REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into as
of the 2nd day of September, 1997, by and between XXX. XXXXXX' HOLDING COMPANY,
INC., a Delaware corporation ("Fields"), and XXXXXX X. XXXXXXXXX, an individual
with his principal residence in the State of Pennsylvania (a "Shareholder").
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Company" shall mean Fields, Xxx. Xxxxxx' Original Cookies,
Inc. ("MFOC"), and any subsidiaries of either of them, or any parent
entity of them that may be formed; provided, that "Company" shall not
include Capricorn Investors II, L.P., or any parent entity thereof. In
the event that a Company other than Fields, determines to register
Shares, then Fields shall cause such Company to comply with the
provisions of this Agreement, and shall be the "Company" for purposes
hereof.
"Exchange" means the exchange of Pretzel Time, Inc. shares
owned by the Shareholder (or his Permitted Assignees as defined in the
Shareholders Agreement), for Shares (as defined below), as more fully
described in the Exchange Agreement.
"Exchange Agreement" shall mean that certain Exchange
Agreement between the Parties of even date herewith.
"Holder" shall mean the Shareholder (and his Permitted
Transferees as defined in the Shareholders Agreement) or any other
party to or assignee under this Agreement who holds any Registrable
Securities.
The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration
statement in compliance with the Securities Act (as defined below),
including the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" means Shares which may be registered pursuant to this
Agreement.
"Registration Expenses" shall mean all expenses incurred by
the Company in connection with a registration hereunder, including,
without limitation, all registration and filing fees, printing
expenses, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration, and the fees and
disbursements of counsel for the Company.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
of the Commission thereunder.
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of the Shares and all fees
and disbursements of counsel for any Holder in connection with the sale
of the Shares.
"Shares" means shares of the Company's common stock that are
acquired from the Company by a Holder, including pursuant to the
Exchange, and common stock issued in respect of such shares of common
stock as a result of any stock split, stock dividend, recapitalization,
or similar event.
"Shareholders Agreement" shall mean that certain Shareholders
Agreement among the Shareholder, Fields, and Pretzel Time, Inc., of
even date herewith.
2. "Piggy-Back" Registration.
(a) If the Company shall determine at any time to register any
of its common stock or securities which are convertible into or
exercisable for common stock (other than a registration relating solely
to employee benefit plans, a registration relating solely to an SEC
Rule 145 transaction, or a registration on any registration form which
does not permit secondary sales or does not include substantially the
same information as would be required to be included in a registration
statement covering the sale of Registrable Securities), the Company
will: (i) promptly give to each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends
to attempt to qualify such securities under the applicable blue sky or
other state securities laws, and for purposes of the Shareholder shall
be sent concurrently with the Offering Notice described in the Exchange
Agreement), and (ii) use its best efforts to cause to be included in
such registration and in any underwriting involved therein all the
Registrable Securities specified in a written request or requests made
by the Holder within 20 days after receipt of such written notice from
the Company (or, in the case of the Shareholder, at the time of the
Exchange as defined in the Exchange Agreement); provided, however, that
the number of Registrable Securities so registered may be limited by
the underwriter's cut-back provision set forth in the following Section
2(c). Notice shall not be required from the Shareholder and his
Permitted Transferees (as defined in the Shareholders Agreement).
(b) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company
shall so advise the Holder as a part of the written notice given
pursuant to Section 2(a). In such event, the right of the Holder to
registration pursuant to Section 2 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent
provided herein.
(c) Any Holder proposing to distribute their securities
through such underwriting shall (together with the Company) enter into
an underwriting agreement in customary form with the representative of
the underwriter(s) selected for underwriting by the Company.
Notwithstanding any other provision of this Section 2, the Company
shall not be required to include in the registration the securities of
any Holder unless the Holder accepts and agrees to the terms proposed
by the underwriters selected by the Company, and then only in such
quantity as will not, in the opinion of the underwriters and based on
marketing factors identified by such underwriters, jeopardize the
success of the offering by the Company. If the total number of
Registrable Securities which the Holder(s) request to be included in
any offering exceeds the number of shares which the underwriters
reasonably believe is compatible with the success of the offering, the
Company shall only be required to include in the offering so many of
the shares as the underwriters believe will not jeopardize the success
of the offering. In such event, the priorities for inclusion of shares
in the Offering shall be as follows: (i) the Shares of the entity
actually undertaking the registration with respect to its own shares;
(ii) next, the Registrable Securities of the Shareholder and any
Permitted Transferee of the Shareholder (as defined in the Shareholders
Agreement), pro rata among the Shareholder and his Permitted
Transferees; (iii) next, the other Holders (including any parent of the
Company) in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of
filing the registration statement.
