REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of the
___ day of ____________, 2000 by and between XXXXX BROTHERS, INC., a Delaware
corporation (the "Company"), and Boulder Potato Company, Inc., a
________________ corporation ("Boulder").
WHEREAS, the Company and Boulder are parties to that certain Agreement for
Purchase and Sale of Assets, dated as of _______________, 2000 (the "Purchase
and Sale Agreement"), in connection with the purchase by the Company from
Boulder of all of the assets and certain liabilities of Boulder. Pursuant to the
Purchase and Sale Agreement, the Company is required to provide Boulder with
certain registration rights with respect to certain shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), issuable to Boulder
pursuant to the Purchase and Sale Agreement; and
WHEREAS, it is a condition precedent to the closing of the transactions
contemplated by the Purchase and Sale Agreement that the Company enter into this
Agreement with Boulder.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings:
(a) The term "1933 Act" means the Securities Act of 1933, as amended.
(b) The term "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(c) The term "Holder" means Boulder and any other person or entity
holding Registrable Securities (as defined below) to whom the registration
rights granted in this Agreement have been transferred pursuant to Section 9
hereof.
(d) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such registration statement.
(e) The term "Registrable Securities" means (i) the Closing Stock (as
such term is defined in the Purchase and Sale Agreement), (ii) the Additional
Stock (as such term is defined in the Purchase and Sale Agreement), if any,
issued by the Company to Boulder pursuant to the Purchase and Sale Agreement and
(iii) any shares of Common Stock issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of
the Closing Stock or Additional Stock, but excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which such person's
rights under this Agreement are not assigned; PROVIDED, HOWEVER, that any such
securities shall cease to be Registrable Securities when (i) one or more
registration statements with respect to the sale of such securities shall have
become effective under the 1933 Act and all such securities shall have been
disposed of in accordance with the plan of distribution set forth therein; (ii)
such securities shall have been disposed of in accordance with SEC (as defined
below) Rule 144 promulgated under the 1933 Act, or any successor rule or
regulation thereto; or (iii) such securities may otherwise be sold to the public
in a transaction not requiring registration under the 1933 Act.
1
(f) The number of shares of "Registrable Securities Then Outstanding"
shall be equal to the sum of the number of shares of Common Stock outstanding
which are Registrable Securities.
(g) The term "Registration Expenses" means all registration,
qualification and filing fees, printing expenses, escrow fees and blue sky fees,
fees and disbursements of counsel for the Company and of the Company's
independent certified public accountants, in each case incident to or required
by the registration under this Agreement, and any other fees and expenses of the
Company in connection with a registration under this Agreement which are not
Selling Expenses.
(h) The term "SEC" means the Securities and Exchange Commission
(i) The term "Selling Expenses" means all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders, and any other fees and expenses incurred by Holders
(including legal fees and expenses) in connection with a registration under this
Agreement.
(j) All other capitalized terms used in this Section that are not
defined herein shall have the meaning otherwise given in the Purchase and Sale
Agreement.
2. PIGGYBACK REGISTRATION RIGHTS.
(a) If, at any time or from time to time on or after the date of the
one year anniversary of this Agreement (the "Anniversary Date"), the Company
shall determine to register any of its Common Stock, either for its own account
or for the account of a security holder or holders pursuant to demand
registration rights which are exercised on or after the Anniversary Date, other
than pursuant to a Registration Statement on Form S-4 or Form S-8, the Company
will (i) promptly give each Holder written notice thereof, and (ii) include in
such registration (and any related qualification under blue sky or other state
securities laws), and in any underwriting involved therein, all of the
Registrable Securities Then Outstanding specified in a written request or
requests made by any Holder within fifteen (15) days after receipt of such
written notice from the Company.
(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 Holders as part of the written notice given pursuant to Section 2(a).
