<PAGE> 1
As filed with the Securities and Exchange Commission on January 12, 1999
Registration No. 333-64889
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NATIONAL RECORD MART, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-2782687
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
507 FOREST AVENUE
CARNEGIE, PENNSYLVANIA 15106
(412) 276-6200
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------
WILLIAM A. TEITELBAUM
CHAIRMAN AND PRESIDENT
NATIONAL RECORD MART, INC.
507 FOREST AVENUE
CARNEGIE, PENNSYLVANIA 15106
(412) 276-6200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
ROBERT K. MORRIS, ESQ.
REED SMITH SHAW & McCLAY LLP
435 SIXTH AVENUE
PITTSBURGH, PA 15219
(412) 288-3126
----------
Approximate date of commencement of the proposed sale of the securities to
the public: From time to time after the effective date of this Registration
Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=====================================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE AGGREGATE PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK, $0.01 PAR VALUE 400,000 (1) (1) (1)
=====================================================================================================================
</TABLE>
(1) Previously calculated and paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
PROSPECTUS
NATIONAL RECORD MART, INC.
400,000 SHARES OF COMMON STOCK
($0.01 PAR VALUE)
-------------------
This Prospectus relates to 400,000 shares (the "Shares") of
common stock, $0.01 par value ("Common Stock"), of National Record Mart, Inc.
(the "Company"), which may be offered by the Selling Stockholders named herein
or their respective pledgees, donees, transferees or other successors in
interest (individually, the "Selling Stockholder" or in the aggregate, the
"Selling Stockholders") from time to time. The Shares may be acquired by the
Selling Shareholders upon exercise of outstanding warrants to purchase shares of
Common Stock, issued by the Company on April 16, 1998 in a non-public
transaction. Such warrants are exercisable at a price of $.01 per share of
Common Stock, at any time on or after October 16, 1998. The Company will receive
no part of the proceeds from sales of the Shares offered hereby. The Shares are
quoted on the NASDAQ National Market System ("NASDAQ NMS") under the trading
symbol "NRMI". On January 11, 1999, the closing price of the Common Stock on
the NASDAQ NMS was $7-13/16 per share.
The Shares may be offered for sale from time to time by the
Selling Stockholders, or by certain other persons who are named in an amendment
or supplement to this Prospectus, in one or more transactions described herein
on the NASDAQ NMS, in the over-the-counter market, in one or more private
transactions or in a combination of such methods of sale, at prices and on terms
then prevailing, at prices related to such prices or at negotiated prices. See
"Plan of Distribution" below. The price at which any of the Shares of Common
Stock may be sold, and the commissions, if any, paid in connection with any
such sale, may vary from transaction to transaction. It is understood that,
under certain circumstances, persons effecting resales of Common Stock purchased
and dealers or brokers handling such transactions may be deemed (such persons
not so conceding) to be "underwriters" within the meaning of the Securities Act
of 1933, as amended, and the rules and regulations promulgated from time to time
thereunder (the "Securities Act"), with respect to such sales.
The Company will bear all expenses incurred in connection with
the offering of the Shares pursuant to this Prospectus other than underwriting
discounts and commissions, brokerage fees and similar compensation.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------
The date of this Prospectus is January ___, 1999.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; 7
World Trade Center, New York, New York 10048; and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60606. Copies of such materials
can be obtained from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The
Commission maintains an internet site that contains reports, proxy statements
and other information filed electronically by the Company with the Commission
which can be accessed at http://www.sec.gov. All materials filed by the Company
should also be available for inspection at the offices of NASD Operations, 1735
K Street, N.W., Washington, D.C.
The Company has filed with the Commission a Registration
Statement under the Securities Act with respect to the Common Stock to which
this Prospectus relates. This Prospectus omits certain of the information
contained in the Registration Statement, and reference is hereby made to the
Registration Statement and to the exhibits thereto for further information with
respect to the Company and the Common Stock offered hereby. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to such copy filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference. The
Registration Statement and the exhibits thereto may be inspected without charge
at the office of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies thereof may be obtained from the Commission
at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission are incorporated in and made a part of this Prospectus by reference:
(i) the Company's Annual Report on Form 10-K for the year ended March 28, 1998;
(ii) the Company's Quarterly Reports on Form 10-Q for the quarters ended June
27, 1998 and September 26, 1998 and the Company's Amended Quarterly Report on
Form 10-Q/A for the quarter ended September 26, 1998; and (iii) the description
of the Common Stock contained in the Company's Registration Statement on Form
8-A (File No. 22074) dated July 14, 1993, including any reports updating such
description.
All documents subsequently filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the termination of the offering of the Shares made hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
Any person receiving a copy of this Prospectus may obtain,
without charge, upon written or oral request, a copy of any of the documents
incorporated by reference herein, except for the exhibits to such documents
(other than the exhibits expressly incorporated in such documents by reference).
Requests should be directed to Theresa Carlise, Chief Financial Officer,
National Record Mart, Inc., 507 Forest Avenue, Carnegie, Pennsylvania 15106
(telephone number 412-276-6200).
THE COMPANY
The Company is a Delaware corporation founded in 1937, and
operates in a single industry segment as a specialty retailer of prerecorded
home entertainment products, including compact discs, audio cassettes, videos
and related accessories. According to Billboard magazine, the Company is the
sixth largest specialty retailer of prerecorded music in the country as measured
by the number of stores. The Company is a leading specialty music retailer in
its core
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<PAGE> 4
western Pennsylvania/eastern Ohio market. The principal executive offices of the
Company are located at 507 Forest Avenue, Carnegie, Pennsylvania 15106 and its
telephone number at such address is (412) 276-6200.
ISSUANCE OF THE WARRANTS
On April 16, 1998, the Company issued, to ten sophisticated
investors, an aggregate of $15,000,000 of senior subordinated notes, accompanied
by warrants (the "Warrants") to purchase an aggregate of 400,000 shares of
Common Stock at an exercise price of $.01 per share. In the transaction, the
Company agreed to register for resale, under the Securities Act of 1933, the
shares of Common Stock issuable upon exercise of the Warrants.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed and traded on the NASDAQ NMS under
the symbol NRMI. The following table sets forth for the periods indicated the
high and the low sales prices of the Common Stock, as reported in The Wall
Street Journal for the periods indicated.
<TABLE>
<CAPTION>
SALES PRICE PER SHARE
HIGH LOW
---- ---
<S> <C> <C> <C>
1996
First Quarter........................................2-1/4 15/16
Second Quarter.......................................2-3/8 1-5/16
Third Quarter........................................1-7/8 1-1/2
Fourth Quarter.......................................1-1/2 1-1/4
1997
First Quarter........................................1-3/4 1-1/4
Second Quarter.......................................1-9/16 1-1/4
Third Quarter........................................4-5/8 2-11/16
Fourth Quarter.......................................4-1/4 3-1/2
1998
First Quarter........................................6-1/2 5-1/2
Second Quarter......................................12-1/8 5-7/8
Third Quarter.......................................9-1/8 4-5/16
Fourth Quarter.......................................14 4
1999 First Quarter (through January 11)...................8-1/16 7-5/8
</TABLE>
See the cover page of this Prospectus or of the Prospectus
Supplement, if any, accompanying this Prospectus for the last sales price of the
Common Stock reported in The Wall Street Journal as of a recent date.
The Company paid no dividends on the Common Stock for the
periods indicated. Dividends on the Common Stock will be determined in light of
the Company's results of operations, financial condition, and other factors
deemed relevant by the Company's Board of Directors. The Company's loan
agreements currently prohibit the payment of any dividends on the Common Stock.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale
of the Shares by the Selling Stockholders. All proceeds from the sale of Common
Stock offered hereby will be for the account of the Selling Stockholders, as
described below.
SELLING STOCKHOLDERS
The following table sets forth certain information as of the
date of this Prospectus regarding the beneficial ownership of Common Stock by
each of the Selling Stockholders. Each Selling Stockholder is offering all
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<PAGE> 5
of the Shares beneficially owned by it. No Selling Stockholder holds any
position, office or other material relationship with the Company or an affiliate
of the Company.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF OUTSTANDING
NAME SHARES (1) SHARES (2)
---- ------ ------
<S> <C> <C>
DFG Corporation 2,911 *
Fleming American Investment Trust 77,925 1.47
Palamundo Securities 2.970 *
Robert Fleming & Co. 154,222 2.91
Robert Fleming Inc. 28,657 *
Scott's Cove Special Credits Fund I, L.P. 9,914 *
Scott's Cove Special Credits Master Fund, Inc. 30,615 *
Seneca Capital L.P. 33,517 *
Seneca Capital International Ltd 56,013 1.06
ZPG Securities 3,256 *
</TABLE>
* Less than 1%
(1) Information with respect to beneficial ownership is based upon
information obtained from the Selling Stockholders and from the
Company's transfer agent. The persons and entities named in the table
have sole voting and sole investment power with respect to all shares
beneficially owned. Shares of Common Stock receivable upon exercise of
the Warrants are deemed to be outstanding and to beneficially owned by
the person presently entitled to exercise for the purpose of computing
the percentage ownership of such person but are not treated as
outstanding for the purpose of computing the percentage ownership of
any other person.
(2) Based on 4,732,000 shares of Common Stock outstanding as of the date
of this Prospectus.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of
9,000,000 shares of Common Stock, of which as of the date of this Prospectus
approximately 4,732,000 shares were issued and outstanding, and 2,000,000 shares
of preferred stock, $.01 par value (the "Preferred Stock"), which may be issued
in one or more series, with such designations, preferences, limitations, voting
rights, conversion privileges and other relative rights and terms as shall be
set forth in resolutions adopted by the Board of Directors providing for the
issuance thereof, of which as of the date of this Prospectus no shares are
issued and outstanding.
The following description of the Common Stock and Preferred
Stock is summarized from the relevant provisions of the Restated Certificate of
Incorporation of the Company, as amended (the "Certificate of Incorporation").
For a complete statement of such provisions, reference is made to the
Certificate of Incorporation, which is filed as an Exhibit to the Registration
Statement. Whenever particular provisions of such document or terms defined
therein are referred to, such provisions or definitions are incorporated by
reference as a part of the statements made, and such statements are qualified in
their entirety by such reference.
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<PAGE> 6
COMMON STOCK
VOTING RIGHTS
The holders of Common Stock are entitled to one vote for each
share held by them on all matters voted upon by stockholders and are not
entitled to cumulative voting rights or preemptive rights for the purchase of
additional shares of any class of the Company's stock.
DIVIDENDS
Holders of Common Stock are entitled to receive such dividends
as may be declared by the Company's Board of Directors out of funds legally
available therefor, subject to the rights of holders of outstanding shares of
any series of Preferred Stock. Dividends on Common Stock will be determined in
light of the Company's results of operations, financial condition and other
factors deemed relevant by the Company's Board of Directors. The Company's loan
agreements currently prohibit the payment of any dividends on the Common Stock.
RIGHTS UPON LIQUIDATION
In the event of liquidation, dissolution or winding up of the
affairs of the Company, holders of Common Stock would be entitled to share
ratably in all assets remaining after payments to all creditors and payments
required to be made in respect of all outstanding shares of any series of
Preferred Stock. See "Preferred Stock" below.
MISCELLANEOUS
The outstanding shares of Common Stock are fully paid and are
not subject to further call or assessment. The Common Stock does not have any
sinking fund, conversion or redemption provision applicable thereto. There is no
restriction in the Restated Certificate of Incorporation on the repurchase of
shares of Common Stock by the Company with funds legally available therefor.
The Common Stock is currently listed and is traded on the
NASDAQ NMS, including the shares of Common Stock offered hereby.
The Transfer Agent and Registrar for the Common Stock is
ChaseMellon Shareholder Services, L.L.C.
PREFERRED STOCK
In addition to the authorized shares of Common Stock, the
authorized capital stock of the Company includes 2,000,000 shares of Preferred
Stock, par value $0.01 per share, issuable in one or more series with such terms
and at such times and for such consideration as the Board of Directors of the
Company determines. As of the date of this Prospectus, there were no shares of
Preferred Stock outstanding.
PREFERENCE
Generally, any shares of Preferred Stock outstanding will have
preference over and will be senior to the rights of the Common Stock with
respect to the payment of dividends and the distribution of assets in the event
of liquidation or dissolution of the Company.
PLAN OF DISTRIBUTION
The Selling Stockholders may offer Shares from time to time
depending on market conditions and other factors, in one or more transactions on
the NASDAQ NMS, in the over-the-counter market or otherwise, at market prices
prevailing at the time of sale, at negotiated prices or at fixed prices. The
Shares may be offered in any manner permitted
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<PAGE> 7
by law, including through underwriters, brokers, dealers or agents, and directly
to one or more purchasers. Sales of Shares may involve (i) sales to underwriters
who will acquire Shares for their own account and resell them in one or more
transactions at fixed prices or at varying prices determined at the time of
sale, (ii) block transactions in which the broker or dealer so engaged will
attempt to sell the Shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction, (iii) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account, (iv) an
exchange distribution in accordance with the rules of any such exchange, and (v)
ordinary brokerage transactions and transactions in which a broker solicits
purchasers. Brokers and dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Stockholders
and/or purchasers of Shares for whom they may act as agent (which compensation
may be in excess of customary commissions). The Selling Stockholders and any
broker or dealer that participates in the distribution of Shares may be deemed
to be underwriters and any commissions received by them and any profit on the
resale of Shares positioned by a broker or dealer may be deemed to be
underwriting discounts and commissions under the Securities Act. In the event a
Selling Stockholder engages an underwriter in connection with the sale of the
Shares, to the extent required, a Prospectus Supplement will be distributed,
which will set forth the number of Shares being offered and the terms of the
offering, including the names of the underwriters, any discounts, commissions
and other items constituting compensation to underwriters, dealers or agents,
the public offering price and any discounts, commissions or concessions allowed
or reallowed or paid by underwriters to dealers.
