Exhibit 10.22
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is entered into as of the 24th day
of November 1999 (this "Agreement"), by and between OVERHILL FARMS, INC., a
Nevada corporation (the "Company"), and XXXXXX XXXXXXXXX CAPITAL PARTNERS II,
L.P., a California limited partnership ("LLCP").
R E C I T A L S
A. The Company, POLYPHASE CORPORATION, a Nevada corporation ("Parent"),
OVERHILL L. C. VENTURES, INC., a California corporation, and LLCP are parties to
the Securities Purchase Agreement dated of even date herewith (as amended from
time to time, the "Securities Purchase Agreement") pursuant to which, on the
date hereof, the Company is issuing to LLCP, and LLCP is purchasing from the
Company, among other things, Warrant No. LL-1 to Purchase 166.04 Shares of
Common Stock of the Company dated of even date herewith (as amended, augmented,
supplemented or otherwise modified from time to time, the "Warrant"), all on the
terms and subject to the conditions set forth therein.
B. The execution and delivery of this Agreement by the Company is a
condition precedent to the obligations of LLCP to consummate the transactions
contemplated by the Securities Purchase Agreement.
A G R E E M E N T
In consideration of the mutual covenants and agreements set forth
herein, and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise indicated, all capitalized terms not
otherwise defined herein shall have the meaning set forth in the Securities
Purchase Agreement. In addition, the following terms shall have the following
meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
successor agency.
"Common Stock" shall mean the Common Stock, $.01 par value per share,
of the Company.
"Company" shall have the meaning set forth in the preamble.
"Demanding Holders" shall mean LLCP only or, if LLCP does not hold a
majority of the Registrable Securities at any time, the holders of a majority of
Registrable Securities.
"Demand Registration" shall have the meaning specified in Section
2.1(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Indemnified Party" shall have the meaning specified in Section 4.3.
"Indemnifying Party" shall have the meaning specified in Section 4.3.
"Inspectors" shall have the meaning specified in Section 3.1(h).
"LLCP" shall have the meaning set forth in the preamble.
"LLCP Indemnified Party" shall have the meaning specified in Section
4.1.
"Maximum Number of Shares" shall have the meaning specified in Section
2.1(d).
"Piggy-Back Registration" shall have the meaning specified in Section
2.2(a).
"Register," "registered" and "registration" shall mean a registration
effected by preparing and filing a registration statement or similar document in
compliance with the requirements of the Securities Act, and the applicable rules
and regulations promulgated thereunder, and such registration statement becoming
effective.
"Registrable Securities" shall mean the Warrant Shares issued or
issuable upon the exercise of the Warrant and any other shares of Common Stock
acquired by LLCP after the date hereof. Registrable Securities shall include any
warrants, shares of capital stock or other securities of the Company issued as a
dividend or other distribution with respect to or in exchange for or in
replacement of such shares of Common Stock. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when (a) a
Registration Statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
sold, transferred, disposed of or exchanged in accordance with such Registration
Statement; (b) such securities shall have become freely transferable under Rule
144(k) (or any successor rule or regulation) or in a transaction pursuant to
Rule 144(e) (or any successor rule or regulation) promulgated under the
Securities Act, (c) such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration under the Securities Act, or (d) such securities
shall have ceased to be outstanding.
"Registration Statement" means a registration statement filed by the
Company with the Commission in compliance with the Securities Act and the rules
and regulations promulgated thereunder for a public offering and sale of its
Common Stock (other than a registration statement on Form S-8 or Form S-4, or
their successors, or any other form for a limited purpose,
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or any registration statement covering only securities proposed to be issued in
exchange for securities or assets of another entity).
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder, all as the same shall be
in effect at the time.
"Securities Purchase Agreement" shall have the meaning set forth in the
recitals.
"Underwriter" shall mean a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
"Warrant" shall have the meaning set forth in the recitals and, in
addition, shall include (i) any new warrant or warrants issued upon the transfer
of all or any portion of the warrant issued pursuant to the Securities Purchase
Agreement and (ii) any warrant or warrants issued upon the further transfer,
division or combination of any such new warrant or warrants.
"Warrant Shares" shall mean the shares of Common Stock issued or
issuable upon the exercise of the Warrant, and the holder of the Warrant or any
portion thereof shall be deemed to be the holder of the Warrant Shares issuable
upon the exercise thereof.
