with such registration (but not of its obligation to pay the
Registration Expenses in connection therewith); and
(ii) if such registration shall be in connection with an
underwritten public offering and the managing underwriter shall advise
the Company in writing that in its opinion the number of shares
requested to be included in such registration exceeds the number of such
securities which can be sold in such offering or would have an adverse
impact on the price of such securities, the Company shall include in
such registration (A) first, the securities the Company proposes to sell
and, if such registration includes an underwritten secondary
registration on behalf of holders of the Company's securities exercising
demand registration rights, the securities requested to be included
therein by such holders requesting such registration, in such
proportions as the Company shall determine, and (B) second, the number
(if any) of other securities of the Company (including, without
limitation, Registrable Shares) requested to be included pursuant to any
incidental registration rights which in the opinion of such underwriter
can be sold (and if, in the opinion of such underwriter, some but not
all of such securities may be so included, all holders of Common Stock
requested to be included therein shall share pro rata in the number of
shares of Common Stock included in such underwritten public offering on
the basis of the number of shares of Common Stock requested to be
included therein).
(iii) with respect to any unissued shares to be included therein, the
Holder delivers a commitment to timely exercise the Option prior to the
effective date of the registration for inclusion therein of such shares,
if the Registration Statement does not otherwise contemplate a
continuing or "shelf" registration of shares issuable under the Option;
and
(iv) the number of shares to be sold by the Holders is not less than
50,000 (subject to Anti-Dilutive Adjustments).
(b) If any Registration pursuant to this Section 5 is an underwritten
primary offering, the Company shall have the right to select the managing
underwriter to administer such offering.
Section 6. Holdback Agreement.
(a) In the event of an underwritten public distribution of Common Stock
under a Registration Statement, whether or not Registrable Shares are included,
each Holder agrees not to effect any public sale or distribution of Common Stock
(except as part of such underwritten public distribution), including a sale
pursuant to Rule 144 or Rule 144A under the Securities Act, during a period
designated by the Company in a written notice duly given to the Holders in
accordance with
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Section 11(b), which period shall commence approximately 14 days prior to the
effective date of any such post-effective amendment to the Shelf Registration or
filing of such prospectus supplement, as the case may be, or the commencement of
such underwritten public distribution of Common Stock under a Registration
Statement and shall continue for up to 104 consecutive days.
(b) The foregoing provisions shall not apply to any Holder to the
extent such Holder is prohibited by applicable law from agreeing to withhold
from sale.
Section 7. Registration Procedures.
Except as otherwise expressly provided herein, in connection with any
registration of Registrable Shares pursuant to this Agreement, the Company
shall, as expeditiously as possible, at its own expense:
(a) prepare and file with the Commission a Registration Statement on
the appropriate form with respect to such Registrable Shares and use its best
efforts to cause such Registration Statement to become effective as soon as
practicable thereafter; and before filing a Registration Statement or prospectus
or any amendments or supplements thereto, furnish to each Selling Holder, copies
of such Registration Statement and such other documents as proposed to be filed
(including copies of any document to be incorporated by reference therein), and
thereafter furnish to such Selling Holder such number of copies of such
Registration Statement, each amendment and supplement thereto (including copies
of any document to be incorporated by reference therein), in each case at the
written request of the Selling Holder, including all exhibits thereto, the
prospectus included in such registration statement (including each preliminary
prospectus), and, promptly after the effectiveness of a Registration Statement,
the definitive final prospectus filed with the Commission, and such other
documents as such Selling Holder may reasonably request in order to facilitate
the disposition of the Registrable Shares owned by such Selling Holder;
(b) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions
within the United States as any Selling Holder reasonably (in light of such
Selling Holder's intended plan of distribution) requests; provided that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 7(b), (ii) subject itself to taxation in any such jurisdiction or (iii)
consent to general service of process in any such jurisdiction;
(c) notify each Selling Holder of such Registrable Shares, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of any event as a result of which the
prospectus included in such Registration Statement (including any document to be
incorporated by reference therein) contains an untrue statement of a material
fact or omits any fact necessary to make the statements therein not misleading
and, at the request of any such Selling Holder, the Company shall as promptly as
practicable, prepare a supplement or amendment to such prospectus (and, in the
case of any post-effective amendment, use its reasonable best efforts to have
such amendment declared effective by the Commission) so that, as thereafter
delivered to the
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purchasers of such Registrable Shares, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and promptly make available to each Selling Holder any such supplement or
amendment;
(d) in connection with an underwritten public offering, enter into
customary agreements (including, if requested, an underwriting agreement),
reasonable satisfactory in form and substance to the Company, and take such
other actions in connection therewith as the Holders of at least a majority in
interest of the Registrable Shares being sold or the underwriter shall
reasonably request in order to consummate the disposition of such Registrable
Shares;
(e) make available for inspection during business hours on reasonable
advance notice by any Selling Holder of such Registrable Shares, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney, accountant or other professional retained by any such Selling Holder
or underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such Inspector in connection with such Registration Statement. Records which the
Company determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a material
misstatement or omission in the Registration Statement or (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Each Selling Holder of such Registrable Shares further
agrees that it will, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give written notice to the Company, and allow
the Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of the Records it deemed confidential. Each Selling Holder of
such Registrable Shares further agrees that information obtained by it as a
result of such inspections which is deemed confidential by the Company shall not
be used by it, and it shall cause each of its Inspectors not to use such
confidential information, as the basis for any market transactions in securities
of the Company or for any purpose other than any due diligence review with
respect to decisions regarding such Selling Holder's investment in the
Registrable Shares, unless and until such information is made generally
available to the public;
(f) in the event such sale is pursuant to an underwritten offering, use
its best efforts to obtain (i) a comfort letter or comfort letters from the
Company's independent public accountants in customary form and covering such
financial and accounting matters of the type customarily covered by comfort
letters as the Selling Holders of a majority in interest of the Registrable
Shares being sold or the managing underwriter reasonably request, and (ii) an
opinion or opinions from counsel for the Company, addressed to the underwriters,
covering the matters customarily covered in opinions given by counsel in similar
transactions; and
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(g) notify the Selling Holders and the managing underwriters, if any,
promptly, and (if requested by any such Person) confirm such advice in writing,
(i) when the Registration Statement, the prospectus or any prospectus supplement
or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of the issuance by the Commission of any stop order suspending
the effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose and the Company shall promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued and (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the Registrable Shares
for offer or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose.