In connection with distributions of the Common Stock or
otherwise, the Selling Stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of Common Stock in the course of hedging the positions they assume with
the Selling Stockholders. The Selling Stockholders also may sell Common Stock
short and redeliver the Shares to close out such short positions. The Selling
Stockholders also may enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealer or other financial institution of the Common Stock offered
hereby, which Common Stock such broker-dealer or other financial institution may
resell pursuant to this Prospectus (as supplemented or amended, to the extent
required, to reflect such transaction). The Selling Stockholders also may pledge
the Shares registered hereunder to a broker-dealer or other financial
institution, including affiliates of the Company, and, upon a default, such
broker-dealer or other financial institution may effect sales of the pledged
Common Stock pursuant to this Prospectus (as supplemented or amended, to the
extent required, to reflect such transaction).
In addition, the Selling Stockholders may from time to time
sell Shares in transactions under Rule 144 under the Securities Act.
In connection with the issuance of the Warrants, the Company
agreed to have a registration statement pertaining to the shares of Common Stock
issued or issuable upon exercise of the Warrants filed with and declared
effective by the Securities and Exchange Commission by October 16, 1998 at the
Company's expense and to maintain the effectiveness of such registration
statement until the earlier of (a) April 16, 2001 or (b) the Selling
Stockholders' disposition of all such registered shares. Prior to effectiveness
of the registration statement, shares of Common Stock issuable upon exercise
of the Warrants may not be sold absent an applicable exemption from
registration. The Company agreed to bear all expenses incurred in connection
with the registration and qualification of the shares registered. In addition,
the Company agreed to indemnify the Selling Stockholders against certain
liabilities, including liabilities under the Securities Act.
Until such time as the registration statement is filed with
the Commission and declared effective, the resale of the shares of Common Stock
issued or issuable upon exercise of the Warrants is not permitted, except in
reliance upon an appropriate exemption under the Securities Act.
LEGAL MATTERS
Certain legal matters in connection with the validity of the
Shares offered hereby have been passed upon for the Company by Reed Smith Shaw &
McClay LLP, counsel for the Company.
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<PAGE> 8
EXPERTS
The consolidated balance sheets of the Company as of March 28,
1998 and March 29, 1997, and the consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended March 28, 1998 incorporated by reference in this Prospectus, have been
incorporated herein in reliance on the report of Ernst & Young LLP, independent
auditors given on the authority of said firm as experts in accounting and
auditing.
CERTAIN FORWARD-LOOKING STATEMENTS
From time to time, the Company may communicate in oral or
written form statements relating to the future results of the Company that may
be considered "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Actual results may differ materially
from those expressed or implied as a result of certain risks and uncertainties,
including, but not limited to, the pricing and marketing activities of large
diversified retailers within the geographic area of the Company's operations;
the extent to which recording artists release "hit" recordings; changes in sales
and advertising promotion practices by the major music distributors; weather,
especially during the Christmas selling season; and interest rates, which affect
the Company's financing costs.
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<PAGE> 9
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED
BY THIS PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROSPECTUS OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
TABLE OF CONTENTS
PAGE
----
Available Information..........................................................2
Incorporation of Certain Documents by Reference................................2
The Company....................................................................2
Issuance of the Warrants.......................................................3
Price Range of Common Stock and Dividends......................................3
Use of Proceeds................................................................3
Selling Stockholders...........................................................3
Description of Capital Stock...................................................4
Plan of Distribution...........................................................5
Legal Matters..................................................................6
Experts........................................................................7
Certain Forward-Looking Statements.............................................7
================================================================================
================================================================================
400,000 SHARES
NATIONAL RECORD MART,
INC.
COMMON STOCK
----------------
PROSPECTUS
----------------
---------------
================================================================================
<PAGE> 10
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Estimated expenses of the Registrant in connection with the
issuance and distribution of the Registrant's Common Stock are as follows:
Securities and Exchange Commission
registration fee $ 733.81
Transfer Agent and Registrar Fees $ 1,000.00
Accounting fees and expenses $ 5,000.00
Printing $ 3,500.00
Legal fees and expenses $10,000.00
Listing Fees $ 0
Other $__________
===========
Total Expenses $20,233.81
No expenses are to be borne by the Selling Stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law ("DGCL") permits a
corporation's certificate of incorporation to provide that no director of the
corporation shall be personally liable to the corporation or its stockholders
for monetary damages for any breach of his or her fiduciary duty as a director;
provided that such provisions shall not eliminate or limit the liability of a
director (i) for any breach of a director's duty of loyalty to the corporation
or its stockholders (ii) for acts or omissions that are not in good faith or
involve intentional misconduct or a knowing violation of the law, (iii) under
Section 174 of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit. The Company's Certificate of Incorporation
so provides.
The Certificate of Incorporation of the Company also provides,
in general, that the Company shall, to the fullest extent permitted by Section
145 of the DGCL, as the same may be amended and supplemented, indemnify any and
all persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters referred to in
or covered by said section, and the indemnification provided for therein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Laws, agreement, vote as to action in his or her official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such person. Section 145 of the DGCL provides, in general,
that any person may be indemnified by a corporation against expenses (including
attorneys' fees, judgments, fines and amounts paid in settlement) actually and
reasonably incurred in connection with the defense or settlement of any
threatened, pending or completed legal proceedings in which he or she is
involved by reason of the fact that he or she is or was a director or officer of
the corporation or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, if he or she acted in good faith and in a manner that
he or she reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, if he or
she had no reasonable cause to believe that his or her conduct was unlawful. If
the legal proceeding, however, is by or in the right of the corporation, the
person may not be indemnified in respect of any claim, issue or matter as to
which he or she shall have been adjudged to be liable for negligence or
misconduct in the performance of his or her duty to the corporation unless a
court determines otherwise.
The foregoing discussion of the Company's Certificate of
Incorporation and Section 145 of the DGCL is not intended to be exhaustive and
is qualified in its entirety by reference to such Certificate and statute.
II-1
<PAGE> 11
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated by
reference herein as part of this Registration Statement:
NUMBER DESCRIPTION
------ -----------
4.1 National Record Mart, Inc.'s Restated Articles of
Incorporation, as amended and restated on September 2, 1993
4.2 Amendment of April 26, 1997 to National Record Mart, Inc.'s
Restated Articles of Incorporation
4.3 Amendment of September 26, 1997 to National Record Mart, Inc.'s
Restated Articles of Incorporation
4.4 National Record Mart, Inc.'s By-Laws, as amended, effective
September 16, 1997
4.5 National Record Mart, Inc.'s Shareholder Protection Rights
Agreement
4.6 Loan and Security Agreement dated June 11, 1993, between the
Company and Barclays Business Credit, Inc.
4.7 Amendment dated January 12, 1995, between the Company and
Barclays Business Credit, Inc, to the Loan and Security
Agreement, dated June 11, 1993, between the Company and
Barclays Business Credit, Inc.
4.8 Amendment, dated September 8, 1995, between the Company and
Shawmut Capital Corporation, successor to Barclays Business
Credit, Inc., to the Loan and Security Agreement, dated June
11, 1993.
4.9 Amendment, dated July 19, 1996, between the Company and Fleet
Capital Corporation, successor to Shawmut Capital Corporation,
to the Loan and security Agreement, dated June 11, 1993,
between the Company and Barclays Business Credit, Inc.
4.10 Amendment, dated October 17, 1996, between the Company and
Fleet Capital Corporation, to the Loan and Security Agreement,
dated June 11, 1993, between the Company and Barclays Business
Credit, Inc.
4.11 Amendment, dated June 25, 1997, between the Company and Fleet
Capital Corporation, to the Loan and Security Agreement, dated
June 11, 1993, between the Company and Barclays Business
Credit, Inc., filed herewith.
4.12 Amendment, dated February 17, 1998, between the Company and
Fleet Capital Corporation, to the Loan and Security Agreement,
dated June 11, 1993, between the Company and Barclays Business
Credit, Inc.
4.13 Amendment, dated April 16, 1998, between the Company and Fleet
Capital Corporation, to the Loan and Security Agreement, dated
June 11, 1993, between the Company and Barclays Business
Credit, Inc.
4.14 Senior Subordinated Secured Note Purchase Agreement, dated as
of April 16, 1998, among the Company, the Guarantors from time
to time party thereto, the Purchasers from time to time party
thereto, and Robert Fleming, Inc., as Agent.
4.15 Senior Subordinated Note Purchase Agreement, dated as of April
16, 1998, among the Company, the Guarantors from time to time
party thereto, the Purchasers from time to time party thereto,
and Robert Fleming, Inc, as Agent.
4.16 Issuer Security and Pledge Agreement, dated as of April 16,
1998, between the Company and Robert Fleming, Inc., as Agent.
4.17 Guarantor Security and Pledge Agreement, dated as of April 16,
1998, between NRM Investments, Inc. and Robert Fleming, Inc.,
as Agent.
4.18 Trademark Collateral Security Agreement, dated as of April 16,
1998, between the Company and Robert Fleming, Inc., as Agent.
4.19 Subordination Agreement, dated as of April 16, 1998, between
Robert Fleming, Inc., as Agent and Fleet Capital Corporation,
acknowledged by the Company and NRM Investments, Inc.
4.20 Junior Subordination Agreement, dated as of April 16, 1998,
between Robert Fleming, Inc., as Agent, and Fleet Capital
Corporation, acknowledged by the Company and NRM Investments,
Inc.
4.21 Collateral Sharing and Agency Agreement, dated as of April 16,
1998, among the Company, NRM Investments, Inc., Robert Fleming,
Inc., as Agent, and Fleet Capital Corporation, for itself and
as Collateral Agent.
4.22 Warrant Agreement dated as of April 16, 1998, between the
Company, the Company as Warrant Agent, Robert Fleming, Inc. and
Seneca Capital L.P.
4.23 Registration Rights Agreement dated as of April 16, 1998 among
the Company, Robert Fleming Inc. and Seneca Capital L.P.
5.1 Opinion of Reed Smith Shaw & McClay LLP, as to the legality of
the Common Stock.
23.1 Consent of Reed Smith Shaw & McClay LLP (included in Exhibit
5.1)
23.2 Consent of Ernst & Young LLP.
23.3 Updated Consent of Ernst & Young LLP.
23.4 Updated Consent of Ernst & Young LLP.
II-2
<PAGE> 12
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this Registration
Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to any provision or arrangement whereby the
Registrant may indemnify a director, officer or controlling person of the
Registrant against liabilities arising under the Securities Act of 1933, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 3 to the registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Pittsburgh,
Commonwealth of Pennsylvania, on January 12, 1999.
NATIONAL RECORD MART, INC.
(Registrant)
By: /S/ WILLIAM A. TEITELBAUM
------------------------------------------
William A. Teitelbaum
Chairman of the Board, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on January 12, 1999:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/S/ WILLIAM A. TEITELBAUM Chairman of the Board, President, Chief Executive
- -----------------------------------------------------------------------------------------------------------------
William A. Teitelbaum Officer and Director
/S/ THERESA CARLISE Senior Vice President, Chief Financial Officer, Chief
- -----------------------------------------------------------------------------------------------------------------
Theresa Carlise Accounting Officer and Director
/S/ THERESA CARLISE Director
- -----------------------------------------------------------------------------------------------------------------
Samuel S. Zacharias
By Theresa Carlise
Attorney-in-Fact
/S/ THERESA CARLISE Director
- -----------------------------------------------------------------------------------------------------------------
Irwin B. Goldstein
By Theresa Carlise
Attorney-in-Fact
</TABLE>
S-1
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION METHOD OF FILING
<S> <C> <C>
4.1 National Record Mart, Inc.'s Restated Articles Previously filed as Exhibit 3.1 to Annual Report
of Incorporation, as amended and restated on on Form 10-K for the year ended
September 2, 1993 December 31, 1993 and incorporated herein by
reference.
4.2 Amendment of April 26, 1997 to National Record Previously filed as Exhibit 3.2 to Registration
Mart, Inc.'s Restated Articles of Incorporation Statement on Form S-4 (333-27945) and
incorporated herein by reference.
4.3 Amendment of September 26, 1997 to National Previously filed as Exhibit 4.3 to Registration
Record Mart, Inc.'s Restated Articles of Statement on Form S-3 (333-38213) and
Incorporation incorporated herein by reference.
4.4 National Record Mart, Inc.'s By-Laws, as Previously filed as Exhibit 4.4 to Registration
amended, effective September 16, 1997 Statement on Form S-3 (333-38213) and
incorporated herein by reference.
