EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement (the "Agreement") is dated as of
October 30, 2007, by and between Smoky Market Foods, Inc., a corporation
organized under the laws of State of Nevada, with its principal executive office
at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company"), and Dutchess
Private Equities Fund, Ltd., a Cayman Islands exempted company, with its
principal office at ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Holder").
WHEREAs, in connection with the Investment Agreement by and between the
Company and the Investor of this date (the "Investment Agreement"), the Company
has agreed to issue and sell to the Investor an indeterminate number of shares
of the Company's Common Stock, $.001 par value per share (the "Common Stock"),
to be purchased pursuant to the terms and subject to the conditions set forth in
the Investment Agreement; and
WHEREAS, to induce the Investor to execute and deliver the Investment
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws, with respect to the shares of Common Stock
issuable pursuant to the Investment Agreement.
NOW THEREFORE, IN CONSIDERATION OF THE FOREGOING PROMISES AND THE MUTUAL
COVENANTS CONTAINED HEREINAFTER AND OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE COMPANY AND THE
INVESTOR HEREBY AGREE AS FOLLOWS:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"Execution Date" means the date of this Agreement set forth above.
"Investor" means Dutchess Private Equities Fund, Ltd., a Cayman Islands
exempted company.
"Person" means a corporation, a limited liability company, an association,
a partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.
"Potential Material Event" means any of the following: (I) the possession
by the Company of material information not ripe for disclosure in the
Registration Statement, which shall be evidenced by determinations in good faith
by the Board of Directors of the Company that disclosure of such information in
the Registration Statement would be detrimental to the business and affairs of
the Company, or (II) any material engagement or activity by the Company which
would, in the good faith determination of the Board of Directors of the Company,
be adversely affected by disclosure in the Registration Statement at such time,
which determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the Registration Statement would be
materially misleading absent the inclusion of such information.
"Principal Market" shall mean The American Stock Exchange, National
Association of Securities Dealer's, Inc., Over-the-Counter electronic bulletin
board, the Nasdaq Global Market or The Nasdaq Capital Market whichever is the
principal market on which the Common Stock of the Company is listed.
"Register," "Registered," and "Registration" refer to the Registration
effected by preparing and filing one (1) or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such Registration
Statement(s) by the United States Securities and Exchange Commission (the
"SEC").
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"Registrable Securities" means (I) the shares of Common Stock issued or
issuable pursuant to the Investment Agreement, and (II) any shares of capital
stock issued or issuable with respect to such shares of Common Stock, if any, as
a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, which have not been (X) included in the Registration
Statement that has been declared effective by the SEC, or (Y) sold under
circumstances meeting all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the 1933 Act.
"Registration Statement" means the registration statement of the Company
filed under the 1933 Act covering the Registrable Securities.
All capitalized terms used in this Agreement and not otherwise defined
herein shall have the same meaning ascribed to them as in the Investment
Agreement.
SECTION 2. REGISTRATION.
(A) The Company shall, within twenty-one (21) days of the date of this
Agreement, file with the SEC the Registration Statement or Registration
Statements (as is necessary) on Form SB-2 (or, if such form is unavailable for
such a registration, on such other form as is available for such registration),
covering the resale of 4,000,000 shares of Common Stock, except to the extent
that the SEC requires the share amount to be reduced as a condition of
effectiveness in which case the Registration Statement shall cover such number
of shares of Common Stock that the Company estimates the SEC would permit, which
Registration Statement(s) shall state that, in accordance with Rule 416
promulgated under the 1933 Act, such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon stock splits, stock dividends or similar transactions.
(B) The Company agrees not to include any other securities in the
Registration Statement covering the Registrable Securities without Investor's
prior written consent which Investor may withhold in its sole discretion;
provided, however, the Investor hereby consents to the inclusion by the Company
of 1,000,000 shares of common stock for the benefit of other selling
stockholders. Furthermore, the Company agrees that it will not file any other
Registration Statement for other securities, until thirty calendar days after
the Registration Statement for the Registrable Securities is declared effective
by the SEC.
SECTION 3. RELATED OBLIGATIONS.