In such event, the right of any Holder to registration shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of
Registrable Securities owned by the Holder in the underwriting to the extent
provided under this Section 2. All Holders proposing to distribute their
Registrable Securities through such underwriting shall (together with the
Company and any other holders of securities of the Company distributing their
securities through such underwriting) enter into an underwriting agreement with
the managing or lead managing underwriter selected by the Company in the form
customarily used by such underwriter with such changes thereto as shall be
acceptable to the Company. Notwithstanding any other provision of this Section
2, if the managing or lead managing underwriter determines that market factors
require that the number of Registrable Securities and other securities requested
to be included in the registration be limited, the managing or lead managing
underwriter may reduce the number of Registrable Securities and securities of
any other holder of securities to be included in the registration. If the
registration includes an underwritten primary registration on behalf of the
Company, the reduction shall be taken (i) first from and to the extent of the
securities requested to be included in such registration by the Holders and the
holders of any other securities PRO RATA according to the number of securities
requested by the Holders and such holders to be included in the registration,
and (ii) thereafter from the securities to be registered on behalf of the
Company. If the registration consists only of an underwritten secondary
registration on behalf of holders of securities of the Company, the reduction
shall be taken (i) first from and to the extent of the securities requested to
be included in the registration by the Holders and any other holders of
2
securities included in the registration other than pursuant to demand
registration rights PRO RATA according to the number of securities requested by
the Holders and such holders to be included in the registration and (ii)
thereafter from securities, if any, to be registered on behalf of holders of
securities included in the registration pursuant to demand registration rights.
The Company shall advise all Holders and other holders participating in such
underwriting as to any such limitation and the number of shares that may be
included in the registration and underwriting. If any Holder disapproves of the
terms of any such underwriting, such Holder may elect to withdraw therefrom by
written notice to the Company and the managing or lead underwriter. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
(c) Notwithstanding any other provision of this Agreement, the Company
may withdraw a registration for which registration rights have been exercised at
any time prior to the time it becomes effective.
3. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with a registration pursuant to this Agreement shall be borne by the
Company. All Selling Expenses relating to the Registrable Securities registered
on behalf of the Holders shall be borne by the Holders of such Registrable
Securities PRO RATA based upon the total number of Registrable Securities
included in the registration or, if such Selling Expenses are specifically
allocable to Registrable Securities held by specific Holders, by such Holders to
the extent related to the sale of such Registrable Securities.
4. REGISTRATION PROCEDURES.
(a) In connection with the registration of Registrable Securities
required pursuant to this Agreement, the Company shall as expeditiously as is
reasonable:
(i) Prepare and file with the SEC on any appropriate form a
registration statement with respect to such Registrable Securities and use
reasonable efforts to cause such registration statement to become effective.
(ii) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the 1933
Act with respect to the disposition of all Registrable Securities and other
securities covered by such registration statement for a period of 180 days or
until the Holder or Holders have completed the distribution described in such
registration statement, whichever occurs first.
(iii) Furnish to each seller of such Registrable Securities such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (at least one of which shall include all
exhibits), such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any summary prospectus), in
conformity with the requirements of the Act, such documents incorporated by
reference in such registration statement or prospectus, and such other documents
as such seller may reasonably request in order to facilitate the sale or
disposition of such Registrable Securities.
(iv) Use reasonable efforts to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities or "blue sky" laws of such jurisdictions
as the underwriter shall reasonably request, and do any and all other acts and
things as may be reasonably necessary to consummate the disposition in such
jurisdictions of the Registrable Securities covered by such registration
statement, except that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified, or to subject itself to taxation in respect of
doing business in any such jurisdiction, or to consent to general service of
process in any such jurisdiction.
3
(v) Immediately notify each seller of Registrable Securities, at
any time when a prospectus relating thereto is required to be delivered under
the 1933 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 of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing or if it is necessary, in the opinion
of counsel to the Company, to amend or supplement such prospectus to comply with
law, and at the request of any such seller prepare and furnish to any such
seller a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include 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 in
light of the circumstances then existing and shall otherwise comply in all
material respects with law and so that such prospectus, as amended or
supplemented, will comply with law.
