1
EXHIBIT 10.12
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
September ___, 1997, is by and among AUTHENTIC SPECIALTY FOODS, INC., a Texas
corporation (the "Company"), TSG2 L.P., a Delaware limited partnership
("TSG2"), Shansby Partners, L.L.C., a Delaware limited liability company
("Shansby Partners"), and Xxxxx X. Xxxxxx ("Lively"). TSG2, Shansby Partners
and Lively and permitted assignees of their rights and duties hereunder are
each referred to herein as a "Holder" and are collectively referred to herein
as the "Holders."
W I T N E S S E T H:
WHEREAS, the Company, TSG2, Lively, Xxxxxx X. Xxxxxxxx and TSG2
Management, L.L.C. have entered into a Contribution and Exchange Agreement
dated June 20, 1997 (as amended, the "Contribution and Exchange Agreement"),
pursuant to which, among other things, the Company has agreed to issue a number
of shares of its Common Stock, par value $1.00 per share ("Common Stock"),
determined in the manner set forth in the Contribution and Exchange Agreement
and subject to the terms and conditions set forth therein; and
WHEREAS, the Company, TSG2 and Lively have agreed to enter into this
Agreement in order to satisfy one of the conditions to obligations of the
parties to consummate the transactions contemplated by the Contribution and
Exchange Agreement; and
WHEREAS, the Company is prepared to consummate its initial public
offering (the "Initial Public Offering") of shares of Common Stock; and
WHEREAS, the consummation of the Initial Public Offering is a
condition to the obligations of the Company, TSG2 and Lively to consummate the
transactions contemplated by the Contribution and Exchange Agreement; and
WHEREAS, in connection with the Initial Public Offering, the Company
and Shansby Partners have entered into a Warrant Agreement dated September ___,
1997, pursuant to which the Company has agreed to issue to Shansby Partners a
number of common stock purchase warrants (the "Warrants") to purchase shares
(the "Warrant Shares") of Common Stock, determined in the manner set forth in
the Warrant Agreement and subject to the terms and conditions set forth
therein; and
WHEREAS, after the Initial Public Offering, each Holder will own a
substantial number of shares of Common Stock; and
WHEREAS, the Common Stock will be registered under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); and
2
WHEREAS, under the provisions of the Securities Act of 1933, as
amended (the "Securities Act") and the General Rules and Regulations
promulgated by the Securities and Exchange Commission (the "SEC") thereunder,
Holder is or may be limited in the manner of selling the shares of Common Stock
owned by Holder, absent registration under the Securities Act of the sale of
such shares or the availability of another exemption from the registration
requirements of the Securities Act.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
1. Demand Registration.
(A) Request for Registration. Holders agree to execute
on an expedited basis any lockup agreements reasonably requested by
the managing underwriter for the Initial Public Offering; provided,
however, that the lockup period shall not exceed 180 days after the
consummation of the Initial Public Offering. Without limiting the
generality of the foregoing, the Holders agree, for the benefit of the
Company and the underwriters for the Initial Public Offering, that no
Holder or any affiliate or family member thereof will directly or
indirectly sell, transfer or otherwise dispose of any Restricted
Securities (as defined below) prior to the expiration of 180 days
after the consummation of the Initial Public Offering (such expiration
date shall be referred to herein as the "Lockup Expiration Date"). As
used in this Agreement, "Restricted Securities" shall mean (i) all
shares of Common Stock issued to TSG2 and Lively pursuant to the
Contribution and Exchange Agreement and owned by TSG2 and Lively after
the Initial Public Offering, together with any securities issued or
issuable with respect to any such Common Stock by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization, or
otherwise and (ii) the Warrants and the Warrant Shares (including any
securities received by Shansby Partners or its successors pursuant to
Section 12 of the Warrant Agreement). As to any particular Restricted
Securities, such securities shall cease to be Restricted 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 disposed of in accordance with such
registration statement, (b) such securities may be distributed to the
public pursuant to Rule 144 (or any successor provision) under the
Securities Act (even though not actually sold pursuant thereto), (c)
such securities shall have been otherwise transferred, new
certificates representing such securities not bearing a legend
restricting transfer shall have been delivered by the Company and
subsequent disposition of such securities (without any volume