At such time as the Company is obligated to prepare and file the
Registration Statement with the SEC pursuant to Section 2(a), the Company will
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, with respect thereto, the Company
shall have the following obligations:
(A) The Company shall use all commercially reasonable efforts to cause
such Registration Statement relating to the Registrable Securities to become
effective within one hundred and twenty (120) days after the Execution Date and
shall keep such Registration Statement effective until the earlier to occur of
the date on which (A) the Investor shall have sold all the Registrable
Securities; or (B) the Investor has no right to acquire any additional shares of
Common Stock under the Investment Agreement (the "Registration Period"). The
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any 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, in light of the circumstances in which
they were made, not misleading. The Company shall use all commercially
reasonable efforts to respond to all SEC comments within seven (7) business days
from receipt of such comments by the Company; provided, however, if any comment
requires the amendment, and reaudit, of audited financial statements, the
Company shall have seven (7) business days from the completion of such reaudit
to respond to the SEC comments. The Company shall use all commercially
reasonable efforts to cause the Registration Statement relating to the
Registrable Securities to become effective no later than five (5) business days
after notice from the SEC that the Registration Statement may be declared
effective. The Investor agrees to provide all information which it is required
by law to provide to the Company, including the intended method of disposition
of the Registrable Securities, and the Company's obligations set forth above
shall be conditioned on the receipt of such information.
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(B) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the Investor
thereof as set forth in such Registration Statement. In the event the number of
shares of Common Stock covered by the Registration Statement filed pursuant to
this Agreement is at any time insufficient to cover all of the Registrable
Securities issuable during the next 120 days (assuming the Company submits put
notices at the same rate as the prior 120 days), the Company shall amend such
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in any event
within thirty (30) calendar days after the necessity therefor arises (based on
the then Purchase Price of the Common Stock and other relevant factors on which
the Company reasonably elects to rely), assuming the Company has sufficient
authorized shares at that time, and if it does not, within thirty (30) calendar
days after such shares are authorized. The Company shall use commercially
reasonable efforts to cause such amendment and/or new Registration Statement to
become effective as soon as practicable following the filing thereof.
(C) The Company shall make available to the Investor whose Registrable
Securities are included in any Registration Statement and its legal counsel
without charge (I) promptly after the same is prepared and filed with the SEC at
least one (1) copy of such Registration Statement and any amendment(s) thereto,
including financial statements and schedules, the prospectus included in such
Registration Statement (including each preliminary prospectus, if any) and, with
regards to such Registration Statement(s), any written correspondence by or on
behalf of the Company to the SEC or the staff of the SEC and any written
correspondence from the SEC or the staff of the SEC to the Company or its
representatives; (II) upon the effectiveness of any Registration Statement, the
Company shall make available copies of the prospectus, via ▇▇▇▇▇, included in
such Registration Statement and all amendments and supplements thereto; and
(III) such other documents, including copies of any preliminary or final
prospectus, as the Investor may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities.
(D) The Company shall use commercially reasonable efforts to (I) register
and qualify the Registrable Securities covered by the Registration Statement
under such other securities or "blue sky" laws of such states in the United
States as the Investor reasonably requests; (II) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period; (III) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (IV)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; PROVIDED, HOWEVER, that
the Company shall not be required in connection therewith or as a condition
thereto to (X) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), or (Y) subject
itself to general taxation in any such jurisdiction. The Company shall promptly
notify the Investor who holds Registrable Securities of the receipt by the
Company of any notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale under the
securities or "blue sky" laws of any jurisdiction in the United States or its
receipt of actual notice of the initiation or threatening of any proceeding for
such purpose.
(E) As promptly as practicable after becoming aware of such event, the
Company shall notify Investor in writing of the happening of any event as a
result of which the prospectus included in the Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
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not misleading ("Registration Default") and use all diligent efforts to promptly
prepare a supplement or amendment to such Registration Statement or prospectus
and take any other necessary steps to cure the Registration Default (which, if
such Registration Statement is on Form S-3, may consist of a document to be
filed by the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d)
of the 1934 Act (as defined below) and to be incorporated by reference in the
prospectus) to correct such untrue statement or omission, and make available
copies of such supplement or amendment to the Investor. The Company shall also
promptly notify the Investor (I) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when the Registration Statement
or any post-effective amendment has become effective (the Company will prepare
notification of such effectiveness which shall be delivered to the Investor on
the same day of such effectiveness and by overnight mail); (II) of any request
by the SEC for amendments or supplements to the Registration Statement or
related prospectus or related information, (III) of the Company's reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate, (IV) in the event the Registration Statement is no longer
effective, or (V) if the Registration Statement is stale as a result of the
