REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is entered into as of the ___ day of
November 2000 (this "Agreement"), by and between THE QUIZNO'S CORPORATION, a
Colorado corporation (the "Company"), and XXXXXX XXXXXXXXX CAPITAL PARTNERS II,
L.P., a California limited partnership ("LLCP").
R E C I T A L S
A. The Company, the other Company Parties and LLCP are parties to the
Securities Purchase Agreement dated of even date herewith (as amended from time
to time, the "Securities Purchase Agreement") pursuant to which, on the date
hereof, the Company is issuing to LLCP, and LLCP is purchasing from the Company,
among other things, the Warrants, all on the terms and subject to the conditions
set forth therein.
B. The execution and delivery of this Agreement by the Company is a
condition precedent to the obligations of LLCP to consummate the transactions
contemplated by the Securities Purchase Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. DEFINITIONS. Unless otherwise indicated, all capitalized terms not otherwise
defined herein shall have the meaning set forth in the Securities Purchase
Agreement. In addition, the following terms shall have the following meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
successor federal agency.
"Common Stock" shall mean the Common Stock, $.001 par value per share,
of the Company.
"Company" shall have the meaning set forth in the preamble.
"Demanding Holders" shall mean LLCP only or, if LLCP does not hold a
majority of the Registrable Securities at any time, the holders of greater than
fifty percent (50.0%) of the outstanding Registrable Securities.
"Demand Registration" shall have the meaning specified in Section
2.1(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Indemnified Party" shall have the meaning specified in Section 4.3.
"Indemnifying Party" shall have the meaning specified in Section 4.3.
"Inspectors" shall have the meaning specified in Section 3.1(h).
"LLCP" shall have the meaning set forth in the preamble.
"LLCP Indemnified Party" shall have the meaning specified in Section
4.1.
"Maximum Number of Shares" shall have the meaning specified in Section
2.1(d).
"Piggy-Back Registration" shall have the meaning specified in Section
2.2(a).
"Register," "registered" and "registration" shall mean a registration
effected by preparing and filing a registration statement or similar document in
compliance with the requirements of the Securities Act, and the applicable rules
and regulations promulgated thereunder, and such registration statement becoming
effective.
"Registrable Securities" shall mean (i) the Warrant Shares, (ii) any
warrants, shares of Capital Stock or other securities of the Company issued as a
dividend or other distribution with respect to or in exchange for or in
replacement of the Warrant Shares and (iii) any other shares of Common Stock
acquired by LLCP from the Company after the date hereof. A security shall cease
to be a Registrable Security when (a) a Registration Statement covering such
Registrable Security shall have been declared effective under the Securities Act
and such Registrable Security shall have been sold in accordance with such
Registration Statement; (b) at such time as the Registrable Securities held by
the Demanding Holders represent less than two percent (2%) of the outstanding
capital stock of the Company on a Fully-Diluted Basis, if such Registrable
Security is entitled to be sold by the holder thereof into the public market in
a single brokerage transaction under the provisions and within the volume
limitations of Rule 144(e)(1), or under the provisions of Rule 144(k),
promulgated under the Securities Act or any successor to such Rule; (c) such
Registrable Security shall have been distributed and sold to the public pursuant
to Rule 144 (or any successor rule or regulation) promulgated under the
Securities Act; (d) a new certificate representing such Registrable Security has
been delivered (to the LLCP or any subsequent transferee) by the Company free
from any restrictive legend and without issuance of stop transfer or other
instructions to the Company's transfer agent and the Holder of such Registrable
Security shall have been advised by counsel acceptable to it that subsequent
disposition of such security will not require registration or qualification
under the Securities Act or any state securities or "blue sky" laws then in
effect; or (e) such Registrable Security shall have ceased to be outstanding.
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"Registration Statement" means a registration statement filed by the
Company with the Commission in compliance with the Securities Act and the rules
and regulations promulgated thereunder for a public offering and sale of its
Common Stock (other than a registration statement relating solely to the sale of
securities to participants in a Company employee or non-employee director and
advisor stock option plan, a registration relating to a corporate reorganization
or other transaction under Rule 145 of the Securities Act, a registration on any
form for a limited purpose that does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities, or a registration in which the
only Common Stock being registered is Common Stock issuable upon conversion of
debt securities that are also being registered).
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder, all as the same shall be
in effect at the time.
"Securities Purchase Agreement" shall have the meaning set forth in the
recitals.
"Underwriter" shall mean a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
"Warrants" shall have the meaning set forth in the Securities Purchase
Agreement and, in addition, shall include (i) any new warrant or warrants issued
upon the transfer of all or any portion of the warrants issued pursuant to the
Securities Purchase Agreement and (ii) any warrant or warrants issued upon the
further transfer, division or combination of any such new warrant or warrants.
"Warrant Shares" shall mean the shares of Capital Stock issued or
issuable upon the exercise of the Warrants, and the holder of the Warrants or
any portion thereof shall be deemed to be the holder of the Warrant Shares
issuable upon the exercise thereof.