limitations) shall not require registration or qualification of such
securities under the Securities Act or any similar state law then in
force, (d) such securities shall have ceased to be outstanding, or (e)
the Holder or Holders thereof shall agree in writing to terminate this
Agreement. Subject to the conditions and limitations set forth in
Section 4 of this Agreement, at any time after the Lockup Expiration
Date, one or more Holders may make a written request for registration
under the Securities Act of all or part of its or their Restricted
Securities pursuant to this Section 1 (a "Demand Registration"),
provided that the Minimum Number (as hereinafter defined) of
Restricted Securities shall
2
3
be registered in such offering. The term "Minimum Number" shall mean
the lesser of (i) 50% of the initial number of Restricted Securities
or (ii) 100% of the number of Restricted Securities then beneficially
owned by all of the Holders in the aggregate. The Holder making such
a request for a Demand Registration is sometimes herein referred to as
the "Designating Holder." Such request will specify the aggregate
number of Restricted Securities proposed to be sold and will also
specify the intended method of disposition thereof. The Holders shall
have the right to two Demand Registrations in the aggregate; provided,
however, that the Holders may not elect more than one Demand
Registration in any 18 month period. Within ten days after receipt of
such request, the Company will give written notice of such
registration request to all other Holders of Restricted Securities and
include, subject to the provisions of Section 1(B) hereof, in such
registration all Restricted Securities with regard to which the
Company has received written requests for inclusion therein within 15
business days after the receipt by the applicable Holders of the
Company's notice. Each such request will also specify the aggregate
number of Restricted Securities to be registered and the intended
method of disposition thereof. The Company may delay for a maximum of
90 days the filing of a registration statement upon request from a
Holder pursuant to this Section 1 when, it its good faith judgment the
Company reasonably believes that the filing thereof at the time
requested, or the offering of securities pursuant thereto, would
materially and adversely affect a pending or proposed public offering
of securities of the Company, an acquisition, merger,
recapitalization, consolidation, reorganization or similar transaction
relating to the Company or negotiations, discussions or pending
proposals with respect thereto or require premature disclosure of
information not otherwise required to be disclosed to the potential
detriment of the Company.
(B) Priority on Demand Registrations. If a registration
pursuant to this Section 1 involves an underwritten offering and the
managing underwriter shall advise the Company that, in its judgment,
the number of Restricted Securities proposed to be included in such
offering should be limited due to market conditions, then the Company
will promptly so advise each Holder of Restricted Securities that has
requested registration, and the securities of the Company to be
included in the offering, if any, shall first be excluded from such
offering to the extent necessary to meet such limitation; and if
further exclusions are necessary to meet such limitation, the
securities shall be excluded pro rata, based on the respective numbers
of shares of Common Stock and/or Warrants as to which registration
shall have been requested by such Holders (with each Warrant being
treated for such purposes as representing the number of Warrant Shares
for which such Warrant is then exercisable) and any "Holder," (as
defined in the Registration Rights Agreement of even date herewith
between the Company and Xxxxxx X. Xxxxxxxx (the "Xxxxxxxx Registration
Rights Agreement") and referred to herein as a "Tanklage Holder") that
have elected to participate in such registration.
(C) Selection of Underwriters and Counsel. The Board of
Directors of the Company will select and obtain the services of the
investment banker or investment bankers and manager or managers that
will administer the offering and the counsel to such investment
bankers and managers; provided that such investment bankers, managers
and counsel must be approved by the Holders of a majority in number of
the Restricted Securities
3
4
to be registered, which approval shall not be unreasonably withheld.
Moreover, if the registration of which the Company gives notice does
involve an underwriting, the right of each Holder to registration
pursuant to this Section 1 shall, unless the Company otherwise agrees,
be conditioned upon such Holder's participation as a seller in such
underwriting and its execution of an underwriting agreement with the
managing underwriter or underwriters selected by the Company.