Company's failure to timely file its financials or otherwise. Notwithstanding
the foregoing,
(i) For not more than twenty (20) consecutive days or for a total of not
more than forty-five (45) days in any twelve (12) month period, the Company may
delay the disclosure of material non-public information concerning the Company,
by suspending the use of any Prospectus included in any registration
contemplated by this Agreement containing such information, the disclosure of
which at the time is not, in the good faith opinion of the Chief Executive
Officer and Chief Financial Officer of the Company, upon advice of counsel, in
the best interests of the Company (an "Allowed Delay"); provided, that the
Company shall promptly (a) notify the Investor in writing of the existence of
(but in no event, without the prior written consent of an Investor, shall the
Company disclose to such Investor any of the facts or circumstances regarding)
material non-public information giving rise to an Allowed Delay, (b) advise the
Investors in writing to cease all sales under the Registration Statement until
the end of the Allowed Delay and (c) use its best efforts to terminate an
Allowed Delay as promptly as practicable; and
(ii) At any time (a) the Company is required to amend the Registration
Statement pursuant to Section 10(a)(3) under the Securities Act, or (b) the
Company is required to amend the Registration Statement to describe a
fundamental change in the information set forth in the Registration Statement
(including, without limitation, any transaction with respect to which the
Company is required to update the Registration Statement to include financial
statements and pro forma financial statements required by Rule 3-05 of
Regulation S-X), the Company shall be allowed up to fifteen (15) business days
from the date the amendment is required in order to file an amendment to the
Registration Statement and until the sixtieth day following the date the
amendment is required in order to cause the amended Registration Statement to be
effective (such 60-day period, the "Update Delay"); provided, that the Company
shall promptly after the occurrence of the event requiring amendment (a) notify
the Investors in writing of the existence of (but in no event, without the prior
written consent of an Investor, shall the Company disclose to such Investor any
of the facts or circumstances regarding) such material non-public information
giving rise to an Update Delay, (b) advise the Investors in writing to cease all
sales under the Registration Statement until the end of the Update Delay and (c)
use its best efforts to terminate an Update Delay as promptly as practicable.
(iii) In no event, shall the Company exercise it's rights under (i) and
(ii) above during a Pricing Period. In addition, during an Allowed Delay or an
Update Delay, the Company may not submit a Put Notice to the Investor, nor shall
the Investor be bound by the terms and conditions of the Investment Agreement
during an Allowed Delay or an Update Delay.
(F) The Company shall use all commercially reasonable efforts to prevent
the issuance of any stop order or other suspension of effectiveness of the
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Investor holding Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
concerning the effectiveness of the registration statement.
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(G) The Company shall permit the Investor and one (1) legal counsel,
designated by the Investor, to review and comment upon the Registration
Statement and all amendments and supplements thereto at least one (1) calendar
day prior to their filing with the SEC. However, any postponement of a filing of
a Registration Statement or any postponement of a request for acceleration or
any postponement of the effective date or effectiveness of a Registration
Statement by written request of the Investor (collectively, the "Investor's
Delay") shall not act to trigger any penalty of any kind, or any cash amount due
or any in-kind amount due the Investor from the Company under any and all
agreements of any nature or kind between the Company and the Investor. The
event(s) of an Investor's Delay shall act to suspend all obligations of any kind
or nature of the Company under any and all agreements of any nature or kind
between the Company and the Investor.
(H) At the request of the Investor, the Company's counsel shall furnish to
the Investor an opinion letter confirming the effectiveness of the registration
statement. Such opinion letter shall be issued as of the date of the
effectiveness of the registration statement and be substantially in the form of
Exhibit B to the Investment Agreement.
(I) The Company shall hold in confidence and not make any disclosure of
information concerning the Investor unless (I) disclosure of such information is
necessary to comply with federal or state securities laws, (II) the disclosure
of such information is necessary to avoid or correct a misstatement or omission
in any Registration Statement, (III) the release of such information is ordered
pursuant to a subpoena or other final, non-appealable order from a court or
governmental body of competent jurisdiction, or (IV) such information has been
made generally available to the public other than by disclosure in violation of
this Agreement or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning the Investor is sought
in or by a court or governmental body of competent jurisdiction or through other
means, give prompt written notice to the Investor and allow the Investor, at the
Investor's expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order covering such information.
(J) The Company shall use all commercially reasonable efforts to maintain
designation and quotation of all the Registrable Securities covered by any
Registration Statement on the Principal Market. If, despite the Company's
commercially reasonable efforts, the Company is unsuccessful in satisfying the
preceding sentence, it shall use commercially reasonable efforts to cause all
the Registrable Securities covered by any Registration Statement to be listed on
each other national securities exchange and automated quotation system, if any,
on which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange or system. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section 3(j).
(K) The Company shall cooperate with the Investor to facilitate the prompt
preparation and delivery of certificates representing the Registrable Securities
to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Investor may reasonably request (and after any sales of such Registrable
Securities by the Investor pursuant to and in a manner permitted by an effective
Registration Statement, such certificates not bearing any restrictive legend).