4.5 National Record Mart, Inc.'s Shareholder Previously filed as Exhibit 1 to Form 8-A
Protection Rights Agreement Registration Statement (File No. 1-7410) dated
October 29, 1996, and incorporated herein by
reference.
4.6 Loan and Security Agreement, dated June 11, Filed as Exhibit 10.16 to the Company's
1993, between the Company and Barclays Business Registration Statement No. 33-62622 on Form S-1
Credit, Inc. and incorporated herein by reference.
4.7 Amendment, dated January 12, 1995, between he Filed as Exhibit 4.7 to the Company's Annual
Company and Barclays Business Credit, Inc., to Report on Form 10-K for the fiscal year ended
the Loan and Security Agreement, dated June 11, March 28, 1998 and incorporated herein by
1993, between the Company and Barclays Business reference.
Credit, Inc.
4.8 Amendment, dated September 8, 1995, between the Filed as Exhibit 4.8 to the Company's Annual
Company and Shawmut Capital Corporation, Report on Form 10-K for the fiscal year ended
successor to Barclays Business Credit, Inc., to March 28, 1998 and incorporated herein by
the Loan and Security Agreement, dated June 11, reference.
1993, between the Company and Barclays Business
Credit, Inc.
4.9 Amendment, dated July 19, 1996, between the Filed as Exhibit 4.9 to the Company's Annual
Company and Fleet Capital Corporation, successor Report on Form 10-K for the fiscal year ended
to Shawmut Capital Corporation, to the Loan and March 28, 1998 and incorporated herein by
Security Agreement, dated June 11, 1993, between reference.
the Company and Barclays Business Credit, Inc.
4.10 Amendment, dated October 17, 1996, between the Filed as Exhibit 10.10 to the Company's Annual
Company and Fleet Capital Corporation, to the Report on Form 10-K for the fiscal year ended
Loan and security Agreement, dated June 11, March 28, 1997 and incorporated herein by
1993, between the Company and Barclays Business reference.
Credit, Inc..
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
<S> <C> <C>
4.11 Amendment, dated June 25, 1997, between the Filed as Exhibit 4.11 to the Company's Annual
Company and Fleet Capital Corporation, to the Report on Form 10-K for the fiscal year ended
Loan and Security Agreement, dated June 11, March 28, 1998 and incorporated herein by
1993, between the Company and Barclays Business reference.
Credit, Inc.
4.12 Amendment, dated February 17, 1998, between the Filed as Exhibit 4.12 to the Company's Annual
Company and Fleet Capital Corporation, to the Report on Form 10-K for the fiscal year ended
Loan and Security Agreement, dated June 11, March 28, 1998 and incorporated herein by
1993, between the Company and Barclays Business reference.
Credit, Inc.
4.13 Amendment, dated April. 16, 1998, between the Filed as Exhibit 4.13 to the Company's Annual
Company and Fleet Capital Corporation, to the Report on Form 10-K for the fiscal year ended
Loan and Security Agreement, dated June 11, March 28, 1998 and incorporated herein by
1993, between the Company and Barclays Business reference.
Credit, Inc.
4.14 Senior Subordinated Secured Note Purchase Filed as Exhibit 4.14 to the Company's Annual
Agreement, dated as of April 16, 1998, among the Report on Form 10-K for the fiscal year ended
Company, the Guarantors from time to time party March 28, 1998 and incorporated herein by
thereto, the Purchasers from time to time party reference.
thereto, and Robert Fleming, Inc., as Agent.
4.15 Senior Subordinated Note Purchase Agreement, Filed as Exhibit 4.15 to the Company's Annual
dated as of April 16, 1998, among the Company, Report on Form 10-K for the fiscal year ended
the Guarantors from time to time party thereto, March 28, 1998 and incorporated herein by
the Purchasers from time to time party thereto reference.
and Robert Fleming, Inc., as Agent.
4.16 Issuer Security and Pledge Agreement, dated as Filed as Exhibit 4.16 to the Company's Annual
of April 16, 1998, between the Company and Report on Form 10-K for the fiscal year ended
Robert Fleming, Inc., as Agent. March 28, 1998 and incorporated herein by
reference.
4.17 Guarantor Security and Pledge Agreement, dated Filed as Exhibit 4.17 to the Company's Annual
as of April 16, 1998, between NRM Investments, Report on Form 10-K for the fiscal year ended
Inc. and Robert Fleming, Inc., as Agent. March 28, 1998 and incorporated herein by
reference.
4.18 Trademark Collateral Security Agreement, dated Filed as Exhibit 4.18 to the Company's Annual
as of April 16, 1998, between the Company and Report on Form 10-K for the fiscal year ended
Robert Fleming, Inc., as Agent. March 28, 1998 and incorporated herein by
reference.
4.19 Subordination Agreement, dated as of April 16, Filed as Exhibit 4.19 to the Company's Annual
1998, between Robert Fleming, Inc., as Agent, Report on Form 10-K for the fiscal year ended
and Fleet Capital Corporation, acknowledged by March 28, 1998 and incorporated herein by
the Company and NRM Investments, Inc. reference.
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
<S> <C> <C>
4.20 Junior Subordination Agreement, dated as of Filed as Exhibit 4.20 to the Company's Annual
April 16, 1998, between Robert Fleming, Inc., as Report on Form 10-K for the fiscal year ended
Agent, and Fleet Capital Corporation, March 28, 1998 and incorporated herein by
acknowledged by the Company and NRM reference.
Investments, Inc.
4.21 Collateral Sharing and Agency Agreement, dated Filed as Exhibit 4.21 to the Company's Annual
as of April 16, 1998, among the Company, NRM Report on Form 10-K for the fiscal year ended
Investments, Inc., Robert Fleming, Inc., as March 28, 1998 and incorporated herein by
Agent, and Fleet Capital Corporation for itself reference.
and as Collateral Agent.
4.22 Warrant Agreement dated as of April 16, 1998, Filed herewith.
between the Company, the Company as Warrant
Agent, Robert Fleming, Inc. and Seneca
Capital L.P.
4.23 Registration Rights Agreement dated as of Filed herewith.
April 16, 1998 among the Company, Robert
Fleming Inc. and Seneca Capital L.P.
23.4 Updated Consent of Ernst & Young LLP. Filed herewith.
</TABLE>
<PAGE> 1
Exhibit 4.22
- --------------------------------------------------------------------------------
WARRANT AGREEMENT
OF
NATIONAL RECORD MART, INC.
A DELAWARE CORPORATION
400,000 SHARES
Dated as of April 16, 1998
- --------------------------------------------------------------------------------
COMMON STOCK PURCHASE WARRANT
<PAGE> 2
WARRANT AGREEMENT dated as of April 16, 1998, between National Record
Mart, Inc., A Delaware corporation (the "Company"), the Company as Warrant
Agent, Robert Fleming Inc., a Delaware corporation ("Fleming"), and Seneca
Capital L.P., a Delaware limited partnership ("Seneca" and with Fleming as the
"Holders")
WHEREAS, pursuant to that certain Senior Subordinated Secured Note
Purchase Agreement of even date herewith, by and between the Company, Fleming
and the Guarantors referred to therein (the "Secured Note Purchase Agreement"),
Fleming has purchased the Company's 11.75% Senior Subordinated Secured Notes
(the "Secured Notes") and is to receive warrants to acquire 200,000 shares of
the Company's common stock;
WHEREAS, pursuant to that certain Senior Subordinated Note Purchase
Agreement of even date herewith, by and between the Company, Fleming, Seneca and
the Guarantors referred to therein (the "Unsecured Note Purchase Agreement"),
the Holders have purchased the Company's 11.75% Senior Subordinated Notes (the
"Unsecured Notes") and is to receive warrants to acquire 200,000 shares of the
Company's common stock;
WHEREAS, the Company proposes to issue at the closing (the "Closing")
of both the Secured Note Purchase Agreement and the Unsecured Note Purchase
Agreement the common stock purchase warrants as hereinafter described (the
"Warrants") exercisable to purchase an aggregate of 400,000 shares of its common
stock, $0.01 par value ("Common Stock") (the shares of Common Stock issuable on
exercise of the Warrants being referred to herein as the "Warrant Shares"), in
favor of the Holders.
NOW THEREFORE, in consideration of the benefits and services provided
to the Company by the Holders, and for the purpose of defining the terms and
provisions of all of the Warrants and the respective rights and obligations
thereunder of the Company and the Holders, the Company and the Holders hereby
agree as follows:
SECTION 1. TRANSFERABILITY AND FORM OF THE WARRANTS.
A. REGISTRATION. The Warrants shall be numbered and shall be
registered on the books of the Company maintained at the principal office of the
Company at 507 Forest Avenue, Carnegie, PA 15106 (the "Warrant Register"). The
Company shall be entitled to treat the Holders of the Warrants as the owners in
fact thereof for all purposes and shall not be bound to recognize any equitable
or other claim to or interest in such Warrants on the part of any other person,
and shall not be liable for any Company registration or transfer of the Warrants
which is registered or to be registered in the name of a fiduciary or the
nominee of a fiduciary unless made with the actual knowledge that a fiduciary or
nominee is committing a breach of trust in requesting such registration of
transfer, or with such knowledge of such facts that its anticipation therein
amounts to bad faith.
-1-
<PAGE> 3
B. TRANSFER RESTRICTIONS. The Warrants are freely
transferable, subject to applicable securities laws restrictions. The holder of
any Warrants so transferred shall continue to be bound by this Agreement.
Notwithstanding the foregoing, the Holders shall be restricted from selling the
Warrants in a public sale for six months following the Closing.
C. TRANSFER-GENERAL. Subject to the terms hereof, the Warrants
shall be transferable only on the books of the Company maintained at its
principal office upon delivery thereof duly endorsed by a Holder or by its duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. In all cases of transfer by an
attorney, the original power of attorney, duly approved, or a copy thereof, duly
certified, shall be deposited and remain with the Company. In case of transfer
by executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and may be required
to be deposited and to remain with the Company in its discretion. Upon any
registration of transfer, the Company shall countersign and deliver new Warrants
to the Persons entitled thereto. The Company or the Warrant Agent may require
the payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any such transfer.
D. NOTICES OF CORPORATE ACTIONS. In the event of: (a) any
taking by the Company of a record of the holders of the Common Stock for the
purpose of determining the holders thereof who are entitled to receive any
dividend or distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of capital stock of any class or any other securities, (b)
any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger involving the Company and any other Person or any transfer or other
disposition of all or substantially all the assets of the Company to another
Person; (c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Company, or (d) any amendment of the certificate of incorporation of the
Company, the Company shall mail to each Holder in accordance with the provisions
of Section 12 hereof a notice specifying (i) the date or expected date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right and
(ii) the date or expected date on which any such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
disposition, dissolution, liquidation or winding-up is to take place, the time,
if any such time is to be fixed, as of which the holders of record of Common
Stock shall be entitled to exchange their shares of Common Stock for the
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
disposition, dissolution, liquidation or winding-up and a description in
reasonable detail of the transaction. Such notice shall be mailed to the extent
practicable at least thirty (30), but not more than ninety (90) days prior to
the date therein specified. In the event that the Company at any time sends any
notice to the holders of its Common Stock, it shall concurrently send a copy of
such notice to each Holder.
-2-
<PAGE> 4
E. FORM OF THE WARRANTS. The text of the Warrants and of the
form of election to purchase Warrant Shares (the "Purchase Form") shall be
substantially as set forth in Exhibit A attached hereto. The Exercise Price (as
defined in and determined in accordance with the provisions of Sections 2 and 6
hereof) and the number of Warrant Shares issuable upon exercise of a Warrant is
subject to adjustment upon the occurrence of certain events, all as hereinafter
provided. Each Warrant shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, President, Chief Financial
Officer, or one of its Vice Presidents, and attested by its Secretary or an
Assistant Secretary.
The Warrants shall be dated as of the date of countersignature
thereof by the Company either upon initial issuance or upon transfer.
SECTION 2. TERMS OF THE WARRANTS; EXERCISE OF THE WARRANTS; EXERCISE
PRICE, ETC.
A. TERM OF THE WARRANTS/VESTING. Subject to the terms of this
Agreement, the Holder shall have the right, which may be exercised from time to
time commencing on the date six months from the Closing until a date five (5)
years from the Closing, to purchase from the Company the number of fully paid
and nonassessable Warrant Shares which the Holder may at the time be entitled to
purchase on exercise of such Warrant. The Warrant shall immediately vest in full
at Closing. If the last day for the exercise of the Warrant shall not be a
business day, then the Warrant may be exercised on the next succeeding business
day.
B. EXERCISE OF THE WARRANTS. The Warrants may be exercised
upon surrender to the Company, at its principal office, of the certificate
evidencing the particular Warrant to be exercised, together with the Purchase
Form on the reverse thereof duly completed and executed, and upon payment to the
Company of the Exercise Price, for the number of Warrant Shares in respect of
which such Warrant is then exercised. Upon partial exercise, a Warrant
certificate for the unexercised portion shall be delivered to the Holder.
Payment of the aggregate Exercise Price shall be made as provided in Section 2.3
below.