2. Demand Registration.
2.1 Demand Registration.
(a) Request for Registration. At any time and from time to time on
or after the date of this Agreement, the Demanding Holders may make a written
request for registration under the Securities Act of all or part of their
Registrable Securities (a "Demand Registration"). Any request for a Demand
Registration shall specify the number of shares of Registrable Securities
proposed to be sold and the intended method(s) of distribution thereof. Upon any
such requested, the Demanding Holders shall be entitled to have their
Registrable Securities included in the Demand Registration, subject to Section
2.1(d) and the provisos set forth in Section 3.1(a). The Company shall not be
obligated to effect more than two (2) Demand Registrations with respect to the
Warrant Shares under this Section 2.1(a).
(b) Effective Registration. Except in the case of a withdrawal
governed by the last sentence of Section 2.1(e), a registration will not count
as a Demand Registration until the Registration Statement filed with the
Commission with respect to such Demand Registration has been declared effective
and the Company has complied with all of its obligations under this Agreement
with respect thereto; provided, however, that, after such Registration Statement
has been declared effective, if the offering of Registrable Securities pursuant
to a Demand Registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or any other governmental agency or
court, such Demand Registration will be deemed not to have become effective
during the period of such interference.
(c) Underwriting Offering. If the Demanding Holders furnish a
written request for a Demand Registration pursuant to Section 2.1(a), the
offering of Registrable
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Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. The Demanding Holders may select one or more firms of
investment bankers to act as the managing Underwriter or Underwriters in
connection with such offering and may select any additional managers to be used
in connection with such offering.
(d) Reduction of Offering. If the managing Underwriter or
Underwriters for a Demand Registration that is to be an underwritten offering
advises the Company and the Demanding Holders in writing that the dollar amount
or number of shares of Registrable Securities which the Demanding Holders desire
to sell, taken together with all other shares of Common Stock or other
securities which the Company desires to sell and the shares of Common Stock, if
any, as to which registration has been requested pursuant to the piggy-back
registration rights, if any, which other shareholders of the Company desire to
sell, exceeds the maximum dollar amount or maximum number of shares that can be
sold in such offering without adversely affecting the proposed offering price,
the timing, the distribution method or the probability of success of such
offering (the "Maximum Number of Shares"), then the Company shall include in
such registration:
(i) first, the Registrable Securities as to which Demand
Registration has been requested by the Demanding Holders (pro rata in
accordance with the number of shares of Registrable Securities held by
each Demanding Holder, regardless of the number of shares of
Registrable Securities which such Demanding Holder has requested be
included in such registration) that can be sold without exceeding the
Maximum Number of Shares;
(ii) second, to the extent the Maximum Number of Shares has
not been reached under the foregoing clause (i), the shares of Common
Stock or other securities that the Company desires to sell that can be
sold without exceeding the Maximum Number of Shares;
(iii) third, to the extent the Maximum Number of Shares has
not been reached under the foregoing clauses (i) and (ii) above, the
shares of Common Stock for the account of other Shareholders of the
Company that the Company is obligated to register (to be allocated
among the Persons requesting inclusion in such registration pursuant to
such agreements pro rata in accordance with the number of shares of
Common Stock with respect to which such Persons has the right to
request such inclusion under such agreements, regardless of the number
of shares which such Person has actually requested be included in such
registration) that can be sold without exceeding the Maximum Number of
Shares; and
(iv) fourth, to the extent the Maximum Number of Shares has
not been reached under the foregoing clauses (i), (ii) and (iii) above,
the shares of Common Stock that other shareholders desire to sell that
can be sold without exceeding the Maximum Number of Shares.
(e) Withdrawal. If the Demanding Holders or any one of them (i)
disapprove of the terms of any proposed underwritten public offering, (ii) are
not entitled to include all of
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their Registrable Securities in any such offering, (iii) the Company takes or
omits to take certain action that adversely affects the registration process or
such offering or (iv) there shall occur any adverse market conditions of the
type that is customarily found in underwriting or similar purchase agreements
relating to public offerings and which may be relied upon by Underwriters or
purchasers to terminate such underwriting or purchase agreement, such Demanding
Holders may elect to withdraw their Registrable Securities from such offering by
giving written notice to the Company of their request to withdraw prior to the
effectiveness of the Registration Statement. If the Demanding Holders withdraw
from any proposed offering for any such reason or reasons, the withdrawing
Demanding Holders shall not be obligated to pay any of the expenses incurred in
connection with such Registration Statement. In addition, the Demanding Holders
or any one of them may, by written notice furnished to the Company prior to the
effective date of a Registration Statement, withdraw from any proposed offering
relating to a Demand Registration for any reason (other than those set forth in
clauses (i) through (iv) above) and, in such event, the withdrawing Demanding
Holders shall be obligated to pay their pro rata share (based upon the number of
Registrable Securities to be included in such Registration Statement) of the
expenses incurred in connection with such Registration Statement and Demand
Registration shall count as a Demand Registration for purposes of Section
2.1(a).