(L) The Company shall provide a transfer agent for all the Registrable
Securities not later than the effective date of the first Registration Statement
filed pursuant hereto.
(M) If requested by the Investor, the Company shall (I) as soon as
reasonably practical incorporate in a prospectus supplement or post-effective
amendment such information as the Investor reasonably determines should be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
offering of the Registrable Securities to be sold in such offering; (II) make
all required filings of such prospectus supplement or post-effective amendment
as soon as reasonably possible after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(III) supplement or make amendments to any Registration Statement if reasonably
requested by the Investor.
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(N) The Company shall use all commercially reasonable efforts to cause the
Registrable Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to facilitate the disposition of such Registrable
Securities.
(O) The Company shall otherwise use all commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC in connection with
any registration hereunder.
(P) Within one (1) business day after the Registration Statement which
includes Registrable Securities is declared effective by the SEC, the Company
shall deliver to the transfer agent for such Registrable Securities, with copies
to the Investor, confirmation that such Registration Statement has been declared
effective by the SEC.
(Q) The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of Registrable Securities
pursuant to the Registration Statement.
SECTION 4. OBLIGATIONS OF THE INVESTOR.
(A) At least five (5) calendar days prior to the first anticipated filing
date of the Registration Statement the Company shall notify the Investor in
writing of the information the Company requires from the Investor for the
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities and the Investor agrees to furnish to the Company
that information regarding itself, the Registrable Securities and the intended
method of disposition of the Registrable Securities as shall reasonably be
required to effect the registration of such Registrable Securities and the
Investor shall execute such documents in connection with such registration as
the Company may reasonably request. The Investor covenants and agrees that, in
connection with any sale of Registrable Securities by it pursuant to the
Registration Statement, it shall comply with the "Plan of Distribution" section
of the then current prospectus relating to such Registration Statement.
(B) The Investor, by its acceptance of the Registrable Securities, agrees
to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of any Registration Statement
hereunder, unless the Investor has notified the Company in writing of an
election to exclude all of the Investor's Registrable Securities from such
Registration Statement.
(C) The Investor agrees that, upon receipt of written notice from the
Company of the happening of any event of the kind described in Section 3(f) or
the first sentence of 3(e), the Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until the Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(f) or the
first sentence of 3(e).
SECTION 5. EXPENSES OF REGISTRATION.
All expenses, other than underwriting discounts and commissions and other
than as set forth in the Investment Agreement, incurred in connection with
registrations including comments, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printing and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company.
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SECTION 6. INDEMNIFICATION.
In the event any Registrable Securities are included in the Registration
Statement under this Agreement:
(A) To the fullest extent permitted by law, the Company, under this
Agreement, will, and hereby does, indemnify, hold harmless and defend the
Investor who holds Registrable Securities, the directors, officers, partners,
employees, counsel, agents, representatives of, and each Person, if any, who
controls, any Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act") (each, an "Indemnified
Person"), against any losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, attorneys' fees, amounts paid in settlement or
expenses, joint or several (collectively, "Claims"), incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto ("Indemnified Damages"), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (I) any untrue
statement or alleged untrue statement of a material fact in the Registration
Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
"blue sky" laws of any jurisdiction in which the Investor has requested in
writing that the Company register or qualify the Shares ("Blue Sky Filing"), or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which the statements therein were made, not misleading, (II)
any untrue statement or alleged untrue statement of a material fact contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading, or (III) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to the
Registration Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Subject to the restrictions set forth in
Section 6(c) the Company shall reimburse the Investor and each such controlling
person, promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (I) shall not apply to a Claim arising out of or
based upon a Violation which is due to the inclusion in the Registration
Statement of the information furnished to the Company by any Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto; (II) shall not be
available to the extent such Claim is based on (A) a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the Company
or (B) the Indemnified Person's use of an incorrect prospectus despite being
promptly advised in advance by the Company in writing not to use such incorrect
prospectus; (III) any claims based on the manner of sale of the Registrable
Securities by the Investor or of the Investor's failure to register as a dealer
under applicable securities laws; (IV) any omission of the Investor to notify
the Company of any material fact that should be stated in the Registration
Statement or prospectus relating to the Investor or the manner of sale; and (V)
any amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the resale of the Registrable Securities by the Investor
pursuant to the Registration Statement.
