Exhibit 2.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated as of
May 12, 2000, by and between XXXXXXXX.XXX, INC., a Delaware corporation (the
"Company"), and CHILI PEPPER, INC., a Massachusetts corporation (the "Seller").
WHEREAS, pursuant to the terms of that certain Asset Purchase Agreement
of even date herewith by and between the Company, the Seller and Xxxxxxxx Xxxxxx
and Xxxx Xxxxxx (the "Purchase Agreement"), the Seller will receive, pursuant to
the conditions of the Purchase Agreement, 241,611 shares of the Company's Common
Stock, par value $.01 per share (the "Common Stock") upon the consummation of
the acquisition of certain of the assets of the Seller (the "Purchase"); and
WHEREAS, in order to induce the Seller to enter into the Purchase
Agreement, the Company desires to grant registration rights to the Seller for
certain of the shares of Common Stock to be received pursuant to the Purchase
Agreement in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1. DEFINITIONS. As used herein the following defined terms shall have
the following respective meanings:
(a) "Capital Stock" means the Company's Common Stock and any
other class of common stock created by the Company in the future.
(b) "Common Stock" has the meaning set forth in the Recitals.
(c) "Holders" means any person or entity to whom shares of
Capital Stock were issued pursuant to the Purchase Agreement and which agrees to
be bound by this Agreement.
(d) "Indemnified Party" has the meaning set forth in
subparagraph 6(c).
(e) "Indemnifying Party" has the meaning set forth in
subparagraph 6(c).
(f) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act.
(g) "Registrable Securities" means thirty percent (30%) of the
shares of Capital Stock of the Company issued pursuant to the Purchase
Agreement.
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(h) "SEC" means the Securities and Exchange Commission.
(i) "Securities Act" means the Securities Act of 1933, as
amended.
2. COMPANY REGISTRATION.
(a) If the Company, in connection with the next registration
of shares of Common Stock under the Securities Act to occur following the
Closing Date (as defined in the Purchase Agreement), shall determine to register
any of its securities, either for its own account or the account of a security
holder or holders, in a registration statement covering the sale of Common Stock
to the general public pursuant to an underwritten public offering, the Company
will: (i) give to each Holder written notice thereof at least forty-five 45 days
before filing; provided, however, in the case of a Registration Statement on
Form S-3, the Company shall be required to give each Holder written notice of
the proposed filing thereof promptly after a decision to make such filing has
been made and in no event less than ten (10) business days prior to filing; and
(ii) use its best efforts to include in such registration (and any related
qualification under blue sky laws) and in any underwriting involved therein, all
the Registrable Securities specified in a written request or requests, made
within fifteen (15) days after receipt of such written notice from the Company,
or, in the case of a Registration Statement on Form S-3, within seven (7)
business days after receipt of such written notice, by any Holder or Holders,
except as set forth in Section 3(b) below. The term "the next registration of
shares of Common Stock under the Securities Act to occur following the Closing
Date" as used in the previous sentence shall not include any registration of
Common Stock covered by the registration statement on Form S-2 filed by the
Company with the SEC on April 14, 2000 (though filed, such registration is not
yet effective), registrations on Forms X-0, X-0 or any registration form which
does not permit secondary sales, or relating to employee stock option plans,
dividend reinvestment plans or Rule 145 transactions. In addition, the
registration rights provided in this subparagraph 3(a) shall be subordinated to
the registration rights of the holders of the Company's Series A Preferred Stock
and Series B Preferred Stock and to the registration rights of Intel
Corporation, The notice referred to in this subparagraph 3(a) shall include a
list of the jurisdictions in which the Company intends to attempt to qualify
such securities under the applicable blue sky or other state securities laws.