Subject to Section 3 hereof, upon such surrender of a Warrant,
a completed Purchase Form, and payment of the Exercise Price as aforesaid, the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Holder and in such name or names as the Holder may
designate, a certificate or certificates for the number of full Warrant Shares
so purchased upon the exercise of the particular Warrant; provided, that any
partial exercise of a Warrant shall be for a whole number of Warrant Shares; and
provided, further that upon the full exercise of any then outstanding Warrants
held by a Holder, the Company shall be permitted to make a cash payment to such
Holder in lieu of any fractional Warrant Shares otherwise issuable. Such
certificate or certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of
-3-
<PAGE> 5
the particular Warrant, completed Purchase Form, and payment of the Exercise
Price, as aforesaid; provided, however, that if, at the date of surrender of the
particular Warrant, completed Purchase Form, and payment of such Exercise Price,
the transfer books for the Warrant Shares or other class of stock purchasable
upon the exercise of the particular Warrant shall be closed, the certificates
for the Warrant Shares in respect of which the particular Warrant is then
exercised shall be issuable as of the date on which such books shall next be
opened (whether before or after the Expiration Date) and until such date the
Company shall be under no duty to deliver any certificate for such Warrant
Shares; provided, further, that the transfer books of record, unless otherwise
required by law, shall not be closed at any one time for a period longer than 20
calendar days.
C. PAYMENT OF THE EXERCISE PRICE. Payment of the Exercise
Price shall be made at the option of the Holder by one or more of the following
methods: (i) by delivery of cash, or a certified or official bank check in the
amount of such Exercise Price, (ii) by instructing the Company to withhold a
number of Warrant Shares then issuable upon exercise of the particular Warrant
with an aggregate Fair Value (as defined in Section 7 hereof) equal to such
Exercise Price (the "Net Exercise Option"), (iii) by surrender to the Company of
Secured Notes or Unsecured Notes in principal amount plus accrued interest equal
to the applicable Exercise Price, or (iv) by surrendering to the Company shares
of Common Stock previously acquired by the Holder with an aggregate Fair Value
equal to such Exercise Price, or any combination of foregoing. In the event of
any withholding of Warrant Stock or surrender of Common Stock pursuant to clause
(ii) or (iv) above where the number of shares whose Fair Value is equal to the
Exercise Price is not a whole number, the number of shares withheld by or
surrendered to the Company shall be rounded down to the nearest whole share.
D. COMPLIANCE WITH GOVERNMENT REGULATIONS. Holder acknowledges
that none of the Warrants or Warrant Shares has been registered under the Act,
and may be sold or disposed of in the absence of such registration only pursuant
to an exemption from such registration and in accordance with this Agreement.
The Warrants and Warrant Shares will bear a legend to the following effect:
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO SALE OR
OTHER DISPOSITION OR PLEDGE OF THESE SECURITIES OR THE SECURITIES
UNDERLYING THESE SECURITIES CAN BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY OR A NO ACTION LETTER OR INTERPRETIVE
OPINION OF THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT.
-4-
<PAGE> 6
E. EXERCISE PRICE. The price per share at which Warrant Shares
shall be purchasable upon exercise of the Warrant (the "Exercise Price") shall
be $0.01 per share, subject to adjustment pursuant to Section 6 hereof.
SECTION 3. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of the Warrants and Warrant
Shares upon the exercise of any of the Warrants; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue or delivery of the Warrants or
certificates for Warrant Shares in a name other than that of the Holder of the
particular Warrant.
SECTION 4. MUTILATED OR MISSING WARRANTS. In case the Warrant shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant certificate of like tenor and representing an equivalent right or
interest; but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of the particular Warrant certificate
and indemnity or bond, if requested, also reasonably satisfactory to them. An
applicant for such substitute Warrant certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
SECTION 5. RESERVATION OF WARRANT SHARES.
A. RESERVATION OF WARRANT SHARES. There have been reserved,
and the Company shall at all times keep reserved, out of its authorized shares
of Common Stock, a number of shares of Common Stock sufficient to provide for
the exercise of the rights of purchase represented by the outstanding Warrants.
The transfer agent for the Common Stock ("Transfer Agent"), and every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of any of the rights of purchase aforesaid will be and are hereby
irrevocably authorized and directed at all times until the Expiration Date to
reserve such number of authorized shares as shall be requisite for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrant. The Company covenants that all Warrant Shares which may be issued upon
exercise of the Warrant will, upon issue, be fully paid, nonassessable, free of
preemptive rights in any third party and free from all taxes, liens, charges and
security interests with respect to the issue thereof. The Company will supply
such Transfer Agent and any subsequent transfer agent with duly executed stock
certificates for such purpose and will itself provide or otherwise make
available any cash which may be payable as provided in Section 8 of this
Agreement. The Company will furnish to such Transfer Agent a copy of all notices
of adjustments, and certificates related thereto, transmitted to each Holder.
-5-
<PAGE> 7
The particular Warrant surrendered in the exercise of the rights thereby
evidenced shall be canceled by the Company.
B. CANCELLATION OF THE WARRANTS. In the event the Company
shall purchase a Warrant, or otherwise acquire any of the Warrants, the
particular Warrant shall be canceled and retired.
SECTION 6. ADJUSTMENT OF THE EXERCISE PRICE AND NUMBER OF WARRANT
SHARES. The number and kind of securities purchasable upon the exercise of the
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of certain events, as hereinafter defined.
6.1 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any
time the Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, additional shares of Common Stock,
(b) subdivide its shares of Common Stock outstanding into a
larger number of shares of such Common Stock, or
(c) combine its shares of Common Stock outstanding into a
smaller number of shares of such Common Stock,
then the number of Warrant Shares shall be adjusted so that the Holder
thereafter will be entitled to receive the number of shares of Common Stock that
such Holder would have owned immediately following such action had the Warrant
been exercised immediately prior thereto, and the Exercise Price of the Warrant
shall be adjusted to equal the product of the Exercise Price in effect
immediately prior to such event multiplied by a fraction the numerator of which
is equal to the number of Warrant Shares purchasable upon the exercise of the
Warrant immediately prior to such adjustment, and the denominator of which is
equal to the number of Warrant Shares purchasable immediately thereafter, and
thereafter the provisions of this Warrant Agreement shall apply with like effect
to such additional or reclassified shares.
6.2 RIGHTS OFFERINGS, OFFERINGS OF COMMON STOCK, AND OTHER
DISTRIBUTIONS. If at any time the Company shall:
(a) issue rights, options, or warrants to all holders of its
Common Stock in respect of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the Fair Value
per share (as determined below) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such
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<PAGE> 8
rights, options or warrants, the Holders shall be entitled to subscribe for or
purchase shares of Common Stock on the same terms and to the same extent as the
other holders of Common Stock; provided, however, that the foregoing shall not
apply to any grant of options to purchase Common Stock at an exercise price not
less than Fair Value per share directed to the Company's employees, officers, or
directors pursuant to a plan approved by the Company's board of directors or its
shareholders;
(b) issue shares of Common Stock, Stock Purchase Rights or
Convertible Securities, for a price per share of Common Stock, in the case of
issuance of Common Stock, or for a price per share of Common Stock initially
deliverable upon a conversion or exchange of such securities less than the Fair
Value per share of Common Stock on the date the Company fixed the offering,
conversion or exchange price of such additional shares, the Holders shall be
entitled to participate to the same extent and on the same terms that the
Holders would have been entitled to participate had the Warrants been exercised
immediately prior thereto; or
(c) by dividend or otherwise, distribute to all holders of its
Common Stock cash, evidences of indebtedness, shares of any class of capital
stock or any other property or rights (including securities, but excluding (i)
any dividend or distribution referred to in Section 6. 1, and (ii) any merger or
consolidation or other transactions to which Section 6.3 applies), then, in such
event, upon the exercise of the Warrant, the Holder shall receive from the
Company, in addition to the shares of Common Stock to which the Holder is
entitled, any cash, evidences of indebtedness, shares of any class of capital
stock or any other property distributed by the Company with respect to the
shares of Common Stock as to which the exercised Warrant pertains.
In the event of a distribution by the Company to holders of
its shares of Common Stock of stock of a subsidiary or securities convertible
into or exercisable for such stock, then in lieu of an adjustment in the number
of Shares purchasable upon the exercise of any of the Warrants, the Holder of
any of the Warrants, upon the exercise thereof at any time after such
distribution, shall be entitled to receive from the Company, such subsidiary or
both, as the Company shall determine, the stock or other securities to which
such Holder would have been entitled if such Holder had exercised the particular
Warrant immediately prior thereto, all subject to further adjustment as provided
in this Section 6.
6.3 REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS.
(a) In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is any change whatsoever in, or distribution with respect to, the outstanding
Common Stock of the Company), Or sell, transfer or otherwise dispose of
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<PAGE> 9
all or substantially all of its property, assets or business to another
corporation and, pursuant to the terms of such reorganization, reclassification,
merger, consolidation or disposition of assets, (i) shares of common stock of
the successor or acquiring corporation or of the Company (if it is the surviving
corporation) or (ii) any cash, shares of stock or other securities or property
of any nature whatsoever (including warrants, options, or other subscription or
purchase rights) in addition to or in lieu of common stock of the successor or
acquiring corporation are to be received by or distributed to the holders of
Common Stock of the Company who are holders immediately prior to such
transaction, then the Holder of the Warrants shall have the right thereafter to
receive from the Company, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and other property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which the Warrants are exercisable
immediately prior to such event.
(b) In case of any such reorganization, reclassification,
merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and condition of
this Agreement to be performed and observed by the Company and all the
obligations and liabilities hereunder. For purposes of this Section 6.4, it
common stock of the successor or acquiring corporation" shall include stock of
such corporation of any class that is not preferred as to dividends or assets
over any other class of stock of such corporation and that is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities that are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 6.4 shall
similarly apply to successive reorganizations, reclassification, mergers,
consolidations or disposition of assets.
6.4 ADDITIONAL WARRANTS IF STOCK IS RESTRICTED. If the Warrant
Shares issuable upon exercise of the Warrants are not freely transferrable to
the public on or after a date six months from the Closing pursuant the
Registration Rights Agreement (i.e., restricted), for each month or portion
thereafter that the Warrant Shares remain so restricted the Company shall
provide the Holders with additional Warrants exercisable to purchase 20,000
Warrant Shares to be allocated pro rata among the Holders. The provisions of
this Section 6.4 shall survive the exercise of the Warrants and the termination
of this Agreement.
6.5 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS
SECTION. The following provisions shall be applicable to the adjustments
provided for pursuant to this Section 6:
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<PAGE> 10
(A) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by
this Section 6 shall be made whenever and as often as any specified event
requiring such an adjustment shall occur. For the purpose of any such
adjustment, any specified event shall be deemed to have occurred at the close of
business in New York on the date of its occurrence.
(B) FRACTIONAL INTERESTS. In computing adjustments under this
Section 6, fractional interests in Common Stock shall be taken into account to
the nearest 1/100th of a share.
(C) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution to which the provisions of Section 6 would
apply, but shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment shall be required by reason of the
taking of such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
(D) CERTAIN LIMITATIONS. Notwithstanding anything herein to
the contrary, the Company agrees not to enter into any transaction that, by
reason of any adjustment under Section 6 above, would cause the Exercise Price
to be less than the par value of the Common Stock, if any, unless the Company
first reduces the par value of the Common Stock to be less than the Exercise
Price that would result from such transaction.
(E) NOTICE OF ADJUSTMENTS. Whenever the number of shares of
Common Stock for which the Warrants are exercisable or the Exercise Price shall
be adjusted pursuant to this Section 6, the Company forthwith shall prepare a
certificate to be executed by either the chief executive or chief financial
officer of the Company setting forth, in reasonable detail, the event requiring
the adjustment and the method by which such adjustment was calculated,
specifying the number of shares of Common Stock for which the Warrants are
exercisable and (if such adjustment was made pursuant to Section 6.3) describing
the number and kind of any other shares of stock or other property for which the
Warrants are exercisable, and any related change in the Exercise Price, after
giving effect to such adjustment or change. The Company shall promptly deliver a
signed copy of such certificate to the Holder in accordance with Section 12. The
Company shall keep at its principal office copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by any Holder or any prospective transferee of any Warrants
designated by a Holder thereof.
(F) INDEPENDENT APPLICATION. Except as otherwise provided
herein, all subsections of this Section 6 are intended to operate independently
of one another (but without duplication). If an event occurs that requires the
application of more than one subsection, all applicable subsections shall be
given independent effect without duplication.
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<PAGE> 11
SECTION 7. DEFINITIONS.
AS used in this Warrant Agreement, the following terms shall
have the following respective meanings:
ACT shall mean the Securities Act of 1933, as amended.
BUSINESS DAY shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in New
York. Closing means the date of closing of the Note Purchase Agreement.
COMMON STOCK means the Common Stock of the Company, $0.01 par
value per share, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of any Common Stock upon any reclassification thereof which is also not
preferred as to dividends or liquidation over any other class of stock of the
Company and which is not subject to redemption and (ii) shares of common stock
of any successor or acquiring corporation (as defined in Section 6.4 hereof)
received by or distributed to the holders of Common Stock of the Company in the
circumstances contemplated by Section 6.4 hereof.
