1
REGISTRATION RIGHTS AGREEMENT
BY AND BETWEEN
SHONEY'S, INC.
AND
XXXXXXX X. XXXXXX
NASHVILLE, TENNESSEE
DECEMBER 1, 1997
2
TABLE OF CONTENTS
1. Certain Definitions and Terms..........................................2
2. Statement of Intent....................................................4
3. Required and Incidental Registrations..................................4
4. Deviation from Agreement; Amendments; and Waivers.....................20
5. Construction..........................................................20
6. Titles of Articles, Sections and Subsections..........................20
7. Shareholder's Death...................................................20
8. Time of Essence.......................................................20
9. Successors and Assigns, Etc...........................................21
10. Notices...............................................................21
11. Arbitration...........................................................22
12. Best Efforts..........................................................23
13. Good Faith and Fair Dealing; Cooperation..............................23
14. Resolution of Issues, Etc.............................................23
15. Counterparts..........................................................24
SIGNATURES.....................................................................24
ii
3
REGISTRATION RIGHTS AGREEMENT
BY AND BETWEEN SHONEY'S, INC.
AND XXXXXXX X. XXXXXX
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") entered into and made
by Shoney's, Inc. (the "Company") and Xxxxxxx X. Xxxxxx (the "Shareholder"), on
behalf of himself and his affiliates, to be effective as of December 1, 1997.
RECITALS:
A. The Shareholder and/or his affiliates beneficially own the Shares
(as defined below) listed on Schedule A hereto, many of which have not been
registered pursuant to the Securities Act of 1933, as amended.
B. Both the Shareholder and the Company believe that a sale of all or a
material portion of such a large number of the Shares (such as in the
circumstances of a sale to diversify the Shareholder's estate or an estate sale
to satisfy estate tax obligations after the Shareholder's death) without
registration could have a disruptive and deleterious impact on the orderly and
stable market for the Company's Common Stock.
C. The appropriate officers of the Company are authorized to enter into
this registration rights agreement with the Shareholder, under which all or a
material portion of the Shares may be registered for sale incidental to a public
distribution of the Shares (excluding Plan Registrations, as herein defined),
subject to the terms and conditions expressed herein.
D. The appropriate officers of the Company also have been authorized to
include in this registration rights agreement an agreement to cooperate with the
Shareholder during his life and, thereafter, with the estate of the Shareholder
in one registration of the Shares on demand (with reasonable advance notice)
during his lifetime and one registration upon his death, pursuant to the terms
and subject to the conditions expressed in this Agreement.
4
NOW THEREFORE, in consideration of One Thousand Dollars ($1,000.00)
paid by the Shareholder to the Company, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties have agreed to the terms set forth in this Agreement.
TERMS:
1. Certain Definitions and Terms. The following terms and definitions
apply to this Agreement:
a. "Common Stock" means the Company's common stock, $1.00 par value,
outstanding on the date hereof, together with any reclassifications thereof or
other changes in respect thereof.
b. "Company" means Shoney's, Inc., a Tennessee corporation with
principal offices located currently at 0000 Xxx Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx,
and any successor(s) in interest thereto.
c. "Company Party" shall have the meaning ascribed to such term in
Subsection 3.e. hereof.
d. "Estate" means the Estate of Xxxxxxx X. Xxxxxx.
e. "Executor" means the executor or administrator of the Estate, as
such Person(s) may be appointed from time to time.
f. "NYSE" means the New York Stock Exchange, Inc. and any successor(s)
in interest thereto.
g. "Person" means any individual, corporation, limited liability
company, limited liability partnership, partnership, general partnership,
association, joint venture, joint stock company, syndicate, business trust or
other type of trust, unincorporated organization, government or any agency or
political subdivision thereof, or any other form of entity.
2
5
h. "Plan Registration" means a registration statement filed on Form S-4
or Form S-8, or any shelf registration statement (unless and until the
securities registered under a shelf registration statement are actually offered
for sale) or other similar successor registration statement.
i. "Registrable Securities" shall have the meaning ascribed to such
term in Section 3 hereof.
j. "Securities Act" means the Securities Act of 1933, as amended.
k. "Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
l. "SEC" means the United States Securities and Exchange Commission.
m. "Shareholder" means Xxxxxxx X. Xxxxxx, currently a resident and a
citizen of the State of Tennessee. The term "Shareholder" includes also, where
the context so indicates, the Executor.
n. "Shareholder Party" shall have the meaning ascribed to such term in
Subsection 3.e. hereof.
o. "Shares" means shares of Common Stock beneficially owned by the
Shareholder and/or his affiliates as listed on Schedule A hereto, unless the
context otherwise requires, subject to any adjustment to reflect any
reclassifications thereof or other changes in respect thereof.
p. "State Administrator" means the Person charged with administering or
enforcing State Laws.
q. "State Laws" mean laws, rules and regulations applicable to the
registration or sale of securities in the various states and territories of the
United States of America, including the District of Columbia, and this term
includes those statutes commonly referred to as "Blue Sky Laws."
3
6
r. The words "hereof", "herein", "hereunder", and words of similar
import shall, when used in this Agreement, refer to this Agreement as a whole
and not to any particular provision of this Agreement.
s. Words importing a particular gender mean and include every other
gender, and words importing the singular number mean and include the plural
number, and vice versa, as the context shall require.
2. Statement of Intent. This Agreement is intended to serve as the
mechanism for avoiding, to the extent practicable, a disruption of the market in
the Common Stock resulting from any sale of all or a material portion of the
Shares before or after the Shareholder's death (many of such Shares having not
been registered pursuant to the Securities Act) in a public distribution
pursuant to applicable exemptions under the Securities Act. The parties'
agreements herein are subject to the terms and conditions set forth in this
Agreement. This Agreement provides a non-exclusive means for the Shareholder or
the Estate to dispose of the Shares.