(b) The right of any Holder to registration pursuant to this
Section 3 shall be conditioned upon such Holder's participation in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company, and may, at their
option, require that any or all the representations and warranties by, and the
covenants and other agreements on the part of, the Company to and for the
benefit of such underwriter shall also be made to and for the benefit of such
Holders. Such Holders shall not be required to make any representations or
warranties to or agreements with the Company or the underwriter other than those
relating to such Holders, their Registrable Securities and their intended
methods of distribution and information about such Holders provided by such
Holders for use in the registration statement. Upon the written request of the
managing underwriter of any underwritten offering of the Company's securities, a
Holder of Registrable Securities shall not sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any Registrable
Securities (other than those included in such
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registration) without the prior written consent of such managing underwriter for
a period not to exceed that period required of any other seller of Capital Stock
that such managing underwriter reasonably determines is necessary in order to
effect the underwritten public offering. Notwithstanding any other provision of
this Section 3, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, the Company shall so
advise all Holders of Registrable Securities which would otherwise be registered
and underwritten pursuant hereto, and the Company shall include in such
registration first the number of shares requested to be sold by the Company
together with the number of shares requested to be sold by the persons and
entities exercising demand registration rights with respect to such
registration, if any, then the number of shares of Registrable Securities
requested to be included in the registration which, in the opinion of such
underwriter, can be sold, pro rata among all Holders thereof and all other
shareholders of the Company that have contractual rights with respect to the
registration of shares of Capital Stock held by such shareholders (the "Other
Holders") in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders and Other Holders at the time of
filing the registration statement, with further proportional allocations among
the Holders and Other Holders if any such Holder or Other Holder has requested
less than all such Registrable Securities it is entitled to register.
3. EXPENSES OF REGISTRATION. All expenses incurred in connection with
any registration or qualification pursuant to this Agreement, including, without
limitation, all registration, filing and qualification fees, printing expenses,
fees and disbursements of counsel for the Company, and expenses and fees of any
special audits incidental to or required by such registration, shall be borne by
the Company; provided, however, that the Company shall not be required to pay
fees of legal counsel of the Holders, or underwriters' discounts or commissions
relating to Registrable Securities (such underwriters' fees, discounts or
commissions to be borne by the Holders, on a pro rata basis, based on the number
of shares of Registrable Securities sold by each of them).
4. REGISTRATION PROCEDURES. In the case of each registration effected
by the Company pursuant to this Agreement, the Company will keep each Holder
participating therein advised in writing as to the initiation of such
registration (and any state qualifications) and as to the completion thereof.
The Company may decline to file a Registration Statement after giving notice to
each Holder, or withdraw any registration after filing and after such notice,
but prior to the effectiveness thereof, provided that the Company shall promptly
notify each Holder in writing of any such action and provided further that the
Company shall bear all expenses incurred by such Holder or otherwise in
connection with such withdrawn registration. Upon receipt of written notice from
the Company that a registration statement or prospectus contains a Misstatement
(as defined below), each Holder of Registrable Securities shall forthwith
discontinue disposition of Registrable Securities until such Holder has received
copies of the supplemented or amended prospectus, or until such Holder is
advised in writing by the Company that the use of the prospectus may be resumed,
and, if so directed by the Company, such Holder shall deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
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5. INDEMNIFICATION.
(a) In connection with any registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, the Company
shall indemnify and hold harmless each Holder that sells such Registrable
Securities, its officers, directors, partners and employees, each underwriter,
broker or any other person acting on behalf of such Holder and each other
person, if any, who controls any of the foregoing persons within the meaning of
the Securities Act against any losses, claims, damages or liabilities, joint or
several, (or actions in respect thereof) to which any of the foregoing persons
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the registration statement under which such
Registrable Securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein or otherwise filed with the
SEC, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Securities, or arise out of or
are based upon 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 any violation by the Company of any rule or regulation
promulgated pursuant to any federal, state or common law rule or regulation
including, without limitation, the Securities Act, applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, and shall reimburse such Holder, such officer, director,
partner or employee, such underwriter, such broker or such other person acting
on behalf of such seller and each such controlling person for any legal or other
expenses reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in said registration statement, preliminary prospectus, final prospectus,
amendment, supplement or document incident to registration or qualification of
any Registrable Securities in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by such
Holder or underwriter specifically for use in the preparation thereof;
(b) In connection with any registration of Registrable