CONVERTIBLE SECURITIES shall mean evidences of indebtedness,
shares of stock or other securities that are convertible into or exchangeable
for, with or without payment of additional consideration in cash or property,
shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.
CURRENT MARKET PRICE shall mean as of any specified date the
average of the Daily Market Price of the Common Stock of the Company for the
twenty (20) consecutive Trading Days immediately preceding such date. The "Daily
Market Price" for each such Trading Day shall be the closing price of the Common
Stock on the principal stock exchange or market on which such stock is actually
traded.
FAIR VALUE MEANS, per share of Common Stock as of any
specified date, (i) if the Common Stock is publicly traded on such date, the
Current Market Price per share or (ii) if the Common Stock is not publicly
traded on such date, the fair market value per share of Common Stock shall be
agreed upon in good faith between the Holders and the Company.
OUTSTANDING shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued and
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<PAGE> 12
outstanding shares of Common Stock, except shares then owned or held by or for
the account of the Company or any Subsidiary thereof.
PERSON shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, incorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
PREEMPTIVE RIGHT means a right of a stockholder to preempt or
to purchase before others a new issue of shares in proportion to one's present
interest in the Company.
REGISTRATION RIGHTS AGREEMENT means that certain Registration
Rights Agreement of even date herewith by and among the Company, Seneca and
Fleming.
SECURED NOTE PURCHASE AGREEMENT shall have the meaning set
forth in the recitals.
STOCK PURCHASE RIGHTS shall mean any options, warrants or
other securities or rights to subscribe to or exercisable for the purchase of
shares of Common Stock or Convertible Securities, whether or not immediately
exercisable.
TRADING DAY means any day that the principal stock exchange or
market on which the securities of the Company are traded is open for trading.
UNSECURED NOTE PURCHASE AGREEMENT shall have the meaning set
forth in the recitals.
SECTION 8. FRACTIONAL INTERESTS. The Company shall not be required to
issue fractional Warrant Shares on the exercise of the Warrant. If any fraction
of a Warrant Shares would, except for the provisions of this Section 8, be
issuable on the exercise of the Warrant (or specified portion thereof), the
Company shall round up such share to an additional whole share of Common Stock.
SECTION 9. NO RIGHTS AS STOCKHOLDER; NOTICES TO HOLDER. Nothing
contained in either this Agreement or the Warrant shall be construed as
conferring upon the Holder or its permitted transferees the right to vote or to
receive dividends or to consent to or receive notice as a stockholder in respect
of any meeting of stockholders for the election of directors of the Company or
any other matter, or any rights whatsoever as a stockholder of the Company.
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<PAGE> 13
SECTION 10. INSPECTION OF WARRANT AGREEMENT. The Company shall keep
copies of this Agreement and any notices given or received hereunder available
for inspection by the Holder during normal business hours at its principal
office.
SECTION 11. IDENTITY OF TRANSFER AND WARRANT AGENT. Forthwith upon the
appointment of any subsequent transfer agent for the Common Stock or Warrant
Agent, or any other shares of the Company's capital stock issuable upon the
exercise of the Warrant, the Company will notify the Holder of the name and
address of such subsequent transfer agent.
SECTION 12. NOTICES. Any notice pursuant to this Agreement by any
Holder to the Company, shall be in writing and shall be mailed first class,
postage prepaid, or delivered to the Company at its office at 507 Forest Avenue,
Carnegie, PA 15106.
Each party hereto may from time to time change the address to
which notices to it are to be delivered or mailed hereunder by notice in writing
to the other party. Any notice mailed pursuant to this Agreement by the Company
or the Warrant Agent to the Holder shall be in writing and shall be mailed first
class, postage prepaid, or delivered to the Holder at its address on the books
of the Warrant Agent.
SECTION 13. EXPENSES, ETC. Whether or not the transactions contemplated
hereby are consummated, the Company agrees, jointly and severally to pay all
costs and expenses (including reasonable attorneys' fees of a special counsel
and, if reasonably required, local or other counsel) incurred by the Holders in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the Note Documents (whether
or not such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend), including any expenses
incurred in any appeals, any rights under this Agreement or the Note Documents
or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Note
Documents, or by reason of being a Holder of Warrants, and (b) the costs and
expenses, including financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of the Company or in connection with any work-out or
restructuring of the transactions contemplated hereby and by the Note Documents.
The Company will pay, and will save each Holder harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by such Holder). The obligations of the Company under this
Section 13 will survive the enforcement, amendment or waiver of any provision of
this Agreement or the Note Documents, and the termination of this Agreement and
the Note Documents
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN
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<PAGE> 14
SUCH STATE. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, AND
REGARDLESS OF ANY PRESENT OR FUTURE DONUCILE OR PRINCIPAL PLACE OF BUSINESS OF
THE OBLIGORS OR THE HOLDERS, OBLIGORS HEREBY CONSENT AND AGREE THAT THE SUPREME
COURT OF NEW YORK COUNTY, NEW YORK OR, AT AGENT'S OPTION, THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK SHALL HAVE THE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OBLIGORS AND
AGENT PERTAINING TO THIS AGREEMENT OR ANY MATTER ARISING OUT OF OR RELATED TO
THIS AGREEMENT. OBLIGORS EXPRESSLY SUBNHT AND CONSENT IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND OBLIGORS
HEREBY WAIVE ANY OBJECTION WHICH COMPANY MAY HAVE BASED ON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON COVENANTS AND HEREBY CONSENT TO THE
GRANTING FOR SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. OBLIGORS HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAEL
ADDRESSED TO THE OBLIGORS AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETE UPON THE EARLIER OF THE OBLIGOR'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAELS, PROPER
POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT
THE RIGHT OF THE AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW, OR TO PRECLUDE THE ENFORCEMENT BY THE AGENT OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE THE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
SECTION 15. WAIVER OF RIGHT TO TRIAL BY JURY. OBLIGORS AND HOLDERS
WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(a) ARISING UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO
HEREIN OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE OBLIGORS AND THE HOLDERS WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO HEREIN
OR DELIVERED IN CONNECTION HEREWITH IN EACH CASE WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE, OBLIGORS AND HOLDERS AGREE AND CONSENT THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE OBLIGORS AND
HOLDERS TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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<PAGE> 15
OBLIGORS AND HOLDERS ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO CONSULT
WITH COUNSEL REGARDING TI-HS SECTION THAT THEY FULLY UNDERSTAND ITS TERMS,
CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY AND KNOWINGLY AGREE TO THE TERMS
OF THIS SECTION.
SECTION 16. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 17. MERGER OR CONSOLIDATION OF THE COMPANY. So long as the
Warrant remains outstanding, the Company will not merge or consolidate with or
into, or sell, transfer or lease all or substantially all of its property to,
any other corporation unless the successor or purchasing corporation, as the
case may be (if not the Company), shall expressly assume, by supplemental
agreement, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company.
SECTION 18. AMENDMENTS AND WAIVERS. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by the
Company and a majority of the Holders (by number of shares). Either the Company
or any Holder may, by an instrument in writing, waive compliance by the other
party with any term or provision of this Agreement on the part of such other
party hereto to be performed or complied with. The waiver by any such party of a
breach of any term or provision of this Agreement shall not be construed as a
waiver by any other party or of any subsequent breach.
SECTION 19. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation, other than the Company and
the Holder, any legal or equitable right, remedy or claim under this Agreement,
but this Agreement shall be for the sole and exclusive benefit of the Company
and the Holder.
SECTION 20. AGREEMENT IN CONFIDENCE. This Agreement and its terms and
the relationship between the Company and the Holder and its principals shall be
kept confidential by the Holder and its affiliates and by Company and its
affiliates and will not be disclosed by either of them except to the extent that
as a matter of law it must be disclosed by either party in any document filed
with any government agency or authority and available for public inspection or
as may be required to be disclosed in connection with the Company's sale of its
capital stock or assets or its merger, reorganization, consolidation or similar
event.
SECTION 21. INTERPRETATION. No provision of this Agreement or any of
the other Note Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured,
drafted or dictated such provision.
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<PAGE> 16
SECTION 22. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 23. CAPTIONS. The captions of the Sections of this Agreement
have been inserted for convenience only and shall have no substantive effect.
SECTION 24. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.
* * *
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<PAGE> 17
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed as of the day, month and year first above written.
THE COMPANY AND
AS THE WARRANT AGRENT:
NATIONAL RECORD MART, INC.
a Delaware Corporation
By: /s/ THERESA CARLISE
----------------------------
Name: Theresa Carlise
Title: CFO
<TABLE>
<CAPTION>
<S> <C>
THE HOLDERS:
As to the 200,000 Warrant Shares issued As to the 200,000 Warrant Shares issued
pursuant to the Secured Note Purchase pursuant to the Unsecured Note Purchase
Agreement: Agreement:
ROBERT FLEMING, INC., As to 101,333 Warrant Shares:
a Delaware corporation ROBERT FLEMING INC.,
a Delaware Corporation
By: /s/ PHILLIP SCHAFFER By: /s/ PHILLIP SCHAFFER
------------------------- -----------------------------
Name: Phillip Schaffer Name: Phillip Schaffer
Title: Title:
As to 98,667 Warrant Shares:
SENECA CAPITAL L.P.
A Delaware limited partnership
By: /s/ PHILLIP SCHAFFER
-----------------------------
Name: Phillip Schaffer
Title:
</TABLE>
SIGNATURE PAGE 1 OF 1
<PAGE> 1
Exhibit 4.23
REGISTRATION RIGHTS AGREEMENT
DATED AS OF APRIL 16, 1998
AMONG
NATIONAL RECORD MART, INC.
A DELAWARE CORPORATION
AND
THE HOLDERS OF REGISTRABLE SECURITIES
REFERRED TO HEREIN
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of April 16,
1998, by and among NATIONAL RECORD MART, INC., a Delaware corporation (the
"Company"), ROBERT FLEMING INC., a Delaware corporation ("Fleming"), and SENECA
CAPITAL L.P., a Delaware limited partnership ("Seneca" and collectively with
Fleming, the "Holders").
RECITALS
--------
WHEREAS, pursuant to that certain Senior Secured Subordinated Note
Purchase Agreement of even date herewith, by and among the Company, Fleming and
the Guarantors referred to therein (the "Secured Note Purchase Agreement"), the
Purchasers of Secured Notes (as defined in the Secured Note Purchase Agreement)
received warrants exercisable to acquire 200,000 shares of the Company's common
stock;
WHEREAS, pursuant to that certain Senior Subordinated Note Purchase
Agreement of even date herewith, by and among the Company, Fleming, Seneca and
the Guarantors referred to therein (the "Unsecured Note Purchase Agreement"),
the Purchasers of Unsecured Notes (as defined in the Unsecured Note Purchase
Agreement) received warrants exercisable to acquire 200,000 shares of the
Company's common stock (the warrants issued to the Purchasers of the Secured
Notes and the Unsecured Notes being, collectively, the "Warrants");
WHEREAS, the Company and Holders of Warrants issued pursuant to the
Secured Note Purchase Agreement and the Unsecured Note Purchase Agreement hereby
desire to set forth the Holders' rights and the Company's obligations to cause
the registration pursuant to the Securities Act of 1933 of the shares of common
stock received or receivable upon the exercise of the Warrants;
NOW, THEREFORE, in consideration of the agreement by the Holders to
provide the benefits under the Secured Note Purchase Agreement and the Unsecured
Note Purchase Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. AGREEMENTS AND REPRESENTATIONS OF THE COMPANY.
1.1. The Company represents and warrants to the Holders that
it has the requisite power and authority to execute, deliver and carry out this
Agreement and has taken all necessary action to approve this Agreement and to
authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly and properly executed and
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<PAGE> 3
delivered by the Company and constitutes the legally valid and binding
obligation of the Company, enforceable against it in accordance with its terms.
Section 2. DEFINITIONS AND USAGE.
As used in this Agreement:
2.1. Definitions.
Agent. "Agent" means the principal placement agent on an
agented placement of Registrable Securities.
Commission. "Commission" shall mean the Securities and
Exchange Commission.
Common Stock. "Common Stock" shall mean (i) the common stock,
$0.01 par value, of the Company, and (ii) shares of capital stock of the Company
issued by the Company in respect of or in exchange for shares of such common
stock in connection with any stock dividend or distribution, stock split-up,
recapitalization, recombination or exchange by the Company generally of shares
of such common stock.
Continuously Effective. "Continuously Effective," with respect
to a specified registration statement, shall mean that it shall not cease to be
effective and available for Transfers of Registrable Securities thereunder for
longer than either (i) any ten (10) consecutive business days, or (ii) an
aggregate of fifteen (15) business days during any calendar year during the
period specified in the relevant provision of this Agreement.
Demand Registration. "Demand Registration" shall have the
meaning set forth in Section 5.1.
Demanding Holders. "Demanding Holders" shall have the meaning
set forth in Section 5.1.
Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended and the rules and regulations promulgated
thereunder.
Holders. "Holders" shall mean Robert Fleming Inc. and Seneca
Capital L.P., and Transferees of such Persons' Registrable Securities with
respect to the rights that such Transferees shall have acquired in accordance
with Section 9, at such times as such Persons shall have beneficial or record
ownership of Registrable Securities.
