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EXHIBIT 10.9
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
September ___, 1997, is between AUTHENTIC SPECIALTY FOODS, INC., a Texas
corporation (the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("Holder").
W I T N E S S E T H:
WHEREAS, the Company, Holder, TSG2 L.P., TSG2 Management, L.L.C. and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ have entered into a Contribution and Exchange Agreement dated
June 20, 1997 (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 parties 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 parties to consummate the transactions
contemplated by the Contribution and Exchange Agreement; 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
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.
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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. Holder agrees 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, Holder agrees, 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 shares of
Restricted Stock (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 Stock" shall mean all
shares of Common Stock issued to Holder pursuant to the Contribution
and Exchange Agreement and owned by any Holder 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. As to
any particular shares of Restricted Stock, such securities shall cease
to be Restricted Stock 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 (each Holder and any permitted assignee of such Holder's
rights and duties hereunder are referred to herein as the "Holders" or
individually as a "Holder"). 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 Stock pursuant to this Section 1 (a
"Demand Registration"), provided that the Minimum Number (as
hereinafter defined) of shares of Restricted Stock shall be registered
in such offering. The term "Minimum Number" shall mean the lesser of
(i) 50% of the initial number of shares of Restricted Stock issued
pursuant to the Contribution and Exchange Agreement (as adjusted for
any stock splits, stock combinations, stock dividends or
recapitalizations that are effected after the Initial Public Offering)
or (ii) 100% of the number of shares of Restricted Stock 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 shares of Restricted Stock proposed to be sold
and will also specify the intended method of
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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 Stock and include, subject to the provisions of
Section 1(B) hereof, in such registration all Restricted Stock 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 shares of Restricted Stock 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 shares 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 Stock that has requested
registration, and the shares 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 and any "Holder," (as defined in the
Registration Rights Agreement of even date herewith by and among the
Company and Shansby Partners, L.L.C., TSG2 L.P. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(the "Shansby Registration Rights Agreement") and referred to herein
as a "Shansby Holder") that have elected to participate in such
registration. The term "Warrant" and "Warrant Shares" shall have the
respective meanings ascribed to such terms in the Shansby Registration
Rights Agreement. For purposes of this paragraph, each Warrant shall
be treated treated as representing the number of Warrant Shares for
which such Warrant is then exercisable.
(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 shares of Restricted Stock 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
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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 Stock 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
shares of Restricted Stock as each such Holder may request. Each Holder of
Restricted Stock desiring to have such Holder's Restricted Stock 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 Stock 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 Stock 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 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. Notwithstanding the
foregoing, if the managing underwriter of such offering advises the Company
that the total number of securities that the Holders and the Shansby 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 Shansby 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 Shansby 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 Shansby 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 Stock 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 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 Stock has requested that any Restricted
Stock be registered, the Company will, subject
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to the provisions of Section 4, use all reasonable best efforts to effect the
registration and the sale of such Restricted Stock 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
Stock, 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 Stock 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 shares of the Restricted Stock 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
Stock 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 shares of Restricted Stock 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 Stock 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 Stock under such other 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
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Restricted Stock 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 Stock 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 Stock;
(F) promptly notify each selling Holder of such
Restricted Stock, 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 Stock, 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; provided, however, that the
Holders will not be required to make any representation or warranty
with respect to the Company in connection with or as a part of such
underwriting agreement;
(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 Stock 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.
Each selling Holder of Restricted Stock 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 Stock pursuant to the registration
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statement covering such Restricted Stock 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 Stock 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 Stock
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 Stock 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 Stock 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
(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.
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(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 (iii) 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 Stock. The Holders for whom Restricted Stock is to be registered
pursuant to this Agreement shall provide to the Company such information
regarding the Restricted Stock to be so registered, the Holder and the intended
method of disposition of such Restricted Stock as shall reasonably be required
in connection with the action to be taken. Any Holder whose Restricted Stock
is 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 shares, 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 Stock shall be borne by each selling
Holder of the Restricted Stock 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 Stock), 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 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.
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7. Indemnification; Contribution.
(A) Indemnification by the Company. The Company agrees
to indemnify and hold harmless each selling Holder of Restricted
Stock, 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 Stock or in any amendment or
supplement thereto or in any preliminary prospectus relating to the
Restricted Stock, 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 Stock 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 Stock
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 Stock. 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 Stock or in any amendment or supplement
thereto or in any preliminary prospectus relating to the Restricted
Stock, 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 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
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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 Stock 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 Stock 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, 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'
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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
Stock 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 Stock.
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 Stock 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. Any such notice shall be effective upon receipt or three
days after placed in the mail, whichever is earlier. Any party may, by notice
so delivered, change its address for notice purposes hereunder.
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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 be terminate and be of no
further force or effect if the Contribution and Exchange Agreement is
terminated in accordance with its terms without the consummation of the
transactions contemplated thereby.
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IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement on the date first written above.
_________________________________
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AUTHENTIC SPECIALTY FOODS, INC.
By:______________________________
Name:__________________________
Title:_________________________
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