2.2 Piggy-Back Registration.
(a) Piggy-Back Rights. If at any time the Company proposes to file
a Registration Statement under the Securities Act with respect to an offering of
equity securities, or securities or other obligations exercisable or
exchangeable for, or convertible into, equity securities, by the Company for its
own account or by shareholders of the Company for their own account (or by the
Company and by shareholders of the Company) other than a Registration Statement
(i) on Form S-4 or S-8 (or any substitute or successor form that may be adopted
by the Commission), (ii) filed in connection with any employee stock option or
other benefit plan, (iii) for an exchange offer or offering of securities solely
to the Company's existing shareholders or (iv) for a dividend reinvestment
plan), the Company shall (x) give written notice of such proposed filing to the
holders of Registrable Securities as soon as practicable but in no event less
than thirty (30) days before the anticipated filing date, which notice shall
describe the amount and type of securities to be included in such offering, the
intended method(s) of distribution, and the name of the proposed managing
Underwriter or Underwriters, if any, of the offering; and (y) offer to the
holders of Registrable Securities in such notice the opportunity to register
such number of shares of Registrable Securities as such holders may request in
writing within fifteen (15) days following receipt of such notice (a "Piggy-Back
Registration"). The Company shall cause such Registrable Securities to be
included in such registration and shall use its best efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten offering to
permit the Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any similar
securities of the Company and to permit the sale or other disposition of such
Registrable Securities in accordance with the intended method(s) of distribution
thereof.
(b) Reduction of Offering. If the managing Underwriter or
Underwriters for a Piggy-Back Registration that is to be an underwritten
offering of shares for the Company's account advises the Company and the holders
of Registrable Securities in writing that the dollar
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amount or number of shares of Common Stock which the Company desires to
sell, taken together with the Registrable Securities as to which registration
has been requested hereunder and the shares of Common Stock, if any, as to which
registration has been requested pursuant to the piggy-back registration rights
which other shareholders of the Company desire to sell, exceeds the Maximum
Number of Shares, then the Company shall include in such registration:
(i) first, the shares of Common Stock or other securities
that the Company desires to sell that can be sold without exceeding the
Maximum Number of Shares;
(ii) second, to the extent the Maximum Number of Shares has
not been reached under the foregoing clause (i) above, the Registrable
Securities as to which registration has been or may be requested under
this Section 2.2; and
(iii) third, to the extent the Maximum Number of Shares has
not been reached under the foregoing clauses (i) and (ii) above, the
shares of Common Stock, if any, as to which registration has been
requested pursuant to the piggy-back registration rights which such
other shareholders desire to sell that can be sold without exceeding
the Maximum Number of Shares.
(c) Withdrawal. Any holder of Registrable Securities may elect to
withdraw such holder's request for inclusion of Registrable Securities in any
Piggy-Back Registration by giving written notice to the Company of such request
to withdraw prior to the effectiveness of the Registration Statement. The
Company may also elect to withdraw a Registration Statement at any time prior to
the effectiveness of the Registration Statement. Notwithstanding any such
withdrawal, the Company shall pay all expenses incurred by the holders of
Registrable Securities in connection with such Piggy-Back Registration as
provided in Section 3.3.
2.3 Registration on Form S-3. If the registration of Registrable
Securities may be made on a Registration Statement on Form S-3 (or any similar
short-form registration which may be available at such time) (a "Form S-3"), the
holders of Registrable Securities may at any time request in writing that the
Company register the resale of any or all of such Registrable Securities on a
Form S-3. Upon receipt of a written request for registration of Registrable
Securities on Form S-3, the Company will promptly give written notice of the
proposed registration to all other holders of Registrable Securities, if any,
and, as soon as practicable thereafter, effect the registration of all or such
portion of such holder's or holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other holder or holders joining in such request as are specified in a
written request given within fifteen (15) days after receipt of such written
notice from the Company. The Company shall use its best efforts to maintain each
Form S-3 under this Section 2.3 effective for the longer of (a) sixty (60) days
and (b) until the Registrable Securities covered thereby have been sold. No
registration effected pursuant to this Section 2.3 shall not be counted as a
Demand Registration effected pursuant to Section 2.1.