The Company may require each Selling Holder of Registrable Shares as to
which any registration is being effected to furnish to the Company such
information regarding the Selling Holder and the distribution of such
Registrable Shares as the Company may from time to time reasonably request in
writing and such other information as may be legally required in connection with
such registration. Each Selling Holder agrees, by its acquisition of
Registrable Shares and its acceptance of the benefits provided to it hereunder,
to furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such
Selling Holder not materially misleading.
Each Holder agrees that upon receipt of any notice from the Company of the
happening of any event of the kind described in Sections 7(c), (g)(ii) or
(g)(iii) hereof, such Holder will forthwith discontinue disposition of
Registrable Shares pursuant to the Registration Statement covering such
Registrable Shares until such Holder's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 7(c) hereof, or until it is
advised in writing by the Company that the use of the prospectus may be resumed,
and, if so directed by the Company, such Holder 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 covering such Registrable Shares current
at the time of receipt of such notice. In the event the Company shall give any
such notice, the Company shall extend the period during which such Registration
Statement shall be maintained effective by the number of days during the period
from and including the date of the giving of such notice pursuant to Section
7(c) hereof to and including the date when each Holder of Registrable Shares
covered by such Registration Statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 7(c) hereof.
Section 8. Registration Expenses.
All expenses incident to the Company's performance of or compliance with
this Agreement, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or "blue sky" laws (including
reasonable fees and disbursements of counsel of the Company and counsel for the
underwriters in connection with "blue sky" qualifications of the
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Registrable Shares) and listing on any national securities exchange or exchanges
which listing may be sought, with filings required to be made with the National
Association of Securities Dealers, Inc., printing expenses, messenger and
delivery expenses, fees and expenses of counsel for the Company and its
independent certified public accountants (including the expenses of any special
audit or "cold comfort" letters required by or incident to such performance),
securities acts liability insurance (if the Company elects to obtain such
insurance), the fees and expenses of any special experts retained by the Company
in connection with such registration, and fees and expenses of other persons
retained by the Company (all such expenses being herein called "Registration
Expenses") will be borne by the Company whether or not any registration
statement becomes effective; provided that in no event shall Registration
Expenses include any (i) underwriting discounts, commissions, or fees
attributable to the sale of the Registrable Shares, (ii) fees and expenses of
any counsel, accountants, or other persons retained or employed by the Holders
or underwriters (other than the reasonable fees and expenses (of which the
Company shall only be obligated to pay up to an aggregate maximum of $15,000) of
one counsel for Participating Holders of Registrable Shares included in the
Registration Statement, which counsel shall be selected by a majority in
interest of the Participating Holders included in the Registration Statement),
or (iii) transfer taxes, if any.
Section 9. Indemnification; Contribution
(a) Indemnification by Company. The Company agrees to indemnify and
hold harmless each Selling Holder of Registrable Shares, its officers,
directors, partners and agents and each Person, if any, who controls such
Selling Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each such person being sometimes hereinafter
referred to as an "Indemnified Person") from and against any and all losses,
claims, damages, liabilities and judgments (including, the reasonable legal
expenses incurred in connection with any action, suit or proceeding) arising out
of or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
registration hereunder or arising out of or based upon 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 under
which they were made, not misleading, or (ii) any violation by the Company of
any federal state or common law rule or regulation applicable to the Company and
relating to action or inaction required by the Company in connection with any
such registration; provided, however, that the Company shall not be liable for
any losses, claims, damages, liabilities or judgments arise out of, or are based
upon, any such untrue statement or omission or allegation thereof based upon
information furnished in writing to the Company by such Selling Holder expressly
for use therein, or by any Holder's failure to deliver a copy of the
Registration Statement or prospectus or any amendment or supplement thereto
after being furnished with a sufficient number of copies thereof by the Company.