3. Obligations of the Company. If there is a registration of
Registrable Securities, the Company shall do the following as expeditiously as
possible:
(a) the Company shall prepare and file with the Commission
such amendments and supplements to such registration statements and the
prospectus used in connection therewith to comply with the requirements
of the Securities Act;
(b) the Company shall furnish to the Holder(s) such number of
copies of a prospectus (including a preliminary prospectus), in
conformity with the requirements of the Securities Act, and such other
documents as such Holder(s) may reasonably request in order to
facilitate the disposition of the Registrable Securities to be sold
under the registration statement; and
(c) the Company shall use its best efforts to register and
qualify the securities covered by such registration statements under
the securities laws of such states of the United States as shall be
reasonably appropriate for the distribution of the securities covered
by such registration statement.
4. Information by Holder. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the Holder(s) of Registrable Securities included in any registration shall
cooperate with the Company and any underwriters to effect such registration(s),
including providing to the Company any consents and furnishing to the Company
such information regarding such Holder(s) and the distribution proposed by such
Holder(s) as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification, or compliance
referred to in this Agreement.
5. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification, or compliance pursuant to
Section 2 of this Agreement shall be borne by the Company, and all Selling
Expenses shall be borne pro rata by the Holders of the securities so registered
pro rata on the basis of the number of their shares so registered.
6. No Delay of Registration. No Holder shall have any right to take any
action to restrain, enjoin, or otherwise delay any registration under this
Agreement as a result of any controversy that might arise with respect to the
interpretation or implementation hereof.
7. Indemnification. In the event that the Registrable Securities of a
Holder are included in a registration statement filed under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
each such Holder, each of its officers, directors and partners, and
each person controlling such Holder, with respect to which registration
or qualification of Registrable Securities of such Holder has been
effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls any underwriter against all claims, losses,
damages and liabilities (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 registration statement, prospectus,
offering circular or other document 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 not misleading, or
any violation by the Company of the Securities Act or of any rule or
regulation promulgated under the Securities Act applicable to the
Company and relating to action or inaction required of the Company in
connection with any such registration, qualification, or compliance,
and will reimburse each such Holder, each of its officers, directors
and partners, and each person controlling such Holder, each such
underwriter, and each person who controls any such underwriter for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability, or
action, provided that the Company will not be liable in any such case
for amounts paid in settlement of any such claim, loss, damage,
liability, or action if such settlement is effected without the
reasonable consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable to the extent
that any such claim, loss, damage, liability, or expense arises out of
or is based on any untrue statement or omission based upon written
information furnished to the Company by such Holder.
(b) To the extent permitted by law, each such Holder will, if
Registerable Securities held by such Holder are included in the
securities as to which such registration, qualification or compliance
is being effected, indemnify the Company, each of its directors and
officers, each legal counsel and independent accountant of the Company,
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 the Securities Act, and each other
Holder, each of such other Holder's officers, directors, and partners,
and each person controlling such other Holder, against all claims,
losses, damages, and liabilities (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, prospectus, offering circular, or other document, or 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, and will reimburse the Company, such other
Holders, such directors, officers, partners, persons, underwriters, or
control persons for any legal or any other expenses reasonably 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,
prospectus, offering circular, or other document in reliance upon and
in conformity with written information furnished to the Company by such
Holder, provided that the Holder will not be liable in any case for
amounts paid in settlement of any such claim, loss, damage, liability,
or action if such settlement is effected without the reasonable consent
of the Holder (which consent shall not be unreasonably withheld), and
provided further, that the liability of any Holder hereunder shall be
limited to the net proceeds to such Holder from the Shares of such
Holder that were sold in such offering.