2.4 Purchase (and Exercise) of the Warrant by the Underwriters.
Notwithstanding any other provision of this Agreement to the contrary, in
connection with any Demand
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Registration or Piggy-Back Registration which is to be an underwritten
offering, to the extent all or any portion of the Registrable Securities to be
included in such registration consist of shares of Common Stock issuable upon
exercise of the Warrant or any portion thereof, the holders of such Registrable
Securities may require that the Underwriter or Underwriters purchase (and
exercise) the Warrant or any portion thereof rather than require the holders of
the Registrable Securities to exercise the Warrant or portion thereof in
connection with such registration, unless the Underwriters inform such holders
that such a purchase and exercise of the Warrant will materially and adversely
affect the proposed offering. The Company shall take all such action and provide
all such assistance as may be reasonably requested by the holders of Registrable
Securities to facilitate any such purchase (and exercise) of the Warrant agreed
to by the Underwriter or Underwriters, including, without limitation, issuing
the Common Stock issuable upon the exercise of the Warrant or any portion
thereof to be issued within such time period as will permit the Underwriters to
make and complete the distribution contemplated by the underwriting.
3. REGISTRATION PROCEDURES.
3.1 Filings; Information. Whenever the Company is required to effect the
registration of any Registrable Securities pursuant to Section 2, the Company
shall use its best efforts to effect the registration and sale of such
Registrable Securities in accordance with the intended method(s) of distribution
thereof as expeditiously as practicable, and in connection with any such
request:
(a) Filing Registration Statement. The Company shall, as expeditiously
as possible, prepare and file with the Commission, with sixty (60) days after
receipt of a request for a Demand Registration pursuant to Section 2.1, a
Registration Statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of all Registrable Securities to be registered thereunder in
accordance with the intended method(s) of distribution thereof, and shall use
its best efforts to cause such Registration Statement to become and remain
effective for the period required by Section 3.1(c); provided, however, that the
Company shall have the right to defer such registration for up to sixty (60)
days if the Company shall furnish to the holders a certificate signed by the
Chief Executive Officer of the Company stating that, in the good faith judgment
of the Board of Directors of the Company, it would be materially detrimental to
the Company and its shareholders for such Registration Statement to be effected
at such time; provided further, however, that in the event the Company elects to
exercise such right with respect to any registration, it shall not have the
right to exercise such right again prior to the date which is twelve (12) months
after the date on which the Registration Statement relating to such deferred
registration is declared effective.
(b) Copies. The Company shall, prior to filing a Registration Statement
or prospectus, or any amendment or supplement thereto, furnish without charge to
the holders of Registrable Securities included in such registration, and such
holders' legal counsel, copies of such Registration Statement as proposed to be
filed, each amendment and supplement to such Registration Statement (in each
case including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such Registration Statement (including each
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preliminary prospectus), and such other documents as the holders of Registrable
Securities included in such registration or legal counsel for any such holders
may request in order to facilitate the disposition of the Registrable Securities
owned by such holders.
(c) Amendments and Supplements. The Company shall prepare and file with
the Commission such amendments, including post-effective amendments, and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
in compliance with the provisions of the Securities Act until all Registrable
Securities and other securities covered by such Registration Statement have been
disposed of in accordance with the intended method(s) of distribution set forth
in such Registration Statement (which period shall not exceed the sum of one
hundred eighty (180) days plus any period during which any such disposition is
interfered with by any stop order, injunction or other order or requirement of
the Commission or any governmental agency or court) or such securities have been
withdrawn.
(d) Notification. After the filing of a Registration Statement, the
Company shall promptly, and in no event more than two (2) Business Days, notify
the holders of Registrable Securities included in such registration statement,
and confirm such advice in writing: (i) when such Registration Statement has
been filed or amended or supplemented and becomes effective, (ii) when any
post-effective amendment to such Registration Statement becomes effective, (iii)
of any stop order issued or threatened by the Commission (and the Company shall
take all actions required to prevent the entry of such stop order or to remove
it if entered) and (iv) of any request by the Commission for any amendment or
supplement to such Registration Statement or any prospectus relating thereto or
for additional information or of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of the securities covered by such
Registration Statement, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and promptly make
available to the holders of Registrable Securities included in such Registration
Statement any such supplement or amendment; except that before filing with the
Commission a Registration Statement or prospectus or any amendment or supplement
thereto, including documents incorporated by reference, the Company shall
furnish to the holders of Registrable Securities included in such Registration
Statement and to the legal counsel for any such holders, copies of all such
documents proposed to be filed sufficiently in advance in filing (and in no
event less than three (3) Business Days prior to filing) to provide such holders
and legal counsel with a reasonable opportunity to review such documents and
comment thereon, and the Company shall not file any Registration Statement or
prospectus or amendment or supplement thereto, including documents incorporated
by reference, to which such holders or their legal counsel shall object.