Majority of the Holders. A "Majority of the Holders" means
those Holders holding at any time a majority of the Registrable Securities and
Transferees of such
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<PAGE> 4
Persons' Registrable Securities with respect to the rights that such Transferees
shall have acquired in accordance with Section 9, at such times as such Persons
shall have beneficial or record ownership of Registrable Securities.
Person. "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
Piggyback Registration. "Piggyback Registration" shall have
the meaning set forth in Section 4.
Piggyback Shelf Registration. "Piggyback Shelf Registration"
shall have the meaning set forth in Section 4.
Register, Registered and Registration. "Register,"
"registered," and "registration" shall refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or ordering by the Commission of
effectiveness of such registration statement or document.
Registrable Securities. "Registrable Securities" shall mean,
subject to Section 9 and Section 12,2: (i) the Shares owned by a Holder on the
date of determination, (ii) any shares of Common Stock or other securities
issued or issuable upon the conversion or exercise of the Warrants or issued as
a dividend or other distribution with respect to, or in exchange by the Company
generally for, or in replacement by the Company generally of, such Shares; and
(iii) any securities issued in exchange for Shares in any merger or
reorganization of the Company; provided, however, that Registrable Securities
shall not include any Shares which have theretofore been registered and sold
pursuant to the Securities Act or which have been sold to the public pursuant to
Rule 144 or any similar rule promulgated by the Commission pursuant to the
Securities Act, and, provided further, the Company shall have no obligation
under Sections 3 and to register any Registrable Securities of a Holder if the
Company shall deliver to the Holders requesting such registration an opinion of
counsel reasonably satisfactory to such Holders and its counsel to the effect
that the proposed sale or disposition of all of the Registrable Securities for
which registration was requested does not require registration under the
Securities Act for any sales or dispositions of such shares within the period
set forth in Rule 144(e), currently three (3) months. For purposes of this
Agreement, a Person will be deemed to be a holder of Registrable Securities
whenever such Person has the then-existing right to acquire such Registrable
Securities (by conversion, subscription or otherwise), whether or not such
acquisition has actually been effected.
Registrable Securities then outstanding. "Registrable
Securities then outstanding" shall mean, with respect to a specified
determination date, the Registrable Securities owned by all Holders on such
date.
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Registration Expenses. "Registration Expenses" shall have the
meaning set forth in Section 7.1.
Secured Note Purchase Agreement. "Secured Note Purchase
Agreement" shall have the meaning set forth in the Recitals.
Securities Act. "Securities Act" shall mean the Securities Act
of 1933, as amended and the rules and regulations promulgated thereunder.
Selling Holders. "Selling Holders" shall mean, with respect to
a specified registration pursuant to this Agreement, Holders whose Registrable
Securities are included in such registration.
Shares. "Shares" shall mean the shares of Common Stock
acquired on exercise of a Warrant.
Transfer. "Transfer" shall mean and include the act of
selling, giving, transferring, creating a trust (voting or otherwise), assigning
or otherwise disposing of (other than pledging, hypothecating or otherwise
transferring as security) (and correlative words shall have correlative
meanings); provided however, that any transfer or other disposition upon
foreclosure or other exercise of remedies of a secured creditor after an event
of default under or with respect to a pledge, hypothecation or other transfer as
security shall constitute a "Transfer".
Underwriters' Representative. "Underwriters' Representative
shall mean the managing underwriter, or, in the case of a co-managed
underwriting, the managing underwriter designated as the Underwriters'
Representative by the co-managers.
Unsecured Note Purchase Agreement. "Unsecured Note Purchase
Agreement" shall have the meaning set forth in the Recitals.
Violation. "Violation" shall have the meaning set forth in
Section 8.1.
Warrant. "Warrant" or "Warrants" shall have the meaning set
forth in the Recitals.
2.2. Usage.
(i) References to a Person are also references to its assigns
and successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
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(ii) References to Registrable Securities "owned" by a Holder
shall include Registrable Securities beneficially owned by such Person but which
are held of record in the name of a nominee, trustee, custodian, or other agent,
but shall exclude shares of Common Stock held by a Holder in a fiduciary
capacity for customers of such Person.
(iii) References to a document are to it as amended, waived
and otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
(iv) References to Sections or to Schedules or Exhibits are to
sections hereof or schedules or exhibits hereto, unless the context otherwise
requires.
(v) The definitions set forth herein are equally applicable
both to the singular and plural forms and the feminine, masculine and neuter
forms of the terms defined.
(vi) The term "including" and correlative terms shall be
deemed to be followed by "without limitation" whether or not followed by such
words or words of like import.
(vii) The term "hereof" and similar terms refer to this
Agreement as a whole.
(viii) The "date of" any notice or request given pursuant to
this Agreement shall be determined in accordance with Section 15.
Section 3. SHELF REGISTRATION
3.1. Pursuant to Rule 415 of the Securities Act, the Company
covenants that it shall have a registration statement pertaining to the
Registrable Securities on Form S-3 filed with and declared effective by the
Commission within six months of the date first written above and said
registration statement shall thereafter remain Continuously Effective for a
period not less than thirty-six (36) months from the date first written above.
Any Registration Expenses incurred by the Company pursuant to this Section shall
be borne solely by the Company.
3.2. If at any time prior to the thirty-six (36) month period
set forth in Section 3.1, the registration statement filed in accordance with
Section 3.1 ceases to be Continuously Effective the Holders shall be entitled
to Piggyback Registration rights set forth in Section 4 and Demand Registration
rights set forth in Section 5.
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Section 4. PIGGYBACK REGISTRATIONS.
4.1. Subject to Section 3.2, if at any time the Company
proposes to register (including for this purpose a registration effected by the
Company for holders of the Company's securities other than the Holders)
securities under the Securities Act in connection with the public offering
solely for cash on Form S-1, S-2 or S-3 (or any replacement or successor forms),
the Company shall promptly give each Holder of Registrable Securities written
notice of such registration (a "Piggyback Registration"). Upon the written
request of each Holder given within 20 days following the date of such notice,
the Company shall cause to be included in such registration statement and use
its best efforts to be registered under the Securities Act all the Registrable
Securities that each such Holder shall have requested to be registered. The
Company shall have the absolute right to withdraw or cease to prepare or file
any registration statement for any offering referred to in this Section 4
without any obligation or liability to any Holder.
4.2. If the Underwriters' Representative or Agent shall advise
the Company in writing (with a copy to each Selling Holder) that, in its
opinion, the amount of Registrable Securities requested to be included in such
Piggyback Registration would materially adversely affect such offering, or the
timing thereof, then the Company will include in such registration, to the
extent of the amount and class which the Company is so advised can be sold
without such material adverse effect in such offering: First, all securities
proposed to be sold by the Company for its own account and, if applicable, all
securities proposed to be sold by such holders other than the Holders for which
such registration is made, in accordance with the agreement between the Company
and such holders; second, the Registrable Securities requested to be included in
such registration by Holders pursuant to this Section 4, third, all other
securities being registered pursuant to the exercise of contractual rights
comparable to the rights granted in this Section 3, pro rata based on the
estimated gross proceeds from the sale thereof; and fourth, all other securities
requested to be included in such registration.
4.3. Each Holder shall be entitled to have its Registrable
Securities included in an unlimited number of Piggyback Registrations pursuant
to this Section 4.
4.4. If the Company has previously filed a registration
statement with respect to Registerable Securities pursuant to Section 5 or
pursuant to this Section 4 pursuant to which Registerable Securities were sold,
and if such previous registration has not been withdrawn or abandoned, the
Company will not file or cause to be effected any other registration of any of
its equity securities or securities convertible or exchangeable into or
exercisable for its equity securities under the Securities Act (except on Form
S-4, S-8 or any equivalent or successor forms thereto), whether on its own
behalf or at the request of any holder or holders of such securities, until a
period of 180 days has elapsed from the effective date of such a previous
registration, or, if such registration was for an underwritten offering, such
shorter period of days as the Underwriter's Representative or Agent shall have
given its consent.
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Section 5. DEMAND REGISTRATION.
5.1.
(i) Subject to Section 3.2, if the Holders of at least 30% of
the Registrable Securities make a written request to the Company (the "Demanding
Holders"), the Company shall cause there to be filed with the Commission a
registration statement meeting the requirements of the Securities Act (a "Demand
Registration"), and each Demanding Holder shall be entitled to have included
therein (subject to Section 5.6) all or such number of such Demanding Holder's
Registrable Securities, as the Demanding Holder shall request in writing;
provided, however, that no request may be made pursuant to this Section 5.1 if
within six (6) months prior to the date of such request a registration statement
pursuant to this Section 5.1 shall have been declared effective by the
Commission. Such Demand Registration shall be effected by the Company by means
of a shelf registration pursuant to Rule 415 of the Securities Act if so
requested by the Demanding Holders. Any request made pursuant to this Section
5.1 shall be addressed to the attention of the Secretary of the Company, and
shall specify the number of Registrable Securities to be registered, the
intended methods of disposition thereof and that the request is for a Demand
Registration pursuant to this Section 5.1(i). The Holders shall be entitled to
no more than two (2) Demand Registrations.
(ii) The Company shall be entitled to postpone for up to
ninety (90) days the filing of any registration statement otherwise required to
be prepared and filed pursuant to this Section 5.1, if the Board determines, in
its good faith reasonable judgment (with the concurrence of the managing
underwriter, if any), that such registration and the Transfer of Registrable
Securities contemplated thereby would materially interfere with, or require
premature disclosure of, any financing, acquisition or reorganization involving
the Company or any of its wholly owned subsidiaries and the Company promptly
gives the Demanding Holders notice of such determination; provided, however,
that the Company shall not have postponed pursuant to this Section 5.1 (ii) the
filing of any other registration statement otherwise required to be prepared and
filed pursuant to this Section 5.1 during the twelve (12) month period ended on
the date of the relevant request pursuant to Section 5.1(i).
(iii) Whenever the Company shall have received a demand
pursuant to Section 5.1(i) to effect the registration of any Registrable
Securities, the Company shall promptly give written notice of such proposed
registration to all Holders. Any such Holder may, within twenty (20) days after
receipt of such notice, request in writing that all of such Holder's Registrable
Securities, or any portion thereof designated by such Holder, be included in the
registration.
(iv) Subject to Section 5.6, in connection with an
underwritten offering, the Company and, with the approval of the Company, other
holders of Common Stock (other than Holders) shall be given the opportunity to
include shares of Common Stock in such offering ("Other Included Shares").
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<PAGE> 9
5.2. Following receipt of a request for a Demand Registration,
the Company shall:
(i) File the registration statement with the Commission as
promptly as practicable, and shall use all reasonable efforts to have the
registration declared effective under the Securities Act as soon as reasonably
practicable, in each instance giving due regard to the need to prepare current
financial statements, conduct due diligence and complete other actions that are
reasonably necessary to effect a registered public offering.
(ii) Use all reasonable efforts to keep the registration
statement Continuously Effective for up to two hundred seventy (270) days or
until such earlier date as of which all the Registrable Securities under the
registration statement shall have been disposed of in the manner described in
the Registration Statement, or such earlier time as the Company would not have
any obligation to include the Registrable Securities that have not been disposed
of in the manner described in the Registration Statement in a registration
pursuant to Section 5 or Section 4 or the Registerable Securities are no longer
Registerable Securities under the definition of "Registrable Securities."
Notwithstanding the foregoing, if for any reason the effectiveness of a
registration pursuant to this Section 5 is suspended or, in the case of a Demand
Registration, postponed as permitted by Section 5.1(ii), the foregoing period
shall be extended by the aggregate number of days of such suspension or
postponement.
5.3. The Company shall be obligated to effect no more than a
total of two (2) Demand Registrations. For purposes of the preceding sentence,
registration shall not be deemed to have been effected (i) unless a registration
statement with respect thereto has become effective, (ii) if after such
registration statement has become effective, such registration or the related
offer, sale or distribution of Registrable Securities thereunder is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason not attributable
to the Selling Holders and such interference is not thereafter eliminated, 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 Selling Holders. If
the Company shall have complied with its obligations under this Agreement, a
right to a Demand Registration pursuant to this Section 5 shall be deemed to
have been satisfied upon the earlier of the date as of which all of the
Registrable Securities included therein shall have been disposed of pursuant to
the Registration Statement or the date as of which such Demand Registration
shall have been Continuously Effective for a period of two hundred seventy (270)
days, or such earlier time as the Company would not have any obligation to
include the Registrable Securities that have not been disposed of in the manner
described in the Registration Statement in a registration pursuant to Section 5
or Section 4, or the Registerable Securities are no longer Registerable
Securities under the definition of "Registrable Securities." Any Demand
Registration Statement which, after filing with the Commission is withdrawn by
the Holders, shall be deemed to have been effective in determining the number of
Demand Registrations the Company is obligated to effect hereunder.
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5.4. A registration pursuant to this Section 5 shall be on
such appropriate registration form of the Commission as shall (i) be selected by
the Company and be reasonably acceptable to the Demanding Holders and (ii)
permit the disposition of the Registrable Securities in accordance with the
intended method or methods of disposition specified in the request pursuant to
Section 5.1(i).