2. Piggyback Registration. If the Company proposes to file a
registration statement under the Securities Act with respect to an offering
(other than the Initial Public Offering) for the Company's own account of any
class of its equity securities (other than a registration statement on Form S-8
(or any successor form) or any other registration statement relating solely to
director and/or employee benefit plans or filed in connection with an exchange
offer, a transaction to which Rule 145 (or any successor rule) under the
Securities Act applies, a transaction relating solely to an exchange offering,
a transaction relating solely to an acquisition of assets or property for
securities or an offering of securities solely to the Company's existing
stockholders), then the Company shall in each case give written notice of such
proposed filing to the Holders of Restricted Securities as soon as practicable
(but no later than 15 business days) before the anticipated filing date, and
such notice shall offer such Holders the opportunity to register such number of
Restricted Securities as each such Holder may request. Each Holder of
Restricted Securities desiring to have such Holder's Restricted Securities
included in such registration statement shall so advise the Company in writing
within ten business days after the date of the Company's notice, setting forth
the amount of such Holder's Restricted Securities for which registration is
requested. If the Company's offering is to be an underwritten offering, the
Company shall, subject to the further provisions of this Agreement, use its
reasonable best efforts to cause the managing underwriter or underwriters of a
proposed underwritten offering to permit the Holders of the Restricted
Securities requested to be included in the registration for such offering to
include such securities in such offering on the same terms and conditions as
any similar securities of the Company included therein. Moreover, if the
registration of which the Company gives notice does involve an underwriting,
the right of each Holder to registration pursuant to this Section 2 shall,
unless the Company otherwise agrees, be conditioned upon such Holder's
participation as a seller in such underwriting and its execution of an
underwriting agreement with the managing underwriter or underwriters selected
by the Company. Notwithstanding the foregoing, if the managing underwriter of
such offering advises the Company that the total number of Restricted
Securities that the Holders and the Tanklage Holders, other than the Company,
intend to include in such offering will in the good faith opinion of such
managing underwriter adversely affect the terms or pricing of such offering,
then the number of Securities to be offered for the account of the Holders and
the Tanklage Holders shall be reduced on a pro rata basis based on the number
of shares of Common Stock and/or Warrants proposed to be sold by the Holders
and the Tanklage Holders to the extent necessary to reduce the total number of
shares of Common Stock and/or Warrants to be included in such offering for the
Holders and the Tanklage Holders other than the Company to the number of shares
of Common Stock and/or Warrants recommended by such managing underwriter (with
each Warrant being treated for such purposes as representing the number of
Warrant Shares for which such Warrant is then exercisable). Any Restricted
Securities excluded from an underwriting shall be withdrawn from registration
and shall not, without the consent of the Company and the manager of the
underwriting, be transferred in a
4
5
public distribution prior to the expiration of 180 days (or such other shorter
period of time as the manager of the underwriting may require) after the
effective date of the registration statement.
3. Registration Procedures. Whenever, pursuant to Section 1 or
2, any of the Holders of Restricted Securities has requested that any
Restricted Securities be registered, the Company will, subject to the
provisions of Section 4, use all reasonable best efforts to effect the
registration and the sale of such Restricted Securities in accordance with the
intended method of disposition thereof as promptly as practicable, and in
connection with any such request, the Company will:
(A) in connection with a request pursuant to Section 1,
prepare and file with the SEC, not later than 60 days after receipt of
a request to file a registration statement with respect to Restricted
Securities, a registration statement on any form for which the Company
then qualifies and which counsel for the Company shall deem
appropriate and which form shall be available for the sale of such
Restricted Securities in accordance with the intended method of
distribution thereof, and use its reasonable best efforts to cause
such registration statement to become effective; provided (i) that,
before filing a registration statement or prospectus or any amendments
or supplements thereto, the Company will furnish to one counsel
selected by the Holders of a majority in number of the Restricted
Securities covered by such registration statement copies of all such
documents proposed to be filed, which documents will be subject to the
review of such counsel, and (ii) that after the filing of the
registration statement, the Company will promptly notify each of the
selling Holders of Restricted Securities of any stop order issued or,
to the knowledge of the Company, threatened by the SEC and take all
reasonable actions to prevent the entry of such stop order or to
remove it if entered;
(B) in connection with a registration pursuant to Section
1, prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for a period of not less than 180 days or such shorter
period as shall terminate when all Restricted Securities covered by
such registration statement have been sold, and comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the
selling Holders thereof set forth in such registration statement;
(C) as soon as reasonably practicable, furnish to each of
the selling Holders, prior to filing a registration statement, copies
of such registration statement as proposed to be filed, and thereafter
furnish to such selling Holders such number of copies of such
registration statement, each amendment and supplement thereto (in each
case, if specified by such Holder, including all exhibits thereto),
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as a selling Holder
may reasonably request in order to facilitate the disposition of the
Restricted Securities owned by such selling Holder;
(D) with reasonable promptness, use its reasonable best
efforts to register or qualify (or cause to be registered or
qualified) such Restricted Securities under such other
5
6
securities or blue sky laws of such jurisdictions within the United
States as any selling Holder (or managing underwriter in the case of