(e) State Securities Laws Compliance. The Company shall use its best
efforts to (i) register or qualify the Registrable Securities covered by the
Registration Statement under such securities or "blue sky" laws of such
jurisdictions in the United States as the holders of Registrable Securities
included in such Registration Statement (in light of their intended plan of
distribution) may request and (ii) cause such Registrable Securities covered by
the Registration Statement to be registered with or approved by such other
Governmental Authorities as may be
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necessary by virtue of the business and operations of the Company and do any and
all other acts and things that may be necessary or advisable to enable the
holders of Registrable Securities included in such Registration Statement to
consummate the disposition of such Registrable Securities in such jurisdictions;
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3.1(e) or subject itself to taxation in any such
jurisdiction.
(f) Agreements for Disposition. The Company shall enter into customary
agreements (including, if applicable, an underwriting agreement in customary
form) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities. The
representations, warranties and covenants of the Company in any underwriting
agreement which are made to or for the benefit of any Underwriters shall also be
made to and for the benefit of the holders of Registrable Securities included in
such registration statement. No holder of Registrable Securities included in
such registration statement shall be required to make any representations or
warranties in the underwriting agreement except, if applicable, with respect to
such holder's organization, good standing, authority, title to Registrable
Securities, lack of conflict of such sale with such holder's material agreements
and organizational documents, and with respect to written information relating
to such holder that such holder has furnished in writing expressly for inclusion
in such registration statement.
(g) Cooperation. The President and Chief Executive Officer of the
Company, the Chief Financial Officer of the Company, any Senior Vice President
of the Company and any other members of the management of the Company shall
cooperate fully in any offering of Registrable Securities hereunder, which
cooperation shall include, without limitation, the preparation of the
Registration Statement with respect to such offering and all other offering
materials and related documents, and participation in meetings with
Underwriters, attorneys, accountants and potential investors.
(h) Records. The Company shall make available for inspection by the
holders of Registrable Securities included in such Registration Statement, any
Underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by any
holder of Registrable Securities included in such Registration Statement or any
Underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, as shall be necessary to enable them to exercise
their due diligence responsibility, and cause the Company's officers, directors
and employees to supply all information requested by any of them in connection
with such registration statement.
(i) Opinions and Comfort Letters. The Company shall furnish to each
holder of Registrable Securities included in any Registration Statement a signed
counterpart, addressed to such holder, of (i) any opinion of counsel to the
Company delivered to any Underwriter and (ii) any comfort letter from the
Company's independent public accountants delivered to any Underwriter. In the
event no legal opinion is delivered to any Underwriter, the Company shall
furnish to each holder of Registrable Securities included in such Registration
Statement, at any time that such holder elects to use a prospectus, an opinion
of counsel to the Company to the
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effect that the Registration Statement containing such prospectus has been
declared effective and that no stop order is in effect.
(j) Earnings Statement. The Company shall comply with all applicable
rules and regulations of the Commission and the Securities Act, and make
available to its shareholders, as soon as practicable, an earnings statement
covering a period of twelve (12) months, beginning within three (3) months after
the effective date of the registration statement, with earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
(k) Listing. The Company shall use its best efforts to cause all
Registrable Securities included in any registration to be listed on such
national securities exchange or otherwise designated for trading in the same
manner as similar securities issued by the Company are then listed or designated
or, if no such similar securities are then listed or designated, in a manner
satisfactory to the holders of a majority of the Registrable Securities included
in such registration.
3.2 Obligation to Suspend Distribution. Upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
3.1(d)(iv), each holder of Registrable Securities included in any registration
shall immediately discontinue disposition of such Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such holder receives the supplemented or amended prospectus contemplated
by Section 3.1(d)(iv), and, if so directed by the Company, each such holder will
deliver to the Company all copies, other than permanent file copies then in such
holder's possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice.