5.5. If any registration pursuant to Section 5 involves an
underwritten offering (whether on a "firm," "best efforts" or "all reasonable
efforts" basis or otherwise), or an agented offering, the Demanding Holders,
shall have the right to select the underwriter or underwriters and manager or
managers to administer such underwritten offering or the placement agent or
agents for such agented offering; provided, however, that each Person so
selected shall be reasonably acceptable to the Company.
5.6. Whenever the Company shall effect a registration pursuant
to this Section 5 in connection with an underwritten offering by one or more
Selling Holders of Registrable Securities: if the Underwriters' Representative
or Agent advises each such Selling Holder in writing that, in its opinion, the
amount of securities requested to be included in such offering (whether by
Selling Holders or others) exceeds the amount which can be sold in such offering
within a price range acceptable to the Demanding Holders, securities shall be
included in such offering and the related registration, to the extent of the
amount which can be sold within such price range, and on a pro rata basis among
all Selling Holders; first for the account of the Demanding Holders, second by
all other Selling Holders and third by the Company and other holders with
respect to the Other Included Shares.
Section 6. REGISTRATION PROCEDURES. Whenever required under Section 4
or Section 5 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as practicable:
6.1. Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use the Company's best
efforts to cause such registration statement to become effective; provided,
however, that before filing a registration statement or prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of the registration statement and prior to
effectiveness thereof, the Company shall furnish to one firm of counsel for the
Selling Holders (selected by the Demanding Holders) copies of all such documents
in the form substantially as proposed to be filed with the Commission at least
four (4) business days prior to filing for review and comment by such counsel,
which opportunity to comment shall include an absolute right to control or
contest disclosure if the applicable Selling Holder reasonably believes that it
may be subject to controlling person liability under applicable securities laws
with respect thereto.
6.2. Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such
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registration statement as may be necessary to comply with the provisions of the
Securities Act and rules thereunder with respect to the disposition of all
securities covered by such registration statement. If the registration is for an
underwritten offering, the Company shall amend the registration statement or
supplement the prospectus whenever required by the terms of the underwriting
agreement entered into pursuant to Section 6,2. The Company shall amend the
registration statement or supplement the prospectus so that it will remain
current and in compliance with the requirements of the Securities Act for the
period after its effective date during which the Demand Registration is to be
kept Continuously Effective by the Company pursuant to Section 5.2(i), and if
during such period any event or development occurs as a result of which the
registration, statement or prospectus contains a misstatement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, the Company shall promptly notify
each Selling Holder, amend the registration statement or supplement the
prospectus so that each will thereafter comply with the Securities Act and
furnish to each Selling Holder of Registrable Securities such amended or
supplemented prospectus, which each such Holder shall thereafter use in the
Transfer of Registrable Securities covered by such registration statement.
Pending such amendment or supplement each such Holder shall cease making offers
or Transfers of Registrable Securities pursuant to the prior prospectus. In the
event that any Registrable Securities included in a registration statement
subject to, or required by, this Agreement remain unsold at the end of the
period during which the Company is obligated to use all reasonable efforts to
maintain the effectiveness of such registration statement, the Company may file
a post-effective amendment to the registration statement for the purpose of
removing such Securities from registered status.
6.3. Furnish to each Selling Holder of Registrable Securities,
without charge, such number of copies of the registration statement, any
pre-effective or post-effective amendment thereto, the prospectus, including
each preliminary prospectus and any amendments or supplements thereto, in each
case in conformity with the requirements of the Securities Act and the rules
thereunder, and such other related documents as any such Selling Holder may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by such Selling Holder.
6.4. Use all reasonable efforts (i) to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such states or jurisdictions as shall be
reasonably requested by the Underwriters' Representative or Agent (as
applicable, or if inapplicable, the Demanding Holders) and (ii) to obtain the
withdrawal of any order suspending the effectiveness of a registration
statement, or the lifting of any suspension of the qualification (or exemption
from qualification) of the offer and transfer of any of the Registrable
Securities in any jurisdiction, at the earliest possible moment; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such state or jurisdiction.
<PAGE> 12
6.5. In the event of any underwritten or agented offering,
enter into and perform the Company's obligations under an underwriting or agency
agreement (including indemnification and contribution obligations of
underwriters or agents), in usual and customary form, with the managing
underwriter or underwriters of or agents for such offering. The Company shall
also cooperate with the Demanding Holders and the Underwriters' Representative
or Agent for such offering in the marketing of the Registrable Securities,
including making available the Company's officers, accountants, counsel,
premises, books and records for such purpose, but the Company shall not be
required to incur any material out-of-pocket expense pursuant to this sentence.
6.6. Promptly notify each Selling Holder of any stop order
issued or threatened to be issued by the Commission in connection therewith (and
take all reasonable actions required to prevent the entry of such stop order or
to remove it if entered).
6.7. Make generally available to the Company's security
holders copies of all periodic reports, proxy statements, and other information
referred to in Section 11.1 and an earnings statement satisfying the provisions
of Section 11(a) of the Securities Act no later than 90 days following the end
of the 12-month period beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of each registration
statement filed pursuant to this Agreement.
6.8. Make available for inspection by any Selling Holder, any
underwriter participating in such offering and the representatives of such
Selling Holder and Underwriter (but not more than one firm of counsel to such
Selling Holders), all financial and other information as shall be reasonably
requested by them, and provide the Selling Holder, any underwriter participating
in such offering and the representatives of such Selling Holder and Underwriter
the opportunity to discuss the business affairs of the Company with its
principal executives and independent public accountants who have certified the
audited financial statements included in such registration statement, in each
case all as necessary to enable them to exercise their due diligence
responsibility under the Securities Act; provided, however, that information
that the Company determines, in good faith, to be confidential and which the
Company advises such Person in writing, is confidential shall not be disclosed
unless such Person signs a confidentiality agreement reasonably satisfactory to
the Company or the related Selling Holder of Registrable Securities agrees to be
responsible for such Person's breach of confidentiality on terms reasonably
satisfactory to the Company.
6.9. Use the Company's commercially reasonable efforts to
obtain a so-called "comfort letter" from its independent public accountants, and
legal opinions of counsel to the Company addressed to the Selling Holders, in
customary form and covering such matters of the type customarily covered by such
letters, and in a form that shall be reasonably satisfactory to Demanding
Holders. The Company shall furnish to each Selling Holder a signed counterpart
of any such comfort letter or legal opinion. Delivery of any such opinion or
comfort letter shall be subject to the recipient furnishing such written
representations or acknowledgments as are customarily provided by selling
shareholders who receive such comfort letters or opinions.
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6.10. Provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement.
6.11. Use all reasonable efforts to cause the Registrable
Securities covered by such registration statement (i) if the Common Stock is
then listed on a securities exchange or included for quotation in a recognized
trading market, to continue to be so listed or included for a reasonable period
of time after the offering, and (ii) to be registered with or approved by such
other United States or state governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Company to enable the
Selling Holders of Registrable Securities to consummate the disposition of such
Registrable Securities.
6.12. Use the Company's reasonable efforts to provide a CUSIP
number for the Registrable Securities prior to the effective date of the first
registration statement including Registrable Securities.
6.13. Take such other actions as are reasonably required in
order to expedite or facilitate the disposition of Registrable Securities
included in each such registration.
Section 7. Holders' Obligations. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
with respect to the Registrable Securities of any Selling Holder of Registrable
Securities that such Selling Holder shall:
7.1. Furnish to the Company such information regarding such
Selling Holder, the number of the Registrable Securities owned by it, and the
intended method of disposition of such securities as shall be required to effect
the registration of such Selling Holder's Registrable Securities, and to
cooperate with the Company in preparing such registration.
7.2. If applicable, agree to sell their Registrable Securities
to the underwriters at the same price and on substantially the same terms and
conditions as the Company or the other Persons on whose behalf the registration
statement was being filed have agreed to sell their securities, and to execute
the underwriting agreement agreed to by the Demanding Holders (in the case of a
registration under Section 5), or the Company and the Selling Holders (in the
case of a registration under Section 4).
Section 8. EXPENSES OF REGISTRATION. Expenses in connection with
registrations pursuant to this Agreement shall be allocated and paid as follows:
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8.1. With respect to each Demand Registration, the Company
shall bear and pay all expenses incurred in connection with any registration,
filing, or qualification of Registrable Securities with respect to such Demand
Registration for each Selling Holder (which right may be assigned to any Person
to whom Registrable Securities are Transferred as permitted by including all
registration, filing and The Nasdaq Stock Market's National Market fees, all
fees and expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery expenses,
the reasonable fees and disbursements of counsel for the Company, and of the
Company's independent public accountants, including the expenses of "cold
comfort" letters required by or incident to such performance and compliance (the
"Registration Expenses"), but excluding underwriting discounts and commissions
relating to Registrable Securities (which shall be paid on a pro rata basis by
the Selling Holders).
8.2. The Company shall bear and pay all Registration Expenses
incurred in connection with any Piggyback Registrations or Piggyback Shelf
Registration pursuant to Section 4 for each Selling Holder (which right may be
Transferred to any Person to whom Registrable Securities are Transferred as
permitted by Section 9), but excluding underwriting discounts and commissions
relating to Registrable Securities (which shall be paid on a pro rata basis by
the Selling Holders of Registrable Securities).
8.3. Any failure of the Company to pay any Registration
Expenses as required by this Section 7 shall not relieve the Company of its
obligations under this Agreement.
Section 9. INDEMNIFICATION; CONTRIBUTION. If any Registrable Securities
are included in a registration statement under this Agreement, including a Shelf
Registration:
9.1. To the extent permitted by applicable law, the Company
shall indemnify and hold harmless each Selling Holder, each Person, if any, who
controls such Selling Holder within the meaning of the Securities Act, and each
officer, director, partner, employee, agent and consultant of such Selling
Holder and such controlling Person, against any and all losses, claims, damages,
liabilities and expenses joint or several), including attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, or to which
any of the foregoing Persons may become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"):
(i) Any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein, or any amendments
or supplements thereto;
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<PAGE> 15
(ii) The omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or
(iii) Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any applicable state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
applicable state securities law;
provided, however, that the indemnification required by this Section 8.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or expense to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished to the Company by the indemnified party expressly for use in
connection with such registration; provided, further, that the indemnity
agreement contained in this Section 8 shall not apply to any underwriter to the
extent that any such loss is based on or arises out of an untrue statement or
alleged untrue statement of a material fact, or an omission or alleged omission
to state a material fact, contained in or omitted from any preliminary
prospectus if the final prospectus shall correct such untrue statement or
alleged untrue statement, or such omission or alleged omission, and a copy of
the final prospectus has not been sent or given to such person at or prior to
the confirmation of sale to such person if such underwriter was under an
obligation to deliver such final prospectus and failed to do so. The Company
shall also indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers, directors, agents and employees and each person who controls such
persons (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) to the same extent as provided above with respect to the
indemnification of the Selling Holders.
9.2. To the extent permitted by applicable law, each Selling
Holder shall indemnify and hold harmless the Company, each of its directors,
each of its officers who shall have signed the registration statement, each
Person, if any, who controls the Company within the meaning of the Securities
Act, any other Selling Holder, any controlling Person of any such other Selling
Holder and each officer, director, partner, and employee of such other Selling
Holder and such controlling Person, against any and all losses, claims, damages,
liabilities and expenses joint and several), including attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, or to which
any of the foregoing Persons may otherwise become subject under the Securities
Act, the Exchange Act or other federal or state laws, insofar as such losses,
claims, damages, liabilities and expenses arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Selling Holder expressly for use in connection with such
registration; provided, however, that the indemnification required by this
Section 8.2 shall not apply to amounts paid in settlement of
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any such loss, claim, damage, liability or expense if settlement is effected
without the consent of the relevant Selling Holder of Registrable Securities,
which consent shall not be unreasonably withheld.
9.3. Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, suit, proceeding,
investigation or threat thereof made in writing for which such indemnified party
may make a claim under this Section 8, such indemnified party shall deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and disbursements and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time following the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
8 but shall not relieve the indemnifying party of any liability that it may have
to any indemnified party otherwise than pursuant to this Section 8. Any fees and
expenses incurred by the indemnified party (including any fees and expenses
incurred in connection with investigating or preparing to defend such action or
proceeding) shall be paid to the indemnified party, as incurred, within thirty
(30) days of written notice thereof to the indemnifying party; provided,
however, that if it is ultimately determined that an indemnified party is not
entitled to indemnification hereunder such indemnified party shall be obligated
to repay the indemnifying party. Any such indemnified party shall have the right
to employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such indemnified party unless (i) the indemnifying
party has agreed to pay such fees and expenses or (ii) the indemnifying party
shall have failed to promptly assume the defense of such action, claim or
proceeding or (iii) the named parties to any such action, claim or proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party, and such indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to the indemnifying party and
that the assertion of such defenses would create a conflict of interest such
that counsel employed by the indemnifying party could not faithfully represent
the indemnified party (in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action, claim or proceeding on behalf of
such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action, claim or proceeding or
separate but substantially similar or related actions, claims or proceedings in
the same jurisdiction arising out of the same general
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<PAGE> 17
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for all such indemnified parties. No indemnifying party
shall be liable to an indemnified party for any settlement of any action,
proceeding or claim without the written consent of the indemnifying party, which
consent shall not be unreasonably withheld.
