REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made as of June 20,
1997 between SUNBELT NURSERY GROUP, INC., a Delaware corporation (the
"Company"), and HEALTHY AMERICAN PRODUCTS, INC., a Minnesota corporation (the
"Holder").
RECITALS
WHEREAS, pursuant to the terms of a Stock Purchase Agreement dated as of
June 20, 1997 (the "Stock Purchase Agreement"), by and among the Holder and
Xxxxxxx Xxxxx, the Holder has agreed to purchase 1,000,000 shares of the
Company's Common Stock, $.01 par value per share (the "Shares"), from Xx. Xxxxx;
and
WHEREAS, in connection therewith the Company has agreed to register the
Shares on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein set forth, it is hereby agreed between the
Company and the Holder as follows:
ARTICLE I
REGISTRATION RIGHTS
Section 1.1. PARTICIPATION IN REGISTRATION. (a) If, at any time or from
time to time after June ____, 1997, the Company shall determine to register any
of its securities, either for its own account or the account of another security
holder or holders, other than (i) a registration relating solely to employee
benefit plans on Form S-8 or similar form which may be promulgated in the
future, or (ii) a registration on Form S-4 or similar form which may be
promulgated in the future relating to an SEC Rule 145 transaction, the Company
will:
(i) promptly give to the Holder written notice thereof (which 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); and
(ii) include in such registration (and any related qualification under blue
sky laws or other compliance), and in any underwriting involved therein, all
Shares specified in a written request or requests, made within 30 days after
receipt of such written notice from the Company, by the Holder.
(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Holder as a part of the written notice given pursuant to Section
1.1(a)(i). In such event, the right of the Holder to
registration pursuant to Section 1.1 shall be conditioned upon the Holder's
agreeing to participate in such underwriting and in the inclusion of such the
Holder's Shares in the underwriting to the extent provided herein. The Holder
shall (together with the Company and any other holder distributing securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company or by any other holder exercising demand registration rights.
Notwithstanding any other provision of this Section 1.1, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the underwriter may limit the number of shares to be
included in the registration and underwritten public offering on a pro rata
basis based on the respective amounts of Shares owned by the Holder and the
securities of the Company owned by each other holder seeking to distribute
securities through the public offering; PROVIDED, HOWEVER, that the Company
shall not exclude more than that number of shares which, in the reasonable
opinion of such underwriter, must reasonably be excluded in light of such
marketing factors. The Company shall so advise the Holder and any other holder
distributing securities through such underwriting, and the number of Shares and
other securities that may be included in the registration shall be allocated
among all holders thereof (other than holders who are exercising demand
registration rights) in proportion, as nearly as practicable, to the respective
amounts of securities entitled to inclusion in such registration held by the
Holder at the time of filing the registration statement. If the Holder
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Company and the underwriter, which notice, to
be effective, must be received by the Company at least two business days before
the anticipated effective date of the registration statement. The Company may
at any time withdraw or abandon any registration statement which triggers the
provisions of this Section 1.1 without any liability to the Holder. Any
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
Section 1.2. DEMAND REGISTRATION RIGHTS. On and after the Date hereof and
for a period of seven (7) years hereafter, the Holder, by written notice, may
demand that the Company file a registration statement under the Securities Act
to permit resale of these Shares. Any such registration shall be subject to the
following limitations:
(a) The Company shall not be required to effect more than two (2)
registrations pursuant to this Section 1.2;
(b) The Company shall not be required to prepare or effect any
registration pursuant to this Section 1.2 unless the Shares to be sold by the
Holder represent not less than 40% of the total Shares; and
(c) If the Company shall furnish to the Holder a certificate, signed by
the Company's president or chief executive officer, stating that (i) the Company
is conducting or is about to conduct an offering of its securities and is
advised by its managing underwriter that such offering might be affected
adversely by the registration on behalf of the Holder or (ii) in the good faith
judgment of the Board of Directors of the Company the offering would interfere
with a pending or contemplated financing, merger, sale of assets,
recapitalization or other similar corporate action
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of the Company if such registration statement would be filed on or before the
date filing would be required and it is therefore essential to defer the filing
of such registration statement, the Company shall have the right, exercisable
only once during any period of twelve consecutive months, to defer filing the
registration statement for a period of not more than 120 days; provided,
however, that the time period set forth in Section 1.2 with respect to the
exercise by the Holder of its Registration Rights shall be extended by the
number of days by which any registration is deferred under the terms of this
paragraph (c).