3.3 Registration Expenses. The Company shall bear all costs and expenses
incurred in connection with any Demand Registration pursuant to Section 2.1
(except as otherwise provided in the last sentence of Section 2.1(e)), any
Piggy-Back Registration pursuant to Section 2.2 and any registration on Form S-3
pursuant to Section 2.3 and all expenses incurred in performing or complying
with its other obligations under this Agreement, whether or not the Registration
Statement becomes effective, including, without limitation, (i) all registration
and filing fees; (ii) fees and expenses of compliance with securities or "blue
sky" laws (including fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities); (iii) printing expenses; (iv)
the Company's internal expenses (including, without limitation, all salaries and
expenses of its officers and employees); (v) the fees and expenses incurred in
connection with the listing of the Registrable Securities as required by Section
3.1(k); (vi) National Association of Securities Dealers, Inc. fees, if any;
(vii) fees and disbursements of counsel for the Company and fees and expenses
for independent certified public accountants retained by the Company (including
the expenses or costs associated with the delivery of any opinions or comfort
letters requested pursuant to Section 3.1(i)); (viii) the fees and expenses of
any special experts retained by the Company in connection with such
registration; (ix) the purchase of selling stockholder errors and omissions
insurance for the benefit of LLCP in any amount equivalent to the gross proceeds
to be received by LLCP in connection with any registration under Sections 2.1
and 2.2, on terms and conditions satisfactory to LLCP, and (x) all fees and
expenses incurred by LLCP in connection with its participation in such
registration,
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including, without limitation, the fees and expenses of LLCP's legal counsel,
accountants and other experts selected by LLCP. The Company shall have no
obligation to pay any underwriting fees, discounts or selling commissions
attributable to the Registrable Securities being sold by LLCP, which expenses
shall be borne by LLCP.
3.4 Information. The holders of Registrable Securities shall provide such
information as reasonably requested by the Company in connection with the
preparation of any registration statement, including amendments and supplements
thereto, in order to effect the registration of any Registrable Securities under
the Securities Act pursuant to Section 2.
4. INDEMNIFICATION AND CONTRIBUTION.
4.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless LLCP and each other holder of Registrable Securities, and each of
their respective officers, employees, Affiliates (including, without limitation,
Xxxxxx Xxxxxxxxx Capital Partners, Inc.), directors, partners, members,
attorneys and agents, and each Person, if any, who controls LLCP and each other
holder of Registrable Securities (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) (each, an "LLCP Indemnified
Party"), from and against any expenses, losses, judgments, claims, damages or
liabilities, whether joint or several, arising out of or based upon any untrue
statement (or alleged untrue statement) of a material fact contained in any
Registration Statement under which such Registrable Securities were registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arising out of or based upon any
omission (or alleged omission) to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
promulgated thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration; and
the Company shall promptly, but in no event more than five (5) Business Days
after request for payment, pay directly or reimburse each LLCP Indemnified Party
for any legal and any other expenses reasonably incurred by such LLCP
Indemnified Party in connection with investigating and defending any such
expense, loss, judgment, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
expense, loss, claim, damage or liability arises out of or is based upon any
untrue statement or omission made in such Registration Statement, preliminary
prospectus, final prospectus, or summary prospectus, or any such amendment or
supplement, in reliance upon and in conformity with information furnished to the
Company, in writing, by such selling holder and stated to be specifically for
use therein. The Company also shall indemnify any Underwriter of the Registrable
Securities, their officers, affiliates, directors, partners, members and agents
and each Person who controls such Underwriters on substantially the same basis
as that of the indemnification provided above in this Section 4.1.
4.2 Indemnification by Holders of Registrable Securities. Each selling
holder of Registrable Securities will, in the event that any Registrable
Securities held by such selling holder as to which any registration is being
effected under the Securities Act pursuant to this Agreement, indemnify and hold
harmless (severally and not jointly) the Company, each of its
11
directors and officers and each Underwriter (if any), and each other Person, if
any, who controls such selling holder or such Underwriter within the meaning of
the Securities Act, against any losses, claims, judgments, damages or
liabilities, whether joint or several, insofar as such losses, claims,
judgments, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement of a material fact contained in any
Registration Statement under which such Registrable Securities were registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission to state a material fact required to be stated therein or necessary to
make the statement therein not misleading, if the statement or omission was made
in reliance upon and in conformity with information furnished in writing to the
Company by such selling holder and stated to be specifically for use therein,
and shall, within five (5) Business Days after a request therefor, reimburse the
Company, its directors and officers, and each such controlling Person for any
legal or other expenses reasonably incurred by any of them in connection with
investigation or defending any such loss, claim, damage, liability or action.