3. Required and Incidental Registrations.
a. Required Registration.
i. During the lifetime of the Shareholder and upon the written request
of the Shareholder, the Company agrees to prepare and file a registration
statement under the Securities Act covering the Shares which are the subject of
such request (referred to herein as the "Registrable Securities") and agrees to
use its best efforts to cause such registration statement to become effective as
expeditiously as possible.
ii. Commencing on the death of the Shareholder, if and whenever the
Company shall receive a written request therefor from the Executor of the
Estate, the Company agrees to prepare and file a registration statement under
the Securities Act covering the Shares which are the subject of such request
(also referred to herein as the "Registrable Securities") and agrees to use its
best efforts to cause such registration statement to become effective as
expeditiously as possible. Before acting on any such request, the Company shall
have the right to determine to its reasonable satisfaction that the person
making the request has the legal authority to represent the Estate and that such
person is authorized to make the request. An opinion of counsel to the Estate or
certified copies of court orders (including letters testamentary) confirming or
containing such authorization shall satisfy the Company's inquiry into the
authority of the person making the request.
4
7
iii. The Company shall be required to prepare, file and to use its best
efforts to cause to become effective only one registration statement pursuant to
this Subsection 3.a. during the life of the Shareholder and only one after his
death.
iv. The request for registration by the Shareholder or the Executor
shall specify the number of Shares to be registered and shall describe the
proposed method of sale of such Shares. If, in the judgment of the Shareholder
or the Executor, the proposed sale of Registrable Securities is not on
satisfactory terms, such request may be withdrawn by the Shareholder or the
Executor at any time before the registration statement is effective, with the
effect that such request shall be deemed, for the purposes of this Agreement,
never to have been made so long as the Shareholder or the Executor promptly
reimburses the Company for all reasonable expenses incurred by the Company
related to such now-withdrawn request. Such expenses shall be itemized.
v. If the Shareholder or the Executor intends to distribute the
Registrable Securities by means of an underwriting, the Shareholder or the
Executor shall provide the Company with the name of a nationally recognized
managing underwriter or underwriters (the "Managing Underwriter") that the
Shareholder or the Executor proposes to employ as a part of Shareholder's or the
Executor's request made pursuant to this Subsection. The Company shall have the
right to approve such Managing Underwriter, which approval shall not be
unreasonably withheld. The Company may disapprove the Shareholder's proposed
underwriter if the Company is then in the process of registering its securities
using another nationally recognized Managing Underwriter or has otherwise
obligated itself to use another nationally recognized Managing Underwriter in
public offerings of its securities. In the event that the Shareholder or the
Estate proposes to sell Shares through such underwriting, the Company agrees to
enter into (together with the Shareholder or the Executor and the other
shareholders distributing their securities through such underwriting) an
underwriting agreement with the nationally recognized Managing Underwriter and
other underwriters selected for such underwriting, provided that such
underwriting agreement is in customary form (including customary provisions
restricting any participant's ability to sell shares of the Company securities
for a reasonable period following the effective date of the registration
statement) and is reasonably acceptable to the Company.
vi. The Company and, subject to the requirements of Subsection f. of
this Section 3, other holders of the Company's securities may include securities
for its (or their) own account in such registration (1) if the Managing
Underwriter so agrees and (2) if the number of Registrable Securities which
would otherwise have been included in such registration statement and
underwriting will not thereby be limited.
5
8
vii. The Company may postpone the filing of any registration statement
requested pursuant to this Subsection for a reasonable period of time not to
exceed one hundred twenty (120) days if it deems such postponement prudent as a
result of current Company or market circumstances, so long as such postponement
does not delay the expected date of sale of the Registrable Securities beyond
ten (10) days before the date by which the Executor must pay federal and/or
state estate taxes in respect of the Estate, including available extensions of
such date that can be obtained by the Executor without, in the opinion of
counsel to the Estate, unreasonable expense or uncertainty (the "Tax Deadline").
The Shareholder's Executor shall certify in writing to the Company the date that
such Person is advised is the Tax Deadline by legal counsel to the Estate and
shall furnish to the Company, upon request, a copy of the opinion of such
counsel to the Estate.
viii. Notwithstanding anything to the contrary contained herein, the
Company may choose to deny any request for registration pursuant to Subsection
3.a. within one hundred twenty (120) days after the effective date of a
registration statement filed by the Company covering an underwritten public
offering which the Shareholder or the Executor shall have been entitled to join,
but failed or refused to join, pursuant to Subsection 3.b., unless (1) in the
interim the Shareholder shall have died, (2) the Managing Underwriter shall have
limited the number of Registrable Securities that the Shareholder or the
Executor proposed to offer for sale pursuant to such registration statement,
and/or (3) if the registration statement shall have been withdrawn by the
Company or the underwriting was not completed substantially in accordance with
the terms offered to the Shareholder or the Executor.
ix. The Company shall not be required to effect any requested
registration pursuant to this Subsection 3.a. if such registration does not
involve the disposition of Registrable Securities constituting at least
twenty-five percent (25%) of the Shares registered in the name of the
Shareholder or the Estate and if the Company shall deliver to the Shareholder or
to the Executor making such request an unqualified opinion of counsel reasonably
acceptable for such Shareholder or Executor to the effect that no such
registration is necessary under the Securities Act and applicable State Laws in
connection with the proposed disposition of such Registrable Securities. Such
opinion shall be addressed to the Shareholder (or to the Estate and the Executor
as the case may be) and shall specifically state that such person or entity, and
the proposed purchaser(s) of the Shares to which the opinion relates, are
entitled to rely thereon in connection with the means of disposition covered by
such opinion; provided, however, that this limitation shall not apply if the
proposed purchaser(s) from the Shareholder or the Estate refuse(s) to purchase
the Shares unless they first be registered.