9.4. If the indemnification required by this Section 8 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to in
this Section 8:
(i) The indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as the relative benefits received by indemnifying party and indemnified parties.
The relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any Violation has been
committed by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such Violation. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 8.1 and Section 8.2, any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8.4 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in Section 8.4(i). 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.
9.5. If indemnification is available under this Section 8, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 8 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 8.4.
9.6. The obligations of the Company and the Selling Holders of
Registrable Securities under this Section 8 shall survive the completion of any
offering of Registrable Securities pursuant to a registration statement under
this Agreement, and otherwise.
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<PAGE> 18
Section 10. TRANSFER OF REGISTRATION RIGHTS. Rights with respect to
Registrable Securities may be Transferred as follows: (i) the rights of a Holder
to require a Demand Registration pursuant to Section 5 may be Transferred to any
Person in connection with the Transfer to such Person by such Holder of at least
1,000 shares or share equivalents of Registrable Securities, and (ii) the rights
of a Holder to participate in a Piggyback or Piggyback Shelf Registration
pursuant to Section 4 may be Transferred by such Holder to any Person in
connection with the Transfer of Registrable Securities to such Person, in all
cases, if (x) any such Transferee that is not a party to this Agreement shall
have executed and delivered to the Secretary of the Company a properly completed
agreement substantially in the form of Exhibit A, and (y) the Transferor shall
have delivered to the Secretary of the Company, no later than 15 days following
the date of the Transfer, written notification of such Transfer setting forth
the name of the Transferor, name and address of the Transferee, and the number
of Registrable Securities which shall have been so Transferred.
Section 11. HOLDBACK. Each Holder entitled pursuant to this Agreement
to have Registrable Securities included in a Demand Registration statement
prepared pursuant to this Agreement, if so requested by the Underwriters'
Representative or Agent in connection with an offering of any Registrable
Securities, shall not effect any public sale or distribution of shares of Common
Stock or any securities convertible into or exchangeable or exercisable for
shares of Common Stock, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such underwritten or agented registration),
during the 5-day period prior to, and during such period as the Underwriter's
Representative or Agent may request, not to exceed a period of 180 days,
beginning on, the date such registration statement is declared effective under
the Securities Act by the Commission provided that such Holder is timely
notified of such effective date in writing by the Company or such Underwriters'
Representative or Agent, and provided, further, that this Section 11 shall apply
to a distribution of Registerable Securities pursuant to Section 3. In order to
enforce the foregoing covenant, the Company shall be entitled to impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder until the end of such period.
Section 12. COVENANTS OF THE COMPANY. The Company hereby agrees and
covenants as follows:
12.1. The Company shall file as and when applicable, on a
timely basis, all reports required to be filed by it under the Exchange Act. If
the Company is not required to file reports pursuant to the Exchange Act, upon
the request of any Holder of Registrable Securities, the Company shall make
publicly available the information specified in Rule 144 of the Securities Act,
and take such further action as may be reasonably required from time to time and
as may be within the reasonable control of the Company, to enable the Holders to
Transfer Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 under the
Securities Act or any similar rule or regulation hereafter adopted by the
Commission.
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<PAGE> 19
12.2. (i) The Company shall not, and shall not permit its
majority owned subsidiaries to, effect any public sale or distribution of any
shares of Common Stock or any securities convertible into or exchangeable or
exercisable for shares of Common Stock, during the five business days prior to,
and during the 180-day period beginning on, the commencement of a public
distribution of the Registrable Securities pursuant to any registration pursuant
to this Agreement (other than by the Company pursuant to such registration);
provided, however, that the provisions of this Section 12.2(i) shall not apply
to a distribution of Registerable Securities pursuant to Section 3.
(ii) Any agreement entered into after the date of this
Agreement pursuant to which the Company or any of its majority owned
subsidiaries issues or agrees to issue any privately placed securities similar
to any issue of the Registrable Securities (other than (x) shares of Common
Stock pursuant to a stock incentive, stock option, stock bonus, stock
subscription or other employee benefit plan of the Company approved by its Board
of Directors, and (y) securities issued to Persons in exchange for ownership
interests in any Person in connection with a business combination in which the
Company or any of its majority owned subsidiaries is a party) shall contain a
provision whereby holders of such securities agree not to effect any public sale
or distribution of any such securities during the periods described in the first
sentence of Section 11.2(i), in each case including a sale pursuant to Rule 144
under the Securities Act (unless such Person is prevented by applicable statute
or regulation from entering into such an agreement) provided, however, that the
provisions of this Section 12.2(ii) shall not apply to a distribution of
Registerable Securities pursuant to Section 3.
12.3. The Company shall not, directly or indirectly, (x) enter
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation or (y) Transfer or agree to Transfer all or
substantially all the Company's assets, unless prior to such merger,
consolidation, reorganization or asset Transfer, the surviving corporation or
the Transferee, respectively, shall have agreed in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Registrable Securities" shall be deemed to include the securities
which the Holders of Registrable Securities would be entitled to receive in
exchange for Registrable Securities pursuant to any such merger, consolidation
or reorganization.
12.4. The Company shall not grant to any Person (other than a
Holder of Registrable Securities) any registration rights with respect to
securities of the Company, or enter into any agreement, that would (i) entitle
the holder thereof to have securities owned by it included in a Demand
Registration or (ii) be inconsistent with the terms of this Agreement.
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<PAGE> 20
Section 13. AMENDMENT, MODIFICATION AND WAIVERS: FURTHER ASSURANCES.
(i) This Agreement may be amended with the consent of the
Company, and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company shall
have obtained the written consent of Holders owning Registrable Securities
possessing a Majority of the Registrable Securities then outstanding to such
amendment, action or omission to act.
(ii) No waiver of any terms or conditions of this Agreement
shall operate as a waiver of any other breach of such terms and conditions or
any other term or condition, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other provision hereof.
No written waiver hereunder, unless it by its own terms explicitly provides to
the contrary, shall be construed to effect a continuing waiver of the provisions
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance with such provision.
(iii) Each of the parties hereto shall execute all such
further instruments and documents and take all such further action as any other
party hereto may reasonably require in order to effectuate the terms and
purposes of this Agreement.
Section 14. Assignment; Benefit. This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, assigns, executors, administrators or
successors; provided, however, that except as specifically provided herein with
respect to certain matters, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by the Company
without the prior written consent of Holders owning Registrable Securities
possessing a majority in number of the Registrable Securities outstanding on the
date as of which such delegation or assignment is to become effective. A Holder
may Transfer its rights with respect to requiring Demand Registrations and
Piggyback Registrations hereunder to a successor in interest to the Registrable
Securities owned by such assignor only as permitted by Section 9.
Section 15. MISCELLANEOUS.
15.1. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY
RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR
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<PAGE> 21
PRINCIPAL PLACE OF BUSINESS OF THE COMPANY OR HOLDERS. THE COMPANY HERBY
CONSENTS AND AGREES THAT THE STUPREME COUT OF NEW YORK COUNTY, NEW YORK OR, AT
THE HOLDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK SHALL HAVE THE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE COMPANY AND THE HOLDER(S) PERTAINING TO THIS
AGREEMENT OR ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. THE COMPANY
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY HERBY WAIVES ANY OBJECTION
WHICH COMPANY MAY HAVE BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HERBY CONSENT TO THE GRANTING FOR SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. THE COMPANY HERBY
WAIVES PERSONAL SERVICE OF THE CUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCES MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE
COMPANY AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETE UPON THE EARLIER OF THE COMPANY'S ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT OF A HOLDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW,
OR TO PRECLUDE THE ENFORCEMENT BY A HOLDER OF ANY JUDGMENT OR ORDER OBTAINED IN
SUCH FORUM OR TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE THE SAME IN
ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
15.2. Waiver of Right to Trial by Jury. THE COMPANY AND
HOLDERS WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT
REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE COMPANY AND THE
HOLDERS WITH RESPECT TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT
REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH IN EACH CASE WHETHER
SONDING IN CONTRACT OR TORT OR OTHERWISE, THE COMPANY AND HOLDERS AGREE AND
CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTINO OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE COMPANY AND HOLDERS TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY. THE COMPANY AND HOLDERS ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO
CONSULT WITH COUNSEL REGARDING THIS
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<PAGE> 22
SECTION THAT THEY FULLY UNDERSTAND ITS TERMS, CONTENT AND EFFECT, AND THAT THEY
VOLUNTARILY AND KNOWINGLY AGREE TO THE TERMS OF THIS SECTION.
15.3. Notices. All notices and requests given pursuant to this
Agreement shall be in writing and shall be made by hand-delivery, first-class
mail (registered or certified, return receipt requested), confirmed facsimile or
overnight air courier guaranteeing next business day delivery to the relevant
address specified on Schedule 1 to this agreement or in the relevant agreement
in the form of Exhibit A whereby such party became bound by the provisions of
this Agreement. Except as otherwise provided in this Agreement, the date of each
such notice and request shall be deemed to be, and the date on which each such
notice and request shall be deemed give shall be: at the time delivered, if
personally delivered or mailed; when receipt is acknowledged, if sent by
facsimile; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next business day delivery.
15.4. Entire Agreement: Integration. This Agreement supercedes
all prior agreements between or among any of the parties hereto with respect to
the subject matter contained herein and therein, and such agreements embody the
entire understanding among the parties relating to such subject matter.
15.5. Injunctive Relief. Each of the parties hereto
acknowledges that in the event of a breach by any of them of any material
provision of this Agreement, the aggrieved party may be without an adequate
remedy at law. Each of the parties therefore agrees that in the event of a
breach hereof, the aggrieved party may elect to institute and prosecute
proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach hereof. By seeking or obtaining
any such relief, the aggrieved party shall not be precluded from seeking or
obtaining any other relief to which it may be entitled.
15.6. Section Headings. Section Headings are for the
convenience of reference only and shall not affect the meaning of any provision
of this Agreement.
15.7. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
15.8. Severability. Any provision of this agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
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<PAGE> 23
15.9. Filing. A copy of this Agreement and of all amendments
thereto shall be filed at the principle executive office of the Company and with
the transfer agent for the Common Stock of the Company.
15.10. Termination. This Agreement may be terminated or
amended at any time by a written instrument signed by the Holders of greater
than seventy-five percent (75%) of the Registerable Securities. Unless sooner
terminated in accordance with the preceding sentence, this Agreement (other than
Section 8 hereof) shall terminate in its entirety at the earlier of (i) such
date as there shall be no Registerable Securities outstanding, (ii) such date as
the registration statement file pursuant to Section 3.1 shall have remained
Continuously Effective for thirty-six (36) months, or (iii) the fifth
anniversary of the date hereof, provided that any shares of Common Stock
previously subject to this Agreement shall not be Registerable Securities
following the sale of any such shares in an offering registered pursuant to this
Agreement.
15.11. Expenses, etc. Whether or not the transactions
contemplated hereby are consummated, the Company agrees, jointly and severally
to pay all costs and expenses (including reasonable attorneys' fees of a special
counsel and, if reasonably required, local or other counsel) incurred by the
Holders in connection with such transactions and in connection with any
amendments, waivers or consents under or in respect of this Agreement or the
Note Documents (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend),
including expenses incurred in any appeals, any rights under this Agreement or
Note Documents or in responding to any subpoena or other legal process or
informal investigative demand issued in connection with this Agreement or the
Note Documents, or by reason of being a Holder, and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or in connection with any work-out or restructuring
of the transaction contemplated hereby and by the Note Documents. The Company
will pay, and will save each Holder harmless from, all claims in respect of any
fees, costs or expenses if any, of brokers and finders (other than those
retained by such Holder). The obligations of the Company under this Section
14.11 will survive the enforcement, amendment or waiver of any provision of this
Agreement or the Note Documents, and the termination of this Agreement and the
Note Documents.
15.12. No Third Party Beneficiaries. Nothing herein expressed
or implied is intended to confer upon any person, other than the parties hereto
or their respective permitted assigns, successors, heirs and legal
representatives, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
15.13. Interpretation. No provision of this Agreement or any
of the other Note Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured,
drafted or dictated such provision.
* * *
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<PAGE> 24
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed as of the day, month and year first above written.
THE COMPANY:
NATIONAL RECORD MART, INC.,
a Delaware corporation
By: /s/ THERESA CARLISE
---------------------------
Name: Theresa Carlise
Title: CFO
THE HOLDERS:
ROBERT FLEMING INC., SENECA CAPITAL L.P.,
a Delaware corporation a Delaware limited partnership
By:/s/ PHILLIP SCHAFFER By: /s/ PHILLIP SCHAFFER
--------------------------- ---------------------------
Name: Phillip Schaffer Name: Phillip Schaffer
Title: Title:
<PAGE> 1
Exhibit 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related prospectus of National Record
Mart, Inc. for the registration of 400,000 shares of Common Stock, par value
$0.01 and to the incorporation by reference therein of our report dated June 5,
1998, with respect to the consolidated financial statements of National Record
Mart, Inc. included in its Annual Report (Form 10-K) for the period ended March
28, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 12, 1999