(B) In connection with any Registration Statement in which Investor is
participating, the Investor agrees to severally and jointly indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement, each Person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act and the Company's agents
(collectively and together with an Indemnified Person, an "INDEMNIFIED PARTY"),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
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Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation is due to the
inclusion in the Registration Statement of the written information furnished to
the Company by the Investor expressly for use in connection with such
Registration Statement; and, subject to Section 6(c), the Investor will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; PROVIDED, HOWEVER, that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall only be liable
under this Section 6(b) for that amount of a Claim or Indemnified Damages as
does not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the resale of the
Registrable Securities by the Investor pursuant to the Registration Statement.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
were corrected on a timely basis in the prospectus, as then amended or
supplemented. This indemnification provision shall apply separately to each
Investor and liability hereunder shall not be joint and several.
(C) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the Indemnified Person or
Indemnified Party, the representation by counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The indemnifying party shall pay for only one (1) separate legal
counsel for the Indemnified Persons or the Indemnified Parties, as applicable,
and such counsel shall be selected by the Investor, if the Investor is entitled
to indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The Indemnified Party or Indemnified
Person shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding affected without
its written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim. Following indemnification
as provided for hereunder, the indemnifying party shall be subrogated to all
rights of the Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.
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(D) The indemnity agreements contained herein shall be in addition to (I)
any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (II) any liabilities the
indemnifying party may be subject to pursuant to the law.
SECTION 7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; PROVIDED, HOWEVER, that:
(I) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6; (II) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (III) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
SECTION 8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investor to sell securities of the Company
to the public without registration ("Rule 144"), provided that the Investor
holds any Registrable Securities are eligible for resale under Rule 144 (k), the
Company agrees to:
(A) make and keep public information available, as those terms are
understood and defined in Rule 144;
(B) file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the
Company remains subject to such requirements (it being understood that nothing
herein shall limit the Company's obligations under Section 5(c) of the
Investment Agreement) and the filing of such reports and other documents is
required for the applicable provisions of Rule 144; and
(C) furnish to the Investor, promptly upon request, (I) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (II) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (III) such other information as may be reasonably requested
to permit the Investor to sell such securities pursuant to Rule 144 without
registration.
SECTION 9. NO ASSIGNMENT OF REGISTRATION RIGHTS.
The rights and obligations under this Agreement shall not be assignable.
SECTION 10. AMENDMENT OF REGISTRATION RIGHTS.
The provisions of this Agreement may be amended only with the written
consent of the Company and Investor.
SECTION 11. MISCELLANEOUS.
(A) Any notices or other communications required or permitted to be given
under the terms of this Agreement that must be in writing will be deemed to have
been delivered (I) upon receipt, when delivered personally; (II) upon receipt,
when sent by facsimile (provided a confirmation of transmission is mechanically
or electronically generated and kept on file by the sending party); or (III) one
(1) business day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
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If to the Company:
Smoky Market Foods, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor:
Dutchess Private Equities Fund, Ltd.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each party shall provide five (5) business days prior notice to the other
party of any change in address, phone number or facsimile number.
(B) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(C) This Agreement and the Transaction Documents constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein.
(D) This Agreement and the Transaction Documents supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
(E) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof. Whenever required by
the context of this Agreement, the singular shall include the plural and
masculine shall include the feminine. This Agreement shall not be construed as
if it had been prepared by one of the parties, but rather as if all the parties
had prepared the same.
(F) This Agreement may be executed in two or more identical counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
(G) Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
(H) In case any provision of this Agreement is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Agreement will not in any way
be affected or impaired thereby.
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SECTION 12. DISPUTES SUBJECT TO ARBITRATION GOVERNED BY MASSACHUSETTS LAW
All disputes arising under this agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Massachusetts,
without regard to principles of conflict of laws. The parties to this agreement
will submit all disputes arising under this agreement to arbitration in Boston,
Massachusetts before a single arbitrator of the American Arbitration Association
("AAA"). The arbitrator shall be selected by application of the rules of the
AAA, or by mutual agreement of the parties, except that such arbitrator shall be
an attorney admitted to practice law in the Commonwealth of Massachusetts. No
party to this agreement will challenge the jurisdiction or venue provisions as
provided in this section. Nothing contained herein shall prevent the party from
obtaining an injunction.
*.*.*
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SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT
Your signature on this Signature Page evidences your agreement to be bound by
the terms and conditions of the Registration Rights Agreement as of the date
first written above.
The undersigned signatory hereby certifies that he has read and understands the
Registration Rights Agreement, and the representations made by the undersigned
in this Registration Rights Agreement are true and accurate, and agrees to be
bound by its terms.
DUTCHESS PRIVATE EQUITIES FUND, LTD.,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Director
SMOKY MARKET FOODS, INC.,
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, CEO
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