x. The Company shall not be required to effect any requested
registration pursuant to Subsection 3.a. if the Company is engaged or plans to
be engaged within ninety (90) days, at the time
6
9
of such written request, in a registered public offering in which the
Shareholder or the Executor has the right to request inclusion of the
Registrable Securities pursuant to Subsection 3.b. hereof so long as (1) the
Company uses its best efforts to assure that all of the Registrable Securities
are in fact included in such registration and (2) as to requests by the Estate
after the death of the Shareholder, the sale pursuant to such registered public
offering is expected to be completed not less than ten (10) days before the Tax
Deadline. In the event that the Company advises the Shareholder or the Executor
that the Company is denying the request for the reason set out in this
paragraph, it is agreed that such request for registration shall not be deemed
or understood to count as a demand registration request under Subsection 3.a.
for purposes of this Agreement.
xi. If the requested registration pursuant to Subsection 3.a. hereof
does not involve an underwritten public offering, the Company's obligation to
maintain the availability of such registration statement for the public
distribution of the Registrable Securities included thereunder shall not exceed
ninety (90) days from the effective date of the registration statement.
xii. The Shareholder or the Estate may withdraw the Registrable
Securities from any registration statement filed pursuant to Subsection 3.a. at
any time before the registration statement becomes effective by giving
telephonic notice to the Company and any Managing Underwriter, which notice
shall be reduced to writing and sent immediately to the Company in accordance
with the notice provisions hereof, and in such event the Shareholder or the
Estate shall promptly reimburse the Company for all reasonable expenses related
to the filing of the registration statement and the Company's obligation to file
a registration statement under Subsection 3.a. shall continue as if the demand
never had been made. Such expenses shall be itemized.
xiii. The Company's undertakings in this Section 3.a. include filings
under and in compliance with State Laws, subject to the limitation set forth in
Subsection 3.c.i.D.
b. Incidental Registration.
i. Each time the Company shall determine to file a registration
statement under the Securities Act (other than pursuant to Section 3.a. hereof
and other than in respect of a Plan Registration), either for its own account or
on behalf of any other security holder, the Company agrees to give prompt
written notice of its determination to the Shareholder or to the Executor. Upon
the written request of the Shareholder or the Executor stating the number of
Shares the Shareholder or the Executor desires to have registered and sold,
received within fifteen (15) days after the receipt of such written notice from
the Company, the Company agrees to use its best efforts to cause all or
7
10
a portion of such Registrable Securities to be included in the Company's
registration statement and registered under the Securities Act, all to the
extent requisite to permit the sale or other disposition by the Shareholder or
the Executor of as many of the shares of Registrable Securities as practicable.
Notwithstanding the foregoing provisions of this Subsection 3.b.i., the Company
may withdraw any registration statement filed or planned to be filed pursuant to
Subsection 3.b. hereof without incurring any liability to the Shareholder or to
the Estate (other than reimbursement of fees, including counsel, accounting and
underwriting fees actually expended by the Shareholder or the Estate in
connection with the proposed registration).
ii. If the registration of which the Company gives written notice
pursuant to Subsection 3.b.i. is for a public offering involving an
underwriting, the Company agrees to so advise the Shareholder or the Executor as
a part of its written notice, including the identity of a nationally recognized
Managing Underwriter selected by the Company. In such event the right of the
Shareholder or the Executor to registration pursuant to this Subsection 3.b.i.
shall be conditioned upon the Shareholder's or the Executor's participation in
such underwriting and the inclusion of the Shareholder's or the Executor's
Registrable Securities in the underwriting to the extent provided herein. In the
event that the Shareholder or the Estate proposes to sell Shares through such
underwriting, the Shareholder or the Executor agrees to enter into (together
with the Company and the other shareholders distributing their securities
through such underwriting) an underwriting agreement with the nationally
recognized Managing Underwriter and other underwriters selected for such
underwriting by the Company, provided that such underwriting agreement is in
customary form (including customary provisions restricting the ability of the
Shareholder or his Estate to sell Shares for a reasonable period following the
effective date of the registration statement) and is reasonably acceptable to
the Company. No underwriting agreement shall result in charges to the
Shareholder or the Estate that are disproportionate to the number of Registrable
Securities included in the registration statement.
iii. Notwithstanding any other provision of this Section 3.b., if the
Managing Underwriter of an underwritten distribution advises the Company and the
Shareholder or the Executor in writing that in its good faith judgment the
number of shares of Registrable Securities and the other securities requested to
be registered exceeds the number of shares of Registrable Securities and other
securities which is advisable to include in such offering (a "Recommendation"),
then (A) the number of shares of Registrable Securities and other securities so
requested to be included in the offering shall be reduced to that number of
shares which in the good faith judgment of the Managing Underwriter it is
advisable to include in such offering except for shares to be issued by the
Company in an offering initiated by the Company, which shall have priority over
the shares of Registrable Securities, and (B)
8
11
such reduced number of shares shall be allocated among the Shareholder or the
Executor and holders of other securities in proportion, as nearly as
practicable, to the respective number of shares of Registrable Securities
requested by the Shareholder or the Executor or other securities requested by
other holders to be included in the registration statement. All Registrable
Securities and other securities which are excluded from the underwriting by
reason of the Managing Underwriter's Recommendation and all Shares not
originally requested to be so included shall not be included in such
registration statement and shall be withheld from the market by the holders
thereof for a period which the Managing Underwriter reasonably determines is
necessary to effect the underwritten public offering.