(vi) Otherwise use reasonable 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 the
period of at least twelve (12) months, beginning with the first month of the
first fiscal quarter after the effective date of such registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
1933 Act.
(vii) Use reasonable efforts to list such securities on each
securities exchange or over-the-counter market, if any, on which shares of
Common Stock are then listed.
(viii) Use reasonable efforts to provide a transfer agent and
registrar for such Registrable Securities not later than the effective date of
such registration statement.
(ix) Issue to any underwriter to which any holder of Registrable
Securities may sell such Registrable Securities in connection with any such
registration (and to any direct or indirect transferee of any such underwriter)
certificates evidencing shares of Common Stock.
(b) If requested by the managing or lead managing underwriter for any
underwritten offering of Registrable Securities on behalf of a Holder or Holders
of Registrable Securities, the Company will enter into an underwriting agreement
with the underwriters of such offering, such agreement to contain such
representations and warranties by the Company and each such Holder and such
other terms and conditions as are contained in underwriting agreements
customarily used by such managing or lead managing underwriter with such changes
as shall be acceptable to the Company, including, without limitation, provisions
relating to indemnification or contribution in lieu thereof.
(c) The Holder or Holders of Registrable Securities included in any
registration shall furnish to the Company such information regarding such Holder
or Holders, the Registrable Securities held by them and the distribution
proposed by such Holder or Holders as the Company may from time to time
reasonably request and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
(d) The Holder or Holders of Registrable Securities included in any
registration shall, upon request by the Company and the managing or lead
managing underwriter, execute and deliver custodian agreements and powers of
attorney in form and substance reasonably satisfactory to the Company and such
Holder or Holders and as shall be reasonably necessary to consummate the
offering.
5. INDEMNIFICATION.
(a) The Company will indemnify each Holder with respect to which
registration has been effected pursuant to this Agreement, each of its officers
and directors, if any, and each underwriter, if any, and each person who
controls the Holder or any such underwriter within the meaning of Section 15 of
4
the 1933 Act, against any and all losses, claims, damages, liabilities or
expenses (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 or prospectus, 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 the 1933 Act or any rule or
regulation promulgated under the 1933 Act applicable to the Company in
connection with any such registration, and the Company will reimburse each such
Holder, each such underwriter and each person who controls any such underwriter,
for any legal and other expenses reasonably incurred, as such expenses are
incurred, in connection with investigating, preparing or defending any such
claims, loss, damage, liability or action; PROVIDED, HOWEVER, 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) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration 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 1933 Act and each other such Holder against any and all
losses, claims, damages, liabilities and expenses (or actions in respect
thereof), arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement or
prospectus, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statement therein,
in the light of the circumstances under which they were made, not misleading,
and will reimburse the Company, such Holders, underwriters or control persons
for any legal or any other expenses reasonably incurred, as such expenses are
incurred, in connection with investigating 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 or prospectus in reliance upon
and in conformity with written information furnished to the Company by such
Holder. Notwithstanding the foregoing, the liability of each Holder under this
Section 5 shall be limited to an amount equal to the aggregate proceeds received
by such Holder from the sale of Registrable Securities hereunder, unless such
liability arises out of or is based on willful conduct by such Holder.
(c) Each party entitled to indemnification under this Section 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 claims or any
litigation resulting therefrom; PROVIDED, HOWEVER, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (which approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such Indemnified Party's expense; PROVIDED, HOWEVER, that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. Notwithstanding the foregoing, the Indemnifying Party shall
not be entitled to assume the defense for matters as to which there is, in the
opinion of counsel to the Indemnifying Party, a conflict of interest or separate
and different defenses. No Indemnifying Party, 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 of such claim or
litigation. Each Indemnified Party shall furnish such information regarding
5
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and the litigation resulting therefrom.