(c) Each party entitled to indemnification under this Section
(the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense, and provided
further that the failure of any Indemnified Party to give notice as
provided herein, if substantially prejudicial to the ability of the
Indemnifying Party to defend against such claim or any litigation
resulting therefrom, shall relieve such Indemnifying Party of any
obligations under this Agreement to the extent such Indemnifying Party
is damaged solely as a result of such failure to give notice, but such
failure shall not relieve such Indemnifying Party of any of its
obligations otherwise than under this Agreement. 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 to such
claim or litigation.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either
(i) any Holder exercising rights under this Agreement, or any
controlling person of any such Holder, makes a claim for
indemnification pursuant to this Section 7 but it is judicially
determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not
be enforced in such case notwithstanding the fact that this Section 7
provides for indemnification in such case, or (ii) contribution under
the Securities Act may be required by order or judgment or decree of
the Commission, or any court of competent jurisdiction on the part of
any such selling Holder or any such controlling person in circumstances
for which indemnification is provided under this Section 7; then, and
in each such case, the Company and such Holder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that
such Holder is responsible for the portion represented by the
percentage that the public offering price of such Holder's stock
offered by the registration statement bears to the public offering
price of all securities offered by such registration statement, and the
Company is responsible for the remaining portion; provided,
however,that, in any such case, (A) no such Holder will be required to
contribute any amount in excess of the public offering price of all
such stock offered by such Holder pursuant to such registration
statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
8. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of any
outstanding Shares to the public without registration, the Company agrees after
any registration to use its best efforts to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all
times;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act
and the Exchange Act, as long as it is subject to such reporting
requirements; and
(c) so long as a Holder holds any Shares, furnish to the
Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual
or quarterly report of the Company, and such other reports and
documents so filed by the Company as a Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a
Holder to sell any such securities without registration.
9. "Market Stand-Off" Agreement. Holder agrees, if requested by the
Company or an underwriter of common stock (or other securities) of the Company,
not to sell or otherwise transfer or dispose of any common stock (or other
securities) of the Company held by the Holder (other than those included in the
registration) during the 90-day period (or longer period if required by the
underwriter(s); provided that the stand off period shall be no longer than the
period required of the Company or its parent) following the effective date of a
registration statement of the Company filed under the Securities Act.
10. Termination of Registration Rights. The obligations of the Company
to register the Registrable Securities pursuant to this Agreement shall
terminate ten (10) years from the date hereof.
11. Modifications and Waivers. This Agreement may not be amended or
modified, nor may the rights of any party hereunder be waived, except by a
written document that is executed by the Company and all Holders at the time of
the amendment, provided that a Holder may be added by the Company alone. No
waiver of any provision of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof, nor shall any waiver constitute a
continuing waiver.
12. Successors. This Agreement is and shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, neither the Company nor any of the Shareholders
shall assign this Agreement to any third party, except that Fields may assign
this Agreement to MFOC, provided that Fields shall not be relieved of its duties
under this Agreement in the event of an assignment thereof.
13. Amendment of Registration. If, after a registration statement
becomes effective, the Company advises the holders of the Registrable Securities
that the Company considers it appropriate for the registration statement to be
amended, the holders of such shares shall suspend any further sales of their
Registrable Securities until the Company advises them that the registration
statement has been amended.
14. Notices. Any notice, request, consent, or other communication
hereunder shall be in writing and shall be sent by one of the following means:
(i) mailed by registered or certified first class air mail, postage prepaid;
(ii) by facsimile transmission; (iii) by reputable overnight courier; or (iv) by
personal delivery, and shall be properly addressed to the parties at their last
known addresses.
15. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto in relation to the subject matter hereof. Any prior
written or oral negotiations, correspondence, or understandings relating to the
subject matter hereof shall be superseded by this Agreement and shall have no
force or effect.
16. Severability. If any provision which is not essential to the
effectuation of the basic purpose of this Agreement is determined by a court of
competent jurisdiction to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of the remaining provisions of
this Agreement.
17. Submission to Jurisdiction. Each of the parties submits to the
jurisdiction of any state or federal court sitting in Salt Lake City, Utah, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto. Each
party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or at equity.
18. Arbitration. All disputes hereunder shall be resolved by binding
arbitration in Salt Lake City, Utah conducted in accordance with the terms of
this arbitration clause. Arbitrations conducted pursuant to this Agreement,
including selection of arbitrators, shall be administered by the American
Arbitration Association (the "Administrator") pursuant to the Commercial
Arbitration rules of the Administrator. Judgment upon any award rendered
hereunder may be entered in any court having jurisdiction. Any party who fails
to submit to binding arbitration following a lawful demand by the opposing party
shall bear all costs and expenses, including reasonable attorney's fees,
incurred by the opposing party in compelling arbitration of any dispute
hereunder.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be an original,
but all of which together shall constitute one and the same instrument.
20. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Utah (applicable to contracts to be
performed wholly within the State).
21. Bound By Agreement. Each party shall be bound by and shall be
entitled to the benefits of the Agreement at the time each such party executes
the Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
COMPANY SHAREHOLDER
XXX. XXXXXX' HOLDING COMPANY, INC.
By:/s/Xxxxxxx X. Xxxx by:/s/Xxxxxx X. Xxxxxxxxx
XXXXXXX X. XXXX XXXXXX X. XXXXXXXXX
VICE PRESIDENT