iv. In the event that, as a result of the allocation as described in
Subsection 3.b.iii. above, the Shareholder or the Executor is unable to include
all requested Registrable Securities in a registration statement which is the
subject of Subsection 3.b., then the Company, upon request of the Shareholder or
the Executor, hereby agrees to include such Registrable Securities, with a full
priority over other Company securities being offered by other Company security
holders, in the next subsequent registration by the Company in accordance with
Subsection 3.b. above, subject to a reduction being effected by reason of the
Managing Underwriter's recommendation and compliance with other applicable terms
of Subsection 3.b.
v. The Shareholder or the Estate may withdraw Registrable Securities
from any registration statement at any time before the registration statement
becomes effective by giving telephonic notice to the Company and the Managing
Underwriter, which notice shall be reduced to writing and sent immediately to
the Company and to the Managing Underwriter in accordance with the notice
provisions hereof.
vi. The Company's undertakings in this Section 3.b. include filings
under and in compliance with State Laws, subject to the limitation set forth in
Subsection 3.c.i.D.
c. Registration Procedures.
i. If and whenever the Company is required by the provisions of
Subsections a. or b. of this Section 3 to use its best efforts to effect the
registration of Registrable Securities under the Securities Act, the Company, as
expeditiously as possible, agrees to:
A. In accordance with the Securities Act and all applicable rules and
regulations, prepare and file with the SEC a registration statement with respect
to such securities and use its best efforts to
9
12
cause such registration statement to become and remain effective for the period
of distribution contemplated thereby, not to exceed ninety (90) days, and
prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus contained therein as may be necessary
to keep such registration statement effective for such period and to maintain
such registration statement and prospectus accurate and complete in all material
respects for such period; provided, however, that the Company shall not be
required to maintain the effectiveness of any registration statement not
covering an underwritten public offering (1) beyond the period of distribution
contemplated thereby or (2) for more than ninety (90) days after such
registration statement becomes effective (whichever period is shorter);
B. If the offering is to be underwritten in whole or in part, enter
into and perform under a written underwriting agreement in customary form and
substance which is reasonably satisfactory to the Managing Underwriter of the
public offering, the Shareholder or the Executor, and the Company;
C. Furnish to the Shareholder or the Executor and to the underwriters
of the securities being registered such number of copies of the registration
statement and each amendment and supplement thereto, preliminary prospectus,
final prospectus and such other documents as such underwriters and the
Shareholder or the Executor may reasonably request in order to facilitate the
public offering of such securities;
D. Use its best efforts to list, register or qualify the securities
covered by such registration statement with the NYSE and under such State Laws
of such jurisdictions as the Shareholder or the Executor and underwriters may
reasonably request, except that the Company shall not for any purpose be
required to qualify to do business as a foreign corporation in any jurisdiction
where it is not so qualified;
E. Notify the Shareholder or the Executor, promptly after it shall
receive notice thereof, of the date and time when such registration statement
and each post-effective amendment thereto has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed;
10
13
F. Notify the Shareholder or the Executor promptly of any request by
the SEC for the amending or supplementing of such registration statement or
prospectus or for additional information;
G. Prepare and file with the SEC, promptly upon the request of the
Shareholder or the Executor, any amendments or supplements to such registration
statement or prospectus which, in the reasonable opinion of counsel for the
Shareholder or the Executor, is required under the Securities Act or the rules
and regulations thereunder in connection with the distribution of the
Registrable Securities by the Shareholder or the Executor;
H. Prepare and file promptly with the SEC, and promptly notify the
Shareholder or the Executor of the filing of, such amendments or supplements to
such registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include 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, in light of the circumstances in which they were made, not
misleading;
I. In case the Shareholder or the Executor or any underwriter for the
Shareholder or the Executor is required to deliver a prospectus at a time when
the prospectus then in circulation is not in compliance in all material respects
with the Securities Act or the rules and regulations of the SEC, or applicable
State Laws, prepare promptly upon request such amendments or supplements to such
registration statement and such prospectus as may be necessary in order for such
prospectus to comply with the requirements of the Securities Act and such rules
and regulations, and/or applicable State Laws;
J. Advise the Shareholder or the Executor, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC (and/or any State Administrator) suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
that purpose and promptly use its best efforts to prevent the issuance of any
stop order or to obtain its prompt withdrawal if such stop order should be
issued;
K. Not file any registration statement or prospectus or any amendment
or supplement to such registration statement or prospectus to which the
Shareholder or the Executor has reasonably objected on the grounds that such
registration statement or prospectus or amendment or supplement
11
14
thereto does not comply in all material respects with the requirements of the
Securities Act or the rules and regulations thereunder, and/or under any
applicable State Laws, after having been furnished with a copy thereof a
reasonable time (under the circumstances) prior to the filing thereof; provided,
however, that the failure of the Shareholder or the Executor or its counsel to
review or object to any registration statement or prospectus or any amendment or
supplement to such registration statement or prospectus (except to the extent of
information furnished to the Company by the Shareholder or the Executor in
writing) shall not affect the rights of the Shareholder or the Executor or its
respective representatives, executors, administrators, partners, assigns, legal
counsel, accountants or controlling persons or any underwriter or any
controlling person of such underwriter under Section 3.e. hereof; and
L. At the request of the Shareholder or the Executor, use its best
efforts to furnish to the Shareholder or the Executor on the effective date of
the registration statement or, if such registration includes an underwritten
public offering, at the closing provided for in the underwriting agreement, (A)
a copy of the opinion of the counsel representing the Company for the purposes
of such registration, covering such matters with respect to the registration
statement, the prospectus and each amendment or supplement thereto, proceedings
under state and federal securities laws, other matters relating to the Company,
the securities being registered and the offer and sale of such securities as are
customarily the subject of opinions of issuer's counsel provided to underwriters
in underwritten public offerings, and (B) copies of letters from the independent
certified public accountants of the Company, stating that they are independent
public accountants within the meaning of the Securities Act and dealing with
such matters as the Managing Underwriter may reasonably request, or if the
offering is not underwritten that in the opinion of such accountants the
financial statements and other financial data of the Company included in the
registration statement or the prospectus or any amendment or supplement thereto
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act and any applicable State Laws.