6. CONTRIBUTION.
(a) If the indemnification provided for in Section 5 hereof is
unavailable to the Indemnified Parties in respect of any losses, claims,
damages, liabilities or expenses (or actions in respect thereof) 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 or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and the
Indemnified Party on the other in connection with the statement or omission
which resulted in such losses, claims, damages, liabilities or expenses (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue statement (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 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
each Holder agree that it would not be just and equitable if contribution
pursuant to this Section 6 were determined by PRO RATA allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to above in this Section shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
(b) Notwithstanding anything to the contrary contained herein, the
obligation of each Holder to contribute pursuant to this Section 6 is several
and not joint and no selling Holder shall be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
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 statement (or alleged untrue statement) or omission (or
alleged omission).
(c) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
7. 1934 ACT REGISTRATION. The Company covenants and agrees that until such
time as there shall be no Registrable Securities outstanding:
(a) It will, if required by law, maintain an effective registration
statement (containing such information and documents as the SEC shall specify)
with respect to the Common Stock under Section 12(g) of the 1934 Act and will
file in a timely manner such information, documents and reports as the SEC may
require or prescribe for companies whose stock has been registered pursuant to
said Section 12(g).
(b) It will, if a registration statement with respect to the Common
Stock under Section 12(b) or Section 12(g) of the 1934 Act is effective, make
whatever filings with the SEC or otherwise make generally available to the
public such financial and other information as may be necessary in order to
enable the Holders to sell shares of Common Stock pursuant to the provisions of
SEC Rule 144 promulgated under the 1933 Act, or any successor rule or regulation
thereto or any statute hereafter adopted to replace or to establish the
exemption that is now covered by said Rule 144 ("Rule 144").
6
The Company represents and warrants that such registration statement or any
information, documents or report filed with the SEC in connection therewith or
any information so made public shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein not misleading. The
Company agrees to indemnify and hold harmless (or to the extent the same is not
enforceable, make contribution to the Holders, each of its officers and
directors, from and against any and all losses, claims, damages, liabilities or
expenses (or actions in respect thereof) arising out of or resulting from any
breach of the foregoing representation or warranty, all on terms and conditions
comparable to those set forth in Section 5; PROVIDED, HOWEVER, that the Company
shall be given written notice and an opportunity to assume on terms and
conditions comparable to those set forth in Section 5 the defense thereof.
8. DELAY OF REGISTRATION. No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
9. TRANSFER OF REGISTRATION RIGHTS. The registration rights of any Holder
(and of any permitted transferee of any Holder or its permitted transferee)
under this Agreement with respect to any shares of Registrable Securities may be
transferred to any transferee who acquires (otherwise than in a registered
public offering) such shares of Registrable Securities; PROVIDED, HOWEVER, that
the Company is given written notice by the Holder at the time of such transfer
stating the name and address of the transferee and identifying the securities
with respect to which the rights under this Agreement are being assigned.
10. GOVERNING LAW. This Agreement shall be governed by and construed under
the internal laws of the State of Arizona without regard to conflicts of law.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12. NOTICES. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
on the date of service if served personally on the party to whom notice is to be
given, or on the fifth day after the date of mailing if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid, and properly addressed as follows: if to the Holder, at its
address as shown in the Company records; and if to the Company, at its principal
office. Any party may change its address for purposes of this paragraph by
giving the other party written notice of the new address in the manner set forth
above.
13. ENTIRE AGREEMENT. This Agreement states the entire agreement of the
parties concerning the subject matter hereof, and supersedes all prior
agreements, written or oral, between them concerning such subject matter.
14. AMENDMENTS; WAIVERS. This Agreement may be amended, and compliance with
any provision of this greement may be omitted or waived, only by the written
agreement of the Holders of at least a majority in voting power of the
then-outstanding Registrable Securities to be bound thereby.
15. HEADINGS. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.
7
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
XXXXX BROTHERS, INC.
By:
------------------------------------
Name:
Title:
BOULDER POTATO COMPANY, INC.
By:
------------------------------------
Name:
Title:
8