an underwritten offering) reasonably (in light of such selling
Holder's or managing underwriter's intended plan of distribution)
requests and do any and all other acts and things that may be
reasonably necessary or advisable to enable such selling Holder to
consummate the disposition in such jurisdictions of the Restricted
Securities owned by such selling Holder; provided that the Company
will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this subsection (D), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
(E) with reasonable promptness, use reasonable best
efforts to cause the Restricted Securities covered by such
registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Company to enable the selling
Holder or Holders thereof to consummate the disposition of such
Restricted Securities;
(F) promptly notify each selling Holder of such
Restricted Securities, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the
occurrence of any event known to the Company requiring the preparation
of a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Restricted Securities, such
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and promptly
make available to each selling Holder any such supplement or
amendment;
(G) in connection with a request pursuant to Section 1,
enter into an underwriting agreement in customary form, the form and
substance of such underwriting agreement being subject to the
reasonable satisfaction of the Company;
(H) in the event such sale is pursuant to an underwritten
offering, use its reasonable efforts to obtain a comfort letter or
letters from the Company's independent public accountants in customary
form and covering such matters of the type customarily covered by
comfort letters as the managing underwriter reasonably requests;
(I) otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the SEC, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement covering a period of twelve months, beginning
within three months after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act; and
(J) with reasonable promptness, use its reasonable
efforts to cause all such Restricted Securities to be qualified for
trading on the NASDAQ National Market and/or listed on each securities
exchange on which the Common Stock of the Company is then listed,
provided that the applicable qualification or listing requirements are
satisfied.
6
7
Each selling Holder of Restricted Securities agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in subsection (F) hereof, such selling Holder will forthwith
discontinue disposition of Restricted Securities pursuant to the registration
statement covering such Restricted Securities until such selling Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
subsection (F) hereof, and, if so directed by the Company, such selling Holder
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such selling Holder's possession, of the
prospectus covering such Restricted Securities current at the time of receipt
of such notice. In the event the Company shall give any such notice, the
Company shall extend the period during which such registration statement shall
be maintained effective pursuant to this Agreement (including the period
referred to in subsection (B)) by the number of days during the period from and
including the date of the giving of such notice pursuant to subsection (F)
hereof to and including the date when each selling Holder of Restricted
Securities covered by such registration statement shall have received the
copies of the supplemented or amended prospectus contemplated by subsection (F)
hereof. Each selling Holder also agrees to notify the Company if any event
relating to such selling Holder occurs that would require the preparation of a
supplement or amendment to the prospectus so that such prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
4. Conditions and Limitations.
(A) The Company's obligations under Section 1 shall be
subject to the following limitations:
(i) the Company shall not be required to furnish
any audited financial statements other than those audited
statements customarily prepared at the end of its fiscal year,
or to furnish any unaudited financial information with respect
to any period other than its regularly reported interim
quarterly periods unless in the absence of such other
unaudited financial information the registration statement
would contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(ii) A registration statement will not count as a
Demand Registration until it has become effective and remains
continuously effective for the lesser of (i) the period during
which all Restricted Securities registered in the Demand
Registration is sold and (ii) 180 days; provided, however,
that a registration shall not constitute a Demand Registration
if (x) after such Demand Registration has become effective,
such registration or the related offer, sale or distribution
of Restricted Securities thereunder is interfered with by any
stop order, injunction or other order or requirement of the
SEC or other governmental agency or court for any reason not
attributable to the Holders and such interference is not
thereafter eliminated and (y) the conditions to closing
specified in the underwriting agreement, if any, entered into
in connection with such Demand Registration are not satisfied
or waived, other than by reason of a failure by the Holders;
and
7
8
(iii) the Company shall have received the
information and documents specified in Section 5 and each
selling Holder shall have observed or performed its other
covenants and conditions contained in such section.
(B) The Company's obligation under Section 2 shall be
subject to the limitations and conditions specified in such section
and in clauses (i), (ii) and (iv) of subsection (A) of this Section 4,
and to the condition that the Company may at any time terminate its
proposal to register its shares and discontinue its efforts to cause a
registration statement to become or remain effective.
5. Information from and Certain Covenants of Holders of
Restricted Securities. The Holders for whom Restricted Securities are to be
registered pursuant to this Agreement shall provide to the Company such
information regarding the Restricted Securities to be so registered, the Holder
and the intended method of disposition of such Restricted Securities as shall
reasonably be required in connection with the action to be taken. Any Holder
whose Restricted Securities are included in a registration statement pursuant
to this Agreement shall execute all consents, powers of attorney, registration
statements and other documents reasonably required to be signed by it in order
to cause such registration statement to become effective. Each selling Holder
covenants that, in disposing of such Holder's Restricted Securities, such
Holder will comply with Regulation M of the SEC adopted pursuant to the
Exchange Act.