ii. If and when the Shareholder or the Executor requests registration
of Registrable Securities pursuant to Subsections a. or b. of this Section 3,
the Shareholder or the Executor shall, at his expense and as expeditiously as
possible, do the following:
A. Supply the Company with all information reasonably required by the
Company concerning the Shareholder, the Executor or the Estate, and the
respective securities holdings and affiliates thereof, in connection with the
proposed distribution by the Shareholder or the Estate and/or their respective
affiliates;
12
15
B. Correct, supplement or amend information requested by or furnished
to the Company so as to ensure that information supplied is not materially
misleading or does not omit to state facts or information necessary to cause
information provided, in light of the circumstances, not to be materially
misleading or incomplete;
C. Provide counsel to the Company, underwriters and accountants access
to all information and records of the Shareholder and his affiliates, or of the
Estate and its affiliates, that these professionals reasonably require to
perform their "due diligence" functions in connection with any registration
hereunder;
D. Comply in all respects with the requirements of the Securities Act,
the Securities Exchange Act, the NYSE, and applicable State Laws in connection
with any registration or sale of securities hereunder;
E. Comply in all material respects with reasonable requests by the
Company and the Managing Underwriter in connection with the sale of the
Registrable Securities (including without limitation entering into customary
underwriting agreements) or with the activities by the Shareholder or the Estate
and the affiliates thereof during or immediately following any underwriting
period hereunder (including without limitation other sales or purchases of
Company securities, confidentiality requirements, public statements, and
responses to the SEC or other regulatory inquiries); and
F. Pay promptly when due all registration fees and other fees and
expenses of the SEC, the NYSE, and any State Administrator or other governmental
entity, and all fees and expenses of his counsel, underwriters or placement
agents, with respect to the registration and/or sale of Registrable Securities
in accordance with the terms hereof.
iii. The Company reserves the right to amend or to stop any
registration or sale of Company securities if it concludes in good faith that
such registration or sale would violate any applicable securities law or
regulation. In such event, the Company shall send prior written notice to the
Shareholder or to the Executor specifying the problems that the Company has
identified in such detail as shall permit the Shareholder or the Executor to
attempt to resolve such ostensible violations to the Company's reasonable
satisfaction such that the registration is not stopped or withdrawn. However,
the Company shall not be required, in any event, to take or to permit any
registration or sale that it deems, in good faith, to violate the Securities Act
(inclusive of its rules and regulations) or any State Laws. However, if such
registration is canceled or withdrawn by the Company for any
13
16
reason or reasons not related to deliberate or grossly negligent misconduct by a
Shareholder Party, including the intentional provision of materially misleading
information (or the intentional omission of information required to make the
statements made not materially misleading in light of the circumstances then and
there pertaining), such registration shall not be deemed to be a demand
registration by the Shareholder, the Executor or the Estate.
d. Expenses.
i. Subject to any generally applicable State Law requirements with
respect to allocation of expenses, the Company shall bear one-half of all
expenses incurred in connection with a registration statement filed pursuant to
Subsection 3.a. hereof, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses incurred in
connection with complying with State Laws, fees of the NYSE, and fees of
transfer agents and registrars; provided, that the Shareholder or the Estate
holding the Registrable Securities covered by or included in such registration
statement shall bear (1) the fees and disbursements of any legal counsel,
accountants or other experts retained by the Shareholder or the Estate to review
matters relating to such registration statement on behalf of the Shareholder or
the Estate (2) any underwriting discounts or commissions applicable to the
Registrable Securities, and (3) any transfer taxes payable on account of the
transfer of such Registrable Securities.
ii. Subject to any generally applicable State Law requirements with
respect to allocation of expenses, the Company shall bear all expenses incurred
in connection with a registration statement filed pursuant to Subsection 3.b.
hereof, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses incurred in connection with
complying with State Laws, fees of the NYSE, and fees of transfer agents and
registrars; provided, that the Shareholder or the Estate holding the Registrable
Securities covered by or included in such registration statement shall bear (1)
the fees and disbursements of any legal counsel, accountants or other experts
retained by the Shareholder or the Estate to review matters relating to such
registration statement on behalf of the Shareholder or the Estate (2) any
underwriting discounts or commissions applicable to the Registrable Securities,
and (3) any transfer taxes payable on account of the transfer of such
Registrable Securities.
14
17
e. Indemnification and Contribution.
i. The Company hereby agrees to indemnify and hold harmless each
Shareholder Party (as defined below) from and against, and agrees to reimburse
each such Shareholder Party with respect to, any and all claims, actions (actual
or threatened), demands, losses, damages, liabilities, costs and expenses
(including reasonable attorneys and other professional fees and the
disbursements thereof) to which any Shareholder Party may become subject, under
the Securities Act or otherwise, insofar as such claims, actions, demands,
losses, damages, liabilities, costs or expenses arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein 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; provided, however, that
the Company will not be liable in any such case to the extent that any such
claim, action, demand, loss, damage, liability, cost or expense is caused by an
untrue statement or alleged untrue statement or omission or alleged omission so
made in strict conformity with written information furnished by the Shareholder,
the Executor or the Estate, to such underwriter or such controlling person
specifically for use in the preparation thereof.