(b) Conduct of Indemnification Proceedings. If any action or
proceeding (including any governmental investigation) shall be brought or
asserted against any Indemnified Person in respect of which indemnity may be
sought from the Company, such Indemnified Person shall
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promptly notify the Company in writing, and the Company shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
Indemnified Person and the payment of all reasonable expenses. Such Indemnified
Person shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Company has
agreed to pay such fees and expenses or (ii) the named parties to any such
action or proceeding (including any impleaded parties) include both such
Indemnified Person and the Company, and such Indemnified Person shall have been
advised in writing by the counsel employed by the Company in accordance with the
provisions of this Section 9(b) that there may exist a conflict of interest
between such Indemnified Person and the Company with respect to such claim (in
which case, if such Indemnified Person notifies the Company in writing that it
elects to employ separate counsel at the expense of the Company, the Company
shall not have the right to assume the defense of such action or proceeding on
behalf of such Indemnified Person, it being understood, however, that the
Company shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for such Indemnified Person and any other Indemnified
Persons, which firm shall be designated in writing by a majority of such
Indemnified Persons). The Company shall not be liable for any settlement of any
such action or proceeding effected without the Company's written consent, but if
settled with its written consent, or if there be a final, unappealable judgment
for the plaintiff in any such action or proceeding, the Company agrees to
indemnify and hold harmless such Indemnified Persons from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment.
(c) Indemnification by Holders of Registrable Shares. Each Selling
Holder agrees severally and not jointly to indemnify and hold harmless the
Company, its directors, officers and agents and each Person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Selling Holder, but only with respect to
information furnished in writing by such Selling Holder expressly for use in any
Registration Statement or prospectus or any amendment or supplement thereto, or
any preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its directors, officers or agents or any such controlling
person, in respect of which indemnity may be sought against such Selling Holder,
such Selling Holder shall have the rights and duties given to the Company, and
the Company or its directors, officers or agents or such controlling person
shall have the rights and duties given to such Selling Holder by the preceding
Section 9(b).
(d) Contribution. If the indemnification provided for in this Section
9 is unavailable to or unenforceable by the Company or the Indemnified Persons
in respect of any losses, claims, damages, liabilities or judgments referred to
herein, then each such indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities and
judgments in such proportions as is appropriate to reflect the relative fault of
the Company and the Indemnified Persons
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in connection with the actions or inactions which resulted in such losses,
claims, damages, liabilities and judgments, as well as any other relevant
equitable considerations (including the relative fault and indemnification or
contribution obligations of other relevant parties). The relative fault of the
indemnifying party on the one hand and of the indemnified person on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified party, and by such party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Indemnified Persons agree that it would not be just
and equitable if contribution pursuant to this Section 9(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 Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
Section 10. Participation in Underwritten Registrations.
No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements, (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and (c) agrees to pay such Person's pro rata portion of all
underwriting discounts, commissions and fees.
Section 11. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not 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 Holders of at least a majority of the Registrable Shares.
Notwithstanding the foregoing, (i) if a waiver or consent to departure from the
provisions hereof does not adversely affect the rights of all of the Holders,
the Company shall not be required to obtain the consent of any such Holder not
adversely affected thereby, and (ii) if such waiver or consent to departure
relates exclusively to the rights of Holders whose Registrable Shares are being
sold pursuant to a Registration Statement and does not directly or indirectly
affect the rights of other Holders, such waiver or consent to departure may be
given by Holders of a least a majority in interest of the Registrable Shares
being sold by such Holders pursuant to such Registration Statement; provided
that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be in writing and shall be delivered personally or by
first-class mail, telecopier or overnight courier:
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(i) if to a Holder of Registrable Shares, at the most
current address set forth on the books of the Company, and
(ii) if to the Company, initially at Cabot Noble, Inc., 0000
X Xxxxxx, X.X., Xxxxx 000 Xxxxxxxxxx, X.X. 00000-0000, Attention:
General Counsel, and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 11(b), with a
copy to Xxxxxx X. XxXxx, Xx., Esq., Xxxxxxxx & Berlin, Chartered, 0000 X
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0000.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personal delivered; five business days
after being deposited in the mail (postage prepaid), if mailed; upon receipt of
a telecopy confirmation sheet, if telecopied; and on the day delivered if sent
by an air courier guaranteeing overnight delivery.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and, to the extent set forth
herein, the assigns of each of the parties, including without limitation and
without the need for an express assignment, Eligible Transferees.
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This Agreement shall be governed by and
construed under and interpreted in accordance with the internal laws of the
state of Delaware, without regard to conflicts of law principles.
(g) Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable any such provision in
any other jurisdiction.
(h) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Registrable Shares. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
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(i) Effectiveness. This Agreement shall become effective on the Effective
Date.
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IN WITNESS WHEREOF, the Company and the Holders have executed this
Agreement as of the date first written above.
COMPANY:
CABOT NOBLE, INC.
By:
----------------------------
NAME:
TITLE:
HOLDER:
-------------------------------
XXXXXX X. XXXX
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