Securities under the Securities Act pursuant to this Agreement, each Holder that
sells Registrable Securities in such registration shall indemnify and hold
harmless (in the same manner and to the same extent as set forth in the
preceding paragraph of this Section) the Company, each director of the Company,
each officer of the Company who shall sign such registration statement, each
underwriter, broker or other person acting on behalf of such seller, each person
who controls any of the foregoing persons within the meaning of the Securities
Act and each other Holder that sells Registrable Securities under such
registration statement with respect to any statement or omission from such
registration statement, any preliminary prospectus or final prospectus contained
therein or otherwise filed with the SEC, any amendment or supplement thereto or
any document incident to registration or qualification of any Registrable
Securities, if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company or such underwriter
through an instrument duly executed by such Holder or underwriter specifically
for use in connection with the preparation of such registration statement,
preliminary prospectus,
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final prospectus, amendment, supplement or document; PROVIDED, HOWEVER, that the
obligation to indemnify will be several, not joint and several, among such
Holders of Registrable Securities, and the maximum amount of liability in
respect of such indemnification shall be in proportion to and limited to, in the
case of each Holder of Registrable Securities, an amount equal to the net
proceeds actually received by such Holder from the sale of Registrable
Securities effected pursuant to such registration;
(c) The indemnification required by this Section 6 will be
made by periodic payments during the course of the investigation or defense, as
and when bills are received or expenses incurred, subject to prompt refund in
the event any such payments are determined not to have been due and owing
hereunder;
(d) Promptly after receipt by an indemnified party of notice
of the commencement of any action involving a claim referred to in this Section
6, such indemnified party shall give written notice to the party required to
provide indemnification of the commencement of such action. In case any such
action is brought against an indemnified party, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be responsible for any
legal or other expenses subsequently incurred by the latter in connection with
the defense thereof; PROVIDED, HOWEVER, that if any indemnified party shall have
reasonably concluded that there may be one or more legal or equitable defenses
available to such indemnified party which are additional to or conflict with
those available to the indemnifying party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
agreement provided in this Section 6, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
and such indemnifying party shall reimburse such indemnified party and any
person controlling such indemnified party for that portion of the fees and
expenses of any counsel retained by the indemnified party which is reasonably
related to the matters covered by the indemnity agreement provided in this
Section 6. The failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying parties of its obligations under this
Section 6 unless such failure shall have a material adverse effect on the
indemnifying party's ability to defend such claim;
(e) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling person
of such indemnified party and will survive the transfer of securities;
(f) If the indemnification provided for in this Section 6 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, claim, damage, liability or action referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amounts 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
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions which
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resulted in such loss, claim, damage or liability as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified 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 the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Holders that sell
Registrable Securities agree that it would not be just and equitable if
contributions pursuant to this Section 6(f) were determined by PRO RATA
allocation or by any other method of allocation which did not take into account
the equitable considerations referred to herein. The amount paid or payable to
an indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to above shall be deemed to include, subject to the limitation
set forth in this Section 6, any legal or other expenses reasonably incurred in
connection with investigating or defending the same. Notwithstanding the
foregoing, in no event shall the amount contributed by a Holder that sells
Registrable Securities exceed the aggregate net offering proceeds received by
such seller from the sale of its Registrable Securities; and
(g) The indemnified party shall make no settlement of any
claim or litigation which would give rise to liability on the part of the
indemnifying parties under any indemnity contained in this Section 6 without the
written consent of the indemnifying parties, which consent shall not be
unreasonably withheld or delayed, and no indemnifying party shall make any
settlement of any such claim or litigation without the consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed.
If a firm offer is made to settle a claim or litigation and the indemnifying
party notifies the indemnified party in writing that the indemnifying party
desires to accept and agree to such offer, but the indemnified party elects not
to accept or agree to such offer within ten (10) days after receipt of written
notice from the indemnifying party of the terms of such offer, then, in such
event, the party that is defending such claim shall continue to contest or
defend such claim or litigation and, in such event, the total maximum liability
of the indemnifying party to indemnify or otherwise reimburse the indemnified
party with respect to such claim or litigation shall be limited to and shall not
exceed the amount of such settlement offer, plus reasonable out-of-pocket costs
and expenses (including reasonable fees and disbursements of counsel) to the
date of notice that the indemnifying party desired to accept such settlement
offer.
6. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
written information regarding such Holder or Holders and the distribution
proposed by such Holder or Holders as the Company may reasonably request in
writing and as shall be required in connection with any registration or
qualification referred to in this Agreement. The Company agrees to include in
any such registration statement all information concerning the Holders and their
distribution which the Holders shall reasonably request.
7. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities that are granted by the Company in this
Agreement may be assigned by a Holder to a transferee or assignee of not less
than twenty-five percent (25%) of the Registrable Securities held by such
Holder; PROVIDED, HOWEVER, that the Company is given notice by the Holder at the
time of or within a reasonable time after the transfer, stating the name and
address
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of the transferee or assignee and identifying the securities with respect to
which such registration rights are being assigned. Subject to the foregoing
provision, this Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns; PROVIDED,
FURTHER, that the registration rights granted in this Agreement shall not be
transferred to persons who received Registrable Securities pursuant to a
registration statement under the Securities Act or pursuant to a transaction
under Rule 144 or any successor provision thereto.
8. CHANGES; WAIVER; ASSIGNMENT. The terms and provisions of this
Agreement may not be modified, amended or assigned, except that they may be
modified, amended or assigned with the written consent of (i) the Company and
(ii) the Holders of a majority of the Registrable Securities outstanding. None
of the terms and provisions of this Agreement may be waived except in writing by
the person so waiving.
9. COMPANY COVENANT. The Company agrees to make and keep public
information available, as those terms are understood and defined in Rule 144
under the Securities Act and to use its best efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
11. NOTICE. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission or mailed by
prepaid first class certified mail, return receipt requested, or delivered by a
nationally recognized overnight courier service prepaid, to the parties at the
following addresses or facsimile numbers:
(a) If to the Company, to:
XxxxXxxx.xxx, Inc.
Xxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx,
President & Chief Executive Officer
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esquire
McGuire, Woods, Battle & Xxxxxx LLP
0 Xx. Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
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(b) If to the Holders:
Chili Pepper, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx, President
Telecopier:
with a copy to:
Xxxxxxx Xxxxxxx, Esquire
000 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier: 000-000-0000
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided for in this Section, be deemed given upon receipt, (iii) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given on the earlier of the fourth Business Day
following mailing or upon receipt and (iv) if delivered by overnight courier to
the address as provided for in this Section, be deemed given on the earlier of
the first Business Day following the date sent by such overnight courier or upon
receipt (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice is
to be delivered pursuant to this Section). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other
parties hereto.
12. TERMINATION. This Agreement shall terminate with respect to any
Holder on the date on which the Holder may sell all of such Holder's Registrable
Securities pursuant to Rule 144 under the Securities Act within any ninety (90)
day period or, with respect to any such Holder, on the date on which all of such
Holder's Registrable Securities have been registered pursuant to a registration
statement filed with the Commission and which has become effective.
13. ARBITRATION.
(a) Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association by an arbitration panel consisting of three persons, one selected by
the Company, one selected by the Stockholders and the third selected by mutual
agreement of the first two arbitrators selected, and judgement upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
(b) The arbitration shall be held in Boston, Massachusetts.
(c) All fees, costs and expenses (including reasonable
attorneys' fees and expenses) incurred by a party that prevails on any issue in
any arbitration commenced hereunder or in any judicial proceeding seeking to
enforce this Agreement to arbitrate disputes or seeking
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to enforce any order or award of any arbitration hereunder shall be assessed
against the party or parties that do not prevail on such issue or issues.
14. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and which together shall constitute a
single agreement. This Agreement may be delivered by facsimile.
15. HEADINGS. The headings of the Paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
hereof.
16. SEVERABILITY. If any provision or any portion of any provision of
this Agreement shall be held to be void or unenforceable, the remaining portions
of this Agreement shall continue in full force and effect.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their authorized officers as of the day and year first above
written.
XXXXXXXX.XXX, INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXXX
---------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President & Chief Executive Officer
CHILI PEPPER, INC.,
a Massachusetts corporation
By: /s/ XXXX XXXXXX
---------------------------------------------
Name: Xxxx Xxxxxx
Title: President
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