Notwithstanding anything to the contrary, in no event shall any holder of
Registrable Securities be liable or responsible for any amount in excess of the
net proceeds actually received by such holder from the sale of Registrable
Securities.
4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any
Person of any written notice of any loss, claim, damage or liability or any
action in respect of which indemnity may be sought pursuant to Section 4.1 or
4.2, such Person (the "Indemnified Party") shall, if a claim in respect thereof
is to be made against any other Person for indemnification hereunder, notify
such other Person (the "Indemnifying Party") in writing of the loss, claim,
judgment, damage, liability or action; provided, however, that the failure by
the Indemnified Party to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which the Indemnifying Party may have to
such Indemnified party hereunder, except to the extent the Indemnifying Party is
actually prejudiced by such failure. If the Indemnified Party is seeking
indemnification with respect to any claim or action brought against the
Indemnified Party, then the Indemnifying Party shall be entitled to participate
in such claim or action, and, to the extent that it wishes, jointly with all
other Indemnifying Parties, to assume the defense thereof with counsel
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that in any action in which both the
Indemnified Party and the Indemnifying Party are named as defendants, the
Indemnified party shall have the right to employ separate counsel (but no more
than one such separate counsel) to represent the Indemnified Party and its
controlling Persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, with the fees and expenses of such counsel to be paid by
such Indemnifying Party if, based upon the written opinion of counsel of such
Indemnified Party, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party (which consent shall not be unreasonably withheld), consent to entry of
judgment or effect any settlement of any claim or pending or threatened
12
proceeding in respect of which the Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such judgment or settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such claim or proceeding.
4.4 Contribution. If the indemnification provided for in the foregoing
Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of
any loss, claim, damage, liability or action referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the Indemnified Parties and the
Indemnifying Parties in connection with the actions or omissions which resulted
in such loss, claim, damage, liability or action, as well as any other relevant
equitable considerations. The relative fault of any Indemnified Party and any
Indemnifying Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such Indemnified Party or such Indemnifying Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement of omission.
The parties agree that it would not be just and equitable if contribution
pursuant to this Section 4.4 were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Party as a result of any loss, claim, damage,
liability or action referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding anything to
the contrary, in no event shall any holder of Registrable Securities be required
to contribute any amount in excess of the net proceeds actually received by such
holder from the sale of Registrable Securities which gave rise to such
contribution obligation. 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.
5. UNDERWRITING AND DISTRIBUTION.
5.1 Rule 144. The Company covenants that it shall file any reports required
to be filed by it under the Securities Act and the Exchange Act and shall take
such further action as the holders of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holders to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 under the Securities Act,
as such Rules may be amended from time to time, or any similar Rule or
regulation hereafter adopted by the Commission.
5.2 Restrictions on Sale by the Company and Others. The Company agrees (a)
not to effect any sale or distribution of any securities similar to those being
registered in accordance with Section 2.1, or any securities convertible into or
exchangeable or exercisable for such
13
securities, during the ninety (90) days prior to, and during the one hundred
twenty (120) day period beginning on, the effective date of any Demand
Registration (except as part of such Demand Registration to the extent permitted
by Section 2.1(d)); and (b) that any agreement entered into after the date
hereof pursuant to which the Company issues or agrees to issue any privately
placed securities shall contain a provision under which holders of such
securities agree not to effect any sale or distribution of any such securities
during the periods described in (i) above, in each case including a sale
pursuant to Rule 144 under the Securities Act (except as part of any such
registration, if permitted); provided, however, that the provisions of this
Section 5.2 shall not prevent the conversion or exchange of any securities
pursuant to their terms into or for other securities and shall not prevent the
issuance of securities by the Company under any employee benefit, stock option
or stock subscription plans.
6. MISCELLANEOUS.
6.1 Other Registration Rights.
(a) The Company represents and warrants to LLCP that no Person has any
right to require the Company to register any shares of the Company's capital
stock for sale or to include shares of the Company's capital stock in any
registration filed by the Company for the sale of shares of capital stock for
its own account or for the account of any other Person.
(b) From and after the date of this Agreement, the Company shall not,
without the prior written consent of LLCP, (a) enter into any agreement granting
any demand registration right (i.e., the right to require the Company to
register the sale of any shares of the Company's capital stock), (b) enter into
any agreement granting any piggy-back registration right (i.e., the right to
require the Company to register the sale of any shares of the Company's capital
stock in any registration filed by the Company for the sale of shares of capital
stock for its own account or for the account of any other Person) which is
consistent with, equal to or superior to any registration rights granted
hereunder or (c) enter into any agreement that adversely affects the rights
granted to the holders of Registrable Securities hereunder.