Section 1.3. EXPENSE OF REGISTRATION. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
Article I shall be borne by the Company. All Selling Expenses relating to
securities registered by the Holder shall be borne by the Holder.
Section 1.4. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Article I,
the Company will keep the Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense, the Company will in good faith use its best efforts to:
(a) Keep such registration, qualification or compliance effective until
the Holder has completed the distribution described in the registration
statement relating thereto;
(b) Furnish such number of prospectuses and other documents incident
thereto as Holder from time to time may reasonably request, but only during the
period that the Company would be required to keep the registration effective;
(c) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(d) Register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Holder, provided that the Company shall not
be required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions;
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. The Holder shall also
enter into and perform its obligations under such agreement;
(f) Notify the Holder at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement
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of material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing; and
(g) Provide the Holder with an opinion of Company's counsel and a letter
from the Company's independent auditors in the form customary to those delivered
to an underwriter of a registered public offering and satisfactory in form and
substance to Holder's counsel.
Notwithstanding any provision of this Agreement to the contrary, the Company
shall have no liability to Holder for failure to comply with any registration
procedure set forth in this Section 1.4 provided Company has used its best
efforts in good faith to perform its obligation under this Section 1.4
Section 1.5. INDEMNIFICATION. (a) The Company will indemnify the Holder
and its officers, directors, shareholders and agents and each underwriter, if
any, and each person who controls any underwriter within the meaning of Section
15 of the Securities Act, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will pay to the
Holder, its officers, directors, shareholders and agents, each such underwriter
and each person who controls any such underwriter, as incurred, any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder or underwriter and stated
to be specifically for use therein.
(b) The Holder will, if Shares held by such Holder are included in the
securities as to which such registration, qualification or compliance is being
effected, indemnify the Company, each of its directors and officers, each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act, and each other holders of
securities covered by the registration statement, each of its officers,
directors or partners and each person controlling such holder within the meaning
of Section 15 of the Securities Act, against all expenses, claims, losses,
damages and liabilities (or actions in respect thereof) including any of the
foregoing incurred in settlement of any litigation commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) by
the Holder of a material fact contained in any
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such registration statement, prospectus, offering circular or other document, or
any amendment or supplement thereto, incident to any such registration,
qualification or compliance or based on any omission (or alleged omission) by
the Holder to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances in
which they were made, not misleading, or any violation by the Holder of any rule
or regulation promulgated under the Securities Act applicable solely to the
Holder (which is not otherwise applicable to or violated by the Company) and
relating to action or inaction required solely of the Holder (and not relating
to or required of the Company) in connection with such registration,
qualification or compliance, and will pay to the Company, any such holder, such
directors, officers, partners, persons, underwriters or control persons, as
incurred, any legal or any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document or any amendment or supplement thereto in reliance upon and in
conformity with written information relating to the Holder which shall have been
furnished to the Company by an instrument duly executed by the Holder and stated
to be specifically for use therein; provided, however, that the obligations of
the Holder hereunder shall be limited to an amount equal to the net proceeds to
the Holder of Shares sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 1.5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at its own
expense, and PROVIDED, FURTHER, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 1.5 unless and then only to the extent that such
failure resulted in actual detriment to the Indemnifying Party. Notwithstanding
the above, however, if representation of one or more Indemnified Parties by the
counsel retained by the Indemnifying Party would be inappropriate due to
conflicting interests between such Indemnified Parties (the "Conflicting
Indemnified Parties") and any other party represented by such counsel in such
proceeding, then such Conflicting Indemnified Parties shall have the right to
retain separate counsel, chosen by the holder of a majority of the shares
included in the registration, at the expense of the Indemnifying Party. No
Indemnifying Party, (i) in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation, or (ii)
shall be liable for amounts paid in any settlement if such settlement is
effected without the consent of the Indemnifying Party.
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Section 1.6. INFORMATION BY HOLDER. The Holder shall furnish to the
Company such information regarding the Holder and the distribution proposed by
the Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Article I.