6. Registration Expenses. All Registration Expenses (as defined
herein) will be borne by the Company. Underwriting discounts and commissions
applicable to the sale of Restricted Securities shall be borne by each selling
Holder of the Restricted Securities to which such discount or commission
relates, and each selling Holder shall be responsible for the fees and expenses
of any counsel, accountants or other agents retained by such selling Holder and
all other out-of-pocket expenses incurred by such selling Holder in connection
with any registration under this Agreement other than fees and expenses of
counsel for the Holders which are treated as Registration Expenses as set forth
below.
As used herein, the term "Registration Expenses" means all expenses
incident to the Company's performance of or compliance with this Agreement
(whether or not the registration in connection with which such expenses are
incurred ultimately becomes effective), including without limitation all
registration and filing fees, fees and expenses of compliance with securities
or blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Restricted Securities), rating
agency fees, printing expenses, messenger and delivery expenses incurred by the
Company, internal expenses incurred by the Company (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and expenses incurred in connection with
the listing of the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed, and fees and
disbursements of counsel for the Company (but shall not include the fees or
disbursements of counsel for the Holders) and the Company's independent
certified public accountants (including the expenses of any special audit or
comfort letters required by or incident to such performance), securities acts
liability insurance (if the Company elects to obtain such
8
9
insurance), the reasonable fees and expenses of any special experts retained by
the Company and the fees and expenses of other persons retained by the Company
in connection with such registration.
7. Indemnification; Contribution.
(A) Indemnification by the Company. The Company agrees
to indemnify and hold harmless each selling Holder of Restricted
Securities, its officers, directors and agents and each person, if
any, who controls such selling Holder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and costs of
investigation) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Restricted
Securities or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Restricted Securities, or
arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of, or are
based upon, any such untrue statement or omission or allegation
thereof based upon information furnished in writing to the Company by
such selling Holder or on such selling Holder's behalf expressly for
use therein and provided further, that with respect to any untrue
statement or omission or alleged untrue statement or omission made in
any preliminary prospectus, the indemnity agreement contained in this
subsection shall not apply to the extent that any such loss, claim,
damage, liability or expense results from the fact that a copy of the
final prospectus was not sent or given to the person asserting any
such losses, claims, damages, liabilities or expenses at or prior to
the written confirmation of the sale of the Restricted Securities
concerned to such person if a final prospectus is made available by
the Company on a timely basis. The Company also agrees to include in
any underwriting agreement with any underwriters of the Restricted
Securities provisions indemnifying and providing for contribution to
such underwriters, their officers and directors and each person who
controls such underwriters on substantially the same basis as the
provisions of this Section 8 indemnifying and providing for
contribution to the selling Holders.
(B) Indemnification by Holders of Restricted Securities.
Each selling Holder agrees to indemnify and hold harmless the Company,
its officers, directors and agents and each person, if any, who
controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages, liabilities and expenses (including
reasonable attorneys' fees and costs of investigation) arising out of
or based upon any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus
relating to the Restricted Securities or in any amendment or
supplement thereto or in any preliminary prospectus relating to the
Restricted Securities, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided (i) that such losses, claims, damages,
liabilities or expenses arise out of, or are based upon, any such
untrue statement or omission or allegation thereof based upon
information furnished in writing to the Company by such
9
10
selling Holder or on such selling Holder's behalf expressly for use
therein, (ii) that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this subsection shall
not apply to the extent that any such loss, claim, damage, liability
or expense results from the fact that a copy of the final prospectus
was not sent or given to the person asserting any such losses, claims,
damages, liabilities or expenses at or prior to the written
confirmation of the sale of the Restricted Securities concerned to
such person, and (iii) that no selling Holder shall be liable for any
indemnification under this Section 8 in an aggregate amount that
exceeds the total net proceeds (before deducting expenses) received by
such selling Holder from the offering. Each selling Holder also
agrees to include in any underwriting agreement with underwriters of
the Restricted Securities provisions indemnifying and providing for
contribution to such underwriters, their officers and directors, and
each person who controls such underwriters, on substantially the same
basis as the provisions of this Section 7 indemnifying and providing
for contribution to the Company.