6.2 Successors and Assigns. The rights and obligations of LLCP under this
Agreement shall be freely assignable in whole or in part. Each such assignee, by
accepting such assignment of the rights of the assignor hereunder, shall be
deemed to have agreed to and be bound by the obligations of the assignor
hereunder. The rights and obligations of the Company hereunder may not be
assigned or delegated.
6.3 Notices. All notices, requests, demands and other communications which
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given if transmitted by telecopier with receipt
acknowledged, or upon delivery, if delivered personally or by recognized
commercial courier with receipt acknowledged, or upon the expiration of 72 hours
after mailing, if mailed by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
14
(i) If to LLCP, to:
Xxxxxx Xxxxxxxxx Capital Partners II, L.P.
c/o Levine Xxxxxxxxx Capital Partners, Inc.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
--------------
Xxxxxxx & XxXxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(ii) If to the Company, at:
Overhill Farms, Inc.
0000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
--------------
Xxxxxxx, Xxxxxxx & Smiley, LLP
0000 Xxxxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Arbiter, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or at such other address or addresses as the Purchaser or the Company, as the
case may be, may specify by written notice given in accordance with this Section
6.3.
6.4 Severability. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
15
6.5 Counterparts. This Agreement may be executed in two or more
counterparts and by facsimile, each of which shall be an original, but all of
which together shall constitute one and the same instrument.
6.6 Descriptive Headings, Construction and Interpretation. The description
headings of the several paragraphs of this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and are not to be
considered in construing or interpreting this Agreement. All section, preamble,
recital, clause and party references are to this Agreement unless otherwise
stated. No party, nor its counsel, shall be deemed the drafter of this Agreement
for purposes of construing the provisions of this Agreement, and all provisions
of this Agreement shall be construed in accordance with their fair meaning, and
not strictly for or against any party.
6.7 Waivers and Amendments. Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally or by course of dealing,
except by a statement in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought.
6.8 Remedies. In the event that the Company fails to observe or perform any
covenant or agreement to be observed or performed under this Agreement, LLCP or
any other holder of Registrable Securities may proceed to protect and enforce
its rights by suit in equity or action at law, whether for specific performance
of any term contained in this Agreement or for an injunction against the breach
of any such term or in aid of the exercise of any power granted in this
Agreement or to enforce any other legal or equitable right, or to take any one
or more of such actions. The Company agrees to pay all fees, costs, and
expenses, including without limitation, fees and expenses of attorneys,
accountants and other experts, and all fees, costs and expenses of appeals,
incurred by LLCP or any other holder of Registrable Securities in connection
with the enforcement of this Agreement or the collection or any sums due
hereunder, whether or not suit is commenced. None of the rights, powers or
remedies conferred under this Agreement shall be mutually exclusive, and each
such right, power or remedy shall be cumulative and in addition to any other
right, power or remedy whether conferred by this Agreement or now or hereafter
available at law, in equity, by statute or otherwise.
6.9 Governing Law. In all respects, including all matters of construction,
validity and performance, this Agreement and the rights and obligations arising
hereunder shall be governed by, and construed and enforced in accordance with,
the laws of the State of California applicable to contracts made and performed
in such state, without regard to the choice of law or conflicts of laws
principles.
7. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
COMMERCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, AND UNDERSTANDING THEY ARE WAIVING A
16
CONSTITUTIONAL RIGHT, THE PARTIES HEREBY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER IN CONTRACT,
TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL
TO, THIS AGREEMENT, THE SECURITIES PURCHASE AGREEMENT AND/OR ANY OTHER
INVESTMENT DOCUMENT OR THE TRANSACTIONS COMPLETED HEREBY OR THEREBY.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
17
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized representatives as of the date
first written above.
COMPANY
-------
OVERHILL FARMS, INC., a Nevada corporation
/s/ Xxxxx Xxxxx
By: _____________________________________________
Xxxxx Xxxxx
President and Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxx
By: _____________________________________________
Xxxxxxx X. Xxxxxxx
Vice President and Chief Financial Officer
LLCP
----
XXXXXX XXXXXXXXX CAPITAL PARTNERS, INC.,
a California corporation
On behalf of XXXXXX XXXXXXXXX CAPITAL
PARTNERS II, L.P., a California limited
partnership
/s/ Xxxxxx X. Xxxxxxxxx
By: _______________________________________
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
18