As used herein, the term "Shareholder Party" means and includes each of
the following: the Shareholder, the Estate, the Executor, and each of the
Shareholder's other representatives, executors, administrators, assigns,
representatives, and partners, and each person who controls or is controlled by
the Shareholder, the Executor, or the Estate within the meaning of the
Securities Act.
ii. The Shareholder hereby agrees that he and his Estate will indemnify
and hold harmless each Company Party (as defined below) from and against, and
agrees to reimburse each such Company Party, with respect to, any and all
claims, actions (actual or threatened), demands, losses, damages, liabilities,
costs or expenses (including attorneys and other professional fees and the
disbursements thereof) to which any Company Party may become subject, under the
Securities Act or otherwise, insofar as such claims, actions, demands, losses,
damages, liabilities, costs or expenses are caused by any untrue or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or are
caused by the omission or the alleged omission to state therein 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, in each case
to the extent, but if and only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was actually so made in
15
18
reliance upon and in strict conformity with written information furnished by the
Shareholder or his Executor specifically for use in the preparation thereof, or
withheld by the Shareholder or the Executor after a request for such information
is received from the Company or its representatives for use in the preparations
thereof.
As used herein, the term "Company Party" means and includes each of the
following: the Company, its officers, and directors, legal counsel and
accountants and each person who controls the Company within the meaning of the
Securities Act.
iii. Promptly after receipt by a party indemnified pursuant to the
provisions of Subsection e.i. or e.ii. of this Section 3 of notice of the
commencement (or threatened commencement) of any action involving the subject
matter of the foregoing indemnity provisions, such indemnified party will, if a
claim therefor is to be made against the indemnifying party pursuant to the
provisions of Subsection e.i. or e.ii. of this Section 3, notify the
indemnifying party of the commencement (or threatened commencement) thereof; but
the omission to notify the indemnifying party will not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 3.e. and shall not relieve the indemnifying party from liability under
this Section 3.e. unless such indemnifying party is prejudiced by such omission.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying parties similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel (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). Upon the permitted assumption by the indemnifying
party of the defense of such action, and approval by the indemnified party of
counsel, the indemnifying party shall not be liable to such indemnified party
under Subsection e.i. or e.ii. of this Section 3 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof (other than reasonable costs of investigation) unless (A) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the immediately
preceding sentence, (B) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time, (C) the indemnifying party and its counsel do
not actively and vigorously
16
19
pursue the defense of such action, or (D) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party. No indemnifying party shall be liable to an indemnified
party for any settlement of any action or claim without the consent of the
indemnifying party and no indemnifying party may unreasonably withhold its
consent to any such settlement. No party seeking indemnity will 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 with respect to such claim or
litigation. The indemnified and the indemnifying party agree to cooperate fully
and, to the maximum extent practicable, to wage a joint defense as to all claims
for which the indemnified party demands indemnification pursuant to this
Agreement.
iv. If the indemnification provided for in Subsection e.i. or e.ii. of
this Section 3 is held by a court of competent jurisdiction to be unavailable to
a party to be indemnified with respect to any claims, actions, demands, losses,
damages, liabilities, costs or expenses referred to therein, then each
indemnifying party under any such Subsection, in lieu of indemnifying such
indemnified party thereunder, hereby agrees to contribute to the amount paid or
payable by such indemnified party as a result of such claims, actions, demands,
losses, damages, liabilities, costs or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions which resulted in such claims, actions, demands, losses, damages,
liabilities, costs or expenses, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified 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 the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. Notwithstanding the foregoing, the amount
any indemnifying party shall be obligated to contribute pursuant to this
Subsection 3.e.iv. shall be limited to an amount equal to the per share public
offering price (less any underwriting discount and commissions) multiplied by
the number of shares of Common Stock sold by the indemnifying party pursuant to
the registration statement which gives rise to such obligation to contribute
(less the aggregate amount of any damages which the indemnifying party has
otherwise been required to pay in respect of such claim, action, demand, loss,
damage, liability, cost or expense or any substantially similar claim, action,
demand, loss, damage, liability, cost or expense arising from the sale of such
Common Stock).
17
20
v. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution
hereunder from any Person who was not guilty of such fraudulent
misrepresentation.
f. Future Registration Rights. Except as expressly permitted by this
Agreement or by the Shareholder or the Executor, and except for an underwriting
agreement between the Company and one or more professional underwriters of
securities, from and after the date hereof the Company agrees not to enter into
any agreement to file a registration statement on demand for any equity
securities under the Securities Act held by any other holder(s) of such
securities ("Other Shareholder(s)") except pursuant to an agreement between the
Company and such Other Shareholder(s) that specifically provides as follows: (i)
the Other Shareholder(s) of such equity securities may not participate in any
registration requested pursuant to Subsection a. of this Section 3 hereof
without the written consent of the Shareholder or the Estate unless (A) the sale
of the Registrable Securities is to be underwritten on a firm commitment basis
and the Managing Underwriter in its good faith judgment concludes that the
public offering or sale of such equity securities would not cause the number of
shares of Registrable Securities and such equity securities to exceed the number
which it is advisable to include in such offering to achieve not less than the
minimum desired sale price, and (B) the Shareholder and the Estate shall have
the right to participate, to the extent that either of them may request, in any
registration statement initiated under a demand registration right exercised by
the Other Shareholder(s), except that if the Managing Underwriter of a public
offering made pursuant to such a demand registration limits the number of shares
of Common Stock to be sold, the participation of the Shareholder or the Estate
and the holders of all other Common Stock desiring to participate (other than
the Other Shareholder(s)) shall be reduced pro rata based upon the number of
shares of Registrable Securities and Common Stock held at the time of filing the
Registration Statement; (ii) the Other Shareholder(s) may not participate in any
registration requested pursuant to Section 3.b. hereof if the sale of
Registrable Securities is to be underwritten unless, if the Managing Underwriter
limits the total number of securities to be sold, the Other Shareholder(s) and
the Shareholder (or the Estate) are entitled to participate in such underwritten
distribution pro rata based upon the number of shares of Common Stock and
Registrable Securities held at the time of filing the registration statement;
and (iii) all equity securities excluded from any registration as a result of
the foregoing limitations shall not be included in such registration and may not
be publicly offered or sold for such period as the Managing Underwriter of such
registered distribution may reasonably request.