(C) Conduct of Indemnification Proceedings. If any
action or proceeding (including any governmental investigation) shall
be brought or asserted against any indemnified party hereunder in
respect of which indemnity may be sought from an indemnifying party,
the indemnifying party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such indemnified
party, and shall assume the payment of all expenses. Such indemnified
party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party has agreed to pay such fees
and expenses or (ii) the use of counsel chosen by the indemnifying
party to represent the indemnified party would, in the opinion of
counsel representing both parties, present such counsel with a
conflict of interest (in which case the indemnifying party shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and
expenses shall be borne by the indemnifying party and paid as
incurred, upon presentation of reasonable evidence of same; provided
that the indemnifying party shall only be responsible for the fees and
expenses of one counsel for the indemnified party or parties
hereunder. The indemnifying party shall not be liable for any
settlement of any such action or proceeding effected without its
written consent, but if settled with its written consent, or if there
is a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party agrees to indemnify and hold
harmless such indemnified party from and against any loss or liability
(to the extent stated above) by reason of such settlement or judgment.
(D) Contribution. If the indemnification provided for in
this Section 7 is unavailable to the Company or the selling Holders in
respect of any losses, claims, damages, liabilities or judgments
referred to therein, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and judgments, in such proportion as is
appropriate to reflect the relative fault of each such party in
connection with such statements or omissions, as well as any other
relevant equitable considerations. The relative fault of each such
party shall be determined by reference to, among other things,
10
11
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 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 agree that it would not be just
and equitable if contribution pursuant to this Section 7(D) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages,
liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigation or defending any
such action or claim. Notwithstanding the provisions of this Section
7(D), no selling Holder shall be required to contribute any amount in
excess of the amount by which the total price at which the Restricted
Securities of such selling Holder were offered to the public exceeds
the amount of any damages which such selling Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. 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.
8. Amendments. This Agreement may be amended or modified upon
the written consent thereto of the Company and the Holders of not less than
66-2/3% of the Restricted Securities.
9. Assignments. This Agreement shall be binding on and inure to
the benefit of the respective successors and assigns of the parties hereto and
shall be expressly assignable by the Holders with respect to their respective
rights created under this Agreement, provided a Holder may only assign the
rights created under this Agreement in conjunction with the transfer of a
majority of such Holder's Restricted Securities and the rights of the
transferor under this Agreement shall terminate upon such assignment.
10. Entire Agreement; Governing Law. This Agreement constitutes
the entire agreement of the parties relating to the subject matter hereof and
all prior or contemporaneous written or oral agreements are merged herein.
This Agreement shall be governed by and construed in accordance with the
domestic laws of the State of Texas without giving effect to any choice or
conflict of law provision or rule (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
11. Notices. Any and all notices or other communications required
or permitted under this Agreement shall be given in writing and delivered in
person or sent by United States certified or registered mail, postage prepaid,
return receipt requested, or by overnight express mail, or by telex, facsimile
or telecopy to the address of such party set forth in the Contribution and
Exchange Agreement or the Warrant Agreement. Any such notice shall be
effective upon receipt or three days
11
12
after placed in the mail, whichever is earlier. Any party may, by notice so
delivered, change its address for notice purposes hereunder.
12. Severability. If any provision of this Agreement is invalid,
illegal or unenforceable, the balance of this Agreement shall remain in full
force and effect and this Agreement shall be construed in all respects as if
such invalid, illegal or unenforceable provision were omitted. If any
provision is inapplicable to any person or circumstance, it shall,
nevertheless, remain applicable to all other persons and circumstances.
13. Construction; Counterparts. Any section headings in this
Agreement are for convenience of reference only, and shall be given no effect
in the construction or interpretation of this Agreement or any provisions
thereof. No provision of this Agreement will be interpreted in favor of, or
against, any party by reason of the extent to which any such party or its
counsel participated in the drafting thereof or by reason of the extent to
which any such provision is inconsistent with any prior draft hereof or
thereof. This Agreement shall be deemed the mutual form of the parties hereto.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, and which together shall constitute but one and the same
instrument.
14. Termination. This Agreement shall terminate and be of no
further force or effect if the Initial Public Offering is not consummated.
12
13
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement on the date first written above.
AUTHENTIC SPECIALTY FOODS, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
TSG2 L.P.
By:
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SHANSBY PARTNERS, L.L.C.
By:
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
----------------------------------------
Xxxxx X. Xxxxxx
13