Section 1.7. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of restricted securities to the public without
registration, the Company agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the date hereof;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934, as amended (at any time it is subject to such reporting
requirements);and
(c) So long as the Holder owns any restricted securities, furnish to the
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 and of the
Securities Act and the Securities Exchange Act of 1934 and a copy of the most
recent annual or quarterly report of the Company.
Section 1.8. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted under Article I may be assigned by the
Holder, provided that written notice is given to the Company in each instance.
No transferee, assignee or other person purporting to exercise rights under this
Article I who is not a signatory to this Agreement shall be entitled to do so
unless and until such person agrees to be bound by the terms of this Article I.
Section 1.9. "MARKET STAND OFF" AGREEMENT. The Holder hereby agrees that
it shall not, to the extent required by the Company and an underwriter of Common
Stock (or other securities) of the Company, sell or otherwise transfer or
dispose (other than to donees who agree to be similarly bound) of any Shares
during the ninety (90) day period following the effective date of a registration
statement of the Company filed under the Securities Act; PROVIDED, HOWEVER, that
such agreement shall not apply to Shares being registered and sold pursuant to
such registration statement.
In order to enforce the foregoing covenant, the Company may impose stop-
transfer instructions with respect to the Shares of the Holder until the end of
such ninety (90) day period.
Section 1.10. PLAN OF DISTRIBUTION. To preserve an orderly market in any
publicly traded securities of the Company, in the event that the aggregate
number of Shares to be registered pursuant to a registration statement under
Section 1.2 exceeds 5% of the Company's outstanding securities, the Holder will
provide advance notice to the Company of its intended marketing and distribution
arrangements in connection with the registration, including information with
respect
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to any investment banking firm or broker-dealer retained by the Holder to manage
the distribution.
ARTICLE II
MISCELLANEOUS
Section 2.1. GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of Minnesota.
Section 2.2. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the parties hereto. Except as otherwise
provided herein, no assignment of this Agreement may be made by either party at
any time, without the other party's prior written consent.
Section 2.3. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subjects hereof. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
Section 2.4. NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger
addressed (a) if to the Company, at 000 Xxxxxxxx Xxxx, Xxxx Xxxxx, XX 00000, or
at such other address as the Company shall have furnished to the Holder in
writing and (b) if to the Holder, at such address as is set forth on the
signature page hereto, or at such other address as the Holder shall have
furnished to the Company in writing. Each such notice or other communication
shall for all purposes of this Agreement be treated as effective or having been
given when delivered if delivered personally, or, if sent by mail, upon its
receipt.
Section 2.5. DELAYS OR OMISSIONS. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to the Company
or the Holder upon any breach or default of any party under this Agreement shall
impair any such right, power or remedy of the Company or the Holder nor shall it
be construed to be a waiver of any such breach or default, or any acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of the Company or the
Holder of any breach or default under this Agreement, or any waiver on the part
of any such party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to the Company or the Holder, shall be cumulative and not alternative.
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Section 2.6. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which may be executed by only one of the parties
hereto, each of which shall be enforceable against the party actually executing
such counterpart, and all of which together shall constitute one instrument.
Section 2.7. SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
Section 2.8. TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 2.9. DEFINITIONS. As used in this Agreement, the following terms
have the meanings specified or referred to in this Section 2.9:
"AGREEMENT" has the meaning specified in the first paragraph of this
Agreement.
"COMMISSION" or "SEC" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"COMPANY" has the meaning specified in the first paragraph of this
Agreement.
"FORM S-4 and FORM S-8" shall mean such forms, as currently identified, for
registration of securities under the Securities Act, or any substantially
similar, equivalent or successor forms under the Securities Act.
"HOLDER" shall mean the person named on the signature page hereof and any
permitted transferee of registration rights.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in
complying with Article I hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
and the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale and all fees and disbursements of counsel for
any holder.
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IN WITNESS WHEREOF, the Company and the Holder have each caused the
foregoing Agreement to be executed by one of its duly authorized officers as of
the date first above written.
SUNBELT NURSERY GROUP, INC.
By /s/Xxxxxxx X. Xxxxx
-----------------------------
Its Chairman and CEO
-----------------------------
HEALTHY AMERICAN PRODUCTS, INC.
By /s/Xxxxxx X. Xxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxx, CEO
Address: c/o Burwell Enterprises
0000 Xxxxxx Xxxxxx Xxxxx,
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
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