18
21
g. Reporting Requirements. The Company agrees (1) to use its best
efforts to file timely such information, documents and reports as the SEC may
require or prescribe under Sections 13, 14 or 15(d) (whichever is applicable) of
the Securities Exchange Act of 1934 and (2) upon request, to furnish to the
Shareholder such reports and documents filed by the Company with the SEC as the
Shareholder may reasonably request in availing itself of an exemption for the
sale of Registrable Securities without registration under the Securities Act.
The Company acknowledges and agrees that the purposes of the requirements
contained in this Section 3 are (i) to enable the Shareholder (or the Estate) to
comply with the current public information requirement contained in paragraph
(c) of Rule 144 under the Securities Act should the Shareholder ever wish to
dispose of any of the securities of the Company acquired by the Shareholder or
his affiliates without registration under the Securities Act in reliance upon
Rule 144 (or any other similar exemptive provision) and (3) to qualify the
Company for the use of registration statements on Form S-3. In addition, the
Company agrees to use its best efforts to take such other measures and file such
other information, documents and reports, as shall be required of it hereafter
by the SEC as a condition to the availability of Rule 144 under the Securities
Act (or any similar exemptive provision hereafter in effect) and the use of Form
S-3. The Company also covenants to use its best efforts, to the extent that it
is reasonably within its power to do so, to qualify, and maintain such
qualification, for the use of Form S-3.
h. Shareholder and Executor Information. The Shareholder or the
Executor shall furnish the Company with such information with respect to the
Shareholder and his affiliates or the Estate in connection with the distribution
of such Registrable Securities as the Company may from time to time reasonably
request in writing and as shall be required by law or by the SEC in connection
therewith. Such information shall be used by the Company solely in connection
with the requested registration and not for any other purpose(s) and shall be
treated as strictly confidential by the Company except as otherwise required by
the Securities Act or other laws, rules and regulations.
i. Forms. All references in this Agreement to particular forms of
registration statements are intended to include, and shall be deemed to include,
references to all successor forms which are intended to replace, or to apply to
similar transactions as, the forms herein referenced.
4. Deviation from Agreement; Amendments; and Waivers. In order to amend
or deviate from the terms of the Agreement, a party must first obtain the prior
written consent of the other party, which consent may be withheld or granted in
such party's sole discretion. No amendment(s), modification(s), deviations from
agreements or covenants, or waiver(s) of any provision of this Agreement, shall
in any event be effective unless the same shall be in writing and signed by
appropriate officers of the Company and by the Shareholder or his authorized
representative(s),
19
22
including his Executor. No action or course of dealing on the part of any Person
or entity, its officers, employees, consultants, heirs, administrators,
executors or agents, nor any failure or delay by a party with respect to
exercising any right, power or privilege of such party under this Agreement
shall operate as a waiver thereof, except as expressly provided in writing in
accordance with this Section.
5. Construction. This Agreement constitutes a contract made under and
shall be construed in accordance with and governed by the laws of the State of
Tennessee.
6. Titles of Articles, Sections and Subsections. All titles or headings
to articles, sections, Subsections or other divisions of this Agreement are only
for the convenience of the parties and shall not be construed to have any effect
or meaning with respect to the other content of such articles, sections,
Subsections or other divisions, such other content being controlling as to the
agreement between the parties hereto.
7. Shareholder's Death. This Agreement shall survive the Shareholder's
death and shall inure to the benefit of the Shareholder's Executor and Estate.
8. Time of Essence. Time is of the essence with regard to each and
every provision of this Agreement.
9. Successors and Assigns, Etc. All covenants and agreements contained
by or on behalf of the parties in this Agreement shall bind such Person's
administrators, executors, and successors and shall inure to the benefit of the
other party and such other party's, administrators, executors, and successors.
However, the rights and duties of the parties under this Agreement may not be
assigned or delegated by any party without the written consent of the other.
10. Notices. All communications under or in connection with this
Agreement shall be in writing and shall be delivered by an overnight courier
service of national standing (such as FedEx) and sent, charges prepaid, for next
business day delivery. In addition, any communication deemed by the sending
party to be urgent shall also be in writing and sent by telecopy or other
similar form of rapid transmission followed by contemporaneously sending for
overnight delivery by overnight courier as provided above (or, in the discretion
of the sender, in lieu of telecopy, such
20
23
communication can be delivered personally to the receiving party or to a
representative thereof at such person's principal office as indicated herein
(subject to change as provided below)). All such communications shall be sent or
delivered to the parties at their respective addresses set forth below:
a. If to the Company, to:
Shoney's, Inc.
0000 Xxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: President
With a copy in each instance to:
Xxxxx X. Xxxxx, III, Esq.
Xxxx Xxxxx & Xxxx PLC
Suite 2700, First American Center
Xxxxxxxxx, Xxxxxxxxx 00000
Facsmilie No. (000) 000-0000
b. If to the Shareholder, the Estate or Executor, to:
Xxxxxxx X. Xxxxxx
The Xxxxxx Company
0 Xxxxxxxxxxxxx Xxxxx Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile No. (000) 000-0000
With a copy in each instance to:
Xxxxxx X. Small, Esq.
Small & Xxxxx
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile No. (000) 000-0000
21
24
Any party may send notice in accordance with this Section of a new
address to be used to contact such party. Any communication so addressed and
transmitted shall be deemed to be given on the date received.
11. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the actual or asserted violation or other breach of this
Agreement, shall be settled by arbitration administered by the American
Arbitration Association ("AAA") in accordance with its Commercial Arbitration
Rules ("Rules"), and judgment upon the award rendered by the arbitrator(s) (and
successor arbitrator(s)) may be entered in any court having jurisdiction
thereof. There shall be (a) one neutral arbitrator for any dispute involving any
claim in connection with this Agreement involving a monetary demand for Fifty
Thousand Dollars ($50,000.00) or less and (b) as to any other dispute, three (3)
neutral arbitrators selected by the AAA pursuant to the Rules. The arbitrators
shall be duly licensed attorneys and (in the judgment of the AAA) substantially
experienced in practicing securities law. The arbitrator(s) shall apply the
procedural and substantive law of the State of Tennessee, as well as the Rules
to the extent not inconsistent with such laws, except that the law applicable to
the arbitration shall be Federal Arbitration Act, 9 U.S.C. xx.xx. 1, et seq. Any
award by an arbitrator or panel of arbitrators shall be issued within 270 days
from the first demand for arbitration in such matter. Any dispute as to whether
a matter is arbitrable shall itself be arbitrated by the parties pursuant to
this provision. No award shall include punitive damages. Rather, each award
shall be for actual damages and out-of-pocket expenses. In the discretion of the
arbitrator, or a majority of the arbitrators as the case may be, the award may
include, as compensable damages and out-of-pocket expenses, all or part of a
party's attorneys fees and other out-of-pocket expenses. The award for attorneys
fees and costs to the prevailing party may be prorated as the arbitrator or a
majority of the arbitrators shall deem just and proper. The Arbitrator(s) shall
permit limited, non-abusive discovery in the form of depositions and the
production of documents and records and shall, on application by a party, enter
appropriate orders granting extraordinary relief to preserve the rights of the
parties pending the issuance of the award.
12. Best Efforts. The requirement that a party use its best efforts
shall not require such party to assume unduly expensive, unduly burdensome, or
otherwise commercially unreasonable obligations. However, it does require that
such a party shall seek to perform the required duty with the same determination
and diligence that it would use to obtain its own important business objectives.
22
25
13. Good Faith and Fair Dealing; Cooperation. The provisions of this
Agreement require in all cases that each party hereto, and all representatives
thereof including underwriters and Managing Underwriters, or any other persons
bound hereby or subject hereto, shall act in good faith and deal fairly in
respect of the transactions described in this Agreement. All discretionary
unilateral decisions permitted by this Agreement shall be subject to the
limitation that such decisions are reasonable when made and not made other than
in good faith intended to accomplish, where reasonably possible, the objectives
of this Agreement.
The parties agree to cooperate with each other in order to promptly and
diligently discharge their obligations under this Agreement.
14. Resolution of Issues, Etc. In the event that a Person, including a
Managing Underwriter, shall recommend to the Company that a lesser number of
Registrable Securities be registered (or shall make other recommendations
relative to a registration of Registrable Securities) than has been requested by
the Shareholder, the Company shall promptly send a copy of the Recommendation to
the Shareholder and shall afford the Shareholder a reasonable opportunity to
resolve any problems raised by such Person (including a Managing Underwriter),
in whole or in part, with a view to resolving the problems raised by such Person
and/or maximizing the number of Registrable Securities (and the price thereof)
that can be sold pursuant to such registration.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY.]
23
26
15. Counterparts. This Agreement may be executed in two or more
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof; each counterpart shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
In witness whereof the parties hereto have executed this Agreement to
be effective as of the date first above written.
EACH OF THE PARTIES HERETO SPECIFICALLY ACKNOWLEDGES, THAT AFTER CONSULTATION
WITH COUNSEL, SUCH PARTY HAS WAIVED SUCH PARTY'S RIGHT TO A TRIAL BY JURY AND
CONSENTS TO THE ARBITRATION PROVISIONS OF THIS AGREEMENT AS TO ALL ISSUES. THIS
IS A SPECIFIC INDUCEMENT TO EACH PARTY TO ENTER INTO THIS AGREEMENT AND A
MATERIAL PART OF THE CONSIDERATION THEREFOR.
THE COMPANY:
SHONEY'S, INC.
By: /s/ J. Xxxxxxx Xxxxxx
----------------------------------
J. Xxxxxxx Xxxxxx, President
SHAREHOLDER:
/s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx
24
27
EXHIBIT A
=============================================================================
Name of Owner Number of Shares
=============================================================================
Xxxxxxx X. Xxxxxx 3,738,695
-----------------------------------------------------------------------------
Xxxxx Xxxxxx Xxxxxx,
Custodian for Xxxxxxx Xxxxxx (UGMA) 15,502
-----------------------------------------------------------------------------
Xxxxx Xxxxxx Xxxxxx,
Custodian for Xxxxxx Xxxxxx (UGMA) 19,107
-----------------------------------------------------------------------------
Xxxxx Xxxxxx Xxxxxx 122,511
-----------------------------------------------------------------------------
Xxxxx Xxxxx Xxxxxx 47,843
-----------------------------------------------------------------------------
The Xxxxxx Foundation 348,276
-----------------------------------------------------------------------------
Xxxxxx Xxxxx Xxxxxx,
Custodian for Xxxxxxx X. Xxxxxx, Xx.
(UGMA) 7,101
-----------------------------------------------------------------------------
Xxxxxx Xxxxx Xxxxxx 83,068
-----------------------------------------------------------------------------
Xxxx Xxxxxx Griel 126,005
-----------------------------------------------------------------------------
Xxxx Xxxxxx Xxxxxx,
Custodian for Xxxxxxx Xxxxxx, Jr. (UGMA) 17,862
-----------------------------------------------------------------------------
Xxxx Xxxxxx Xxxxxx,
Custodian for Xxxxx Xxxxxx (UGMA) 9,827
-----------------------------------------------------------------------------
Estate of Xxxxxxx X. Xxxxxx, deceased 27,742
=============================================================================