2. REGISTRATION RIGHTS.
2.1 Demand Registration.
(a) Request for Registration. At any time on or after the date
of this Agreement, after consummation of a public offering by the Company
pursuant to a Registration Statement (including, for this purpose, a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered), the
Demanding Holders may request in writing that the Company effect the
registration under the Securities Act of all or any portion of Registrable
Securities covering the registration of at least twenty percent (20%) of the
Registrable Securities (or any lesser percentage if the aggregate proposed
offering price to the public (before deduction of underwriting discounts and
commissions) would be at least $10,000,000) (a "Demand
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Registration"). Any request for a Demand Registration shall specify the number
of shares of Registrable Securities proposed to be sold and the intended
method(s) of distribution thereof. Upon any such request, the Demanding Holders
shall be entitled to have Registrable Securities included in the Demand
Registration, subject to Section 2.1(d) and the provisos set forth in Section
3.1(a). The Company shall not be obligated to effect more than two (2) Demand
Registrations under this Section 2.1(a).
(b) Effective Registration. Except in the case of a withdrawal
governed by the last sentence of Section 2.1(e), a registration will not count
as a Demand Registration until the Registration Statement filed with the
Commission with respect to such Demand Registration has been declared effective
and the Company has complied with all of its obligations under this Agreement
with respect thereto; provided, however, that, after such Registration Statement
has been declared effective, if the offering of Registrable Securities pursuant
to a Demand Registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or any other Governmental
Authority, such Demand Registration shall not be deemed to have been made for
purposes of this Section 2.1.
(c) Underwritten Offering. If the Demanding Holders wish to
distribute Registrable Securities covered by its (or their, as the case may be)
request by means of an underwritten offering, it (or they, as the case may be)
shall so advise the Company as a part of the request made pursuant to Section
2.1(a). The Company shall, subject to LLCP's reasonable approval, select one or
more firms of investment bankers of national reputation to act as the managing
Underwriter or Underwriters in connection with such offering and may select any
additional managers to be used in connection with such offering. The right of
any holder of Registrable Securities to include its Registrable Securities in
such registration under Section 2.1 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.
Subject to Section 3.1(f), all holders of Registrable Securities proposing to
distribute their Registrable Securities through such underwriting shall enter
into an underwriting agreement in customary form with the Underwriter.
(d) Reduction of Offering. If the managing Underwriter or
Underwriters for a Demand Registration that is to be an underwritten offering
advises the Company and the Demanding Holders in writing that the dollar amount
or number of shares of Registrable Securities which the Demanding Holders desire
to sell, taken together with all other shares of Common Stock or other
securities which the Company desires to sell and the shares of Common Stock, if
any, as to which registration has been requested pursuant to the piggy-back
registration rights, if any, which other shareholders of the Company desire to
sell, exceeds the maximum dollar amount or maximum number of shares that can be
sold in such offering without adversely affecting the proposed offering price,
the timing, the distribution method or the probability of success of such
offering (the "Maximum Number of Shares"), then the Company shall include in
such registration:
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(i) first, the Registrable Securities as to which
Demand Registration has been requested by the Demanding Holders (pro
rata in accordance with the number of shares of Registrable Securities
held by each Demanding Holder, regardless of the number of shares of
Registrable Securities which such Demanding Holder has requested be
included in such registration) that can be sold without exceeding the
Maximum Number of Shares;
(ii) second, to the extent the Maximum Number of
Shares has not been reached under the foregoing clause (i), the shares
of Common Stock or other securities that the Company desires to sell
that can be sold without exceeding the Maximum Number of Shares;
(iii) third, to the extent the Maximum Number of
Shares has not been reached under the foregoing clauses (i) and (ii)
above, the shares of Common Stock for the account of other Shareholders
of the Company that the Company is obligated to register (to be
allocated among the Persons requesting inclusion in such registration
pursuant to such agreements pro rata in accordance with the number of
shares of Common Stock with respect to which such Persons has the right
to request such inclusion under such agreements, regardless of the
number of shares which such Person has actually requested be included
in such registration) that can be sold without exceeding the Maximum
Number of Shares; and
(iv) fourth, to the extent the Maximum Number of
Shares has not been reached under the foregoing clauses (i), (ii) and
(iii) above, the shares of Common Stock that other shareholders desire
to sell that can be sold without exceeding the Maximum Number of
Shares.
(e) Withdrawal. The Demanding Holders or any one of them may
withdraw their Registrable Securities from any proposed offering being effected
pursuant to a Demand Registration by giving written notice to the Company of
their election to withdraw prior to the effectiveness of the Registration
Statement. If any of the Demanding Holders so withdraw their Registrable
Securities from such proposed offering, the withdrawing Demanding Holders shall
not be obligated to pay any of the expenses incurred in connection with such
Registration Statement and no Demand Registration shall be deemed to have been
made for purposes of Section 2.1(a).
2.2 Piggy-Back Registration.
(a) Piggy-Back Rights. If at any time or from time to time the
Company proposes to file a Registration Statement under the Securities Act with
respect to an offering of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into, equity securities, by the
Company for its own account or by shareholders of the Company for their own
account (or by the Company and by shareholders of the Company) (other than a
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registration statement relating solely to the sale of securities to participants
in a Company employee or non-employee director and advisor stock option plan, a
registration relating to a corporate reorganization or other transaction under
Rule 145 of the Securities Act, a registration on any form for a limited purpose
that does not include substantially the same information as would be required to
be included in a registration statement covering the sale of the Registrable
Securities, or a registration in which the only Common Stock being registered is
Common Stock issuable upon conversion of debt securities that are also being
registered), the Company shall (x) give written notice of such proposed filing
to the holders of Registrable Securities as soon as practicable but in no event
less than thirty (30) days before the anticipated filing date (the "Piggy-Back
Notice"), which notice shall describe the amount and type of securities to be
included in such offering, the intended method(s) of distribution, and the name
of the proposed managing Underwriter or Underwriters, if any, of the offering;
and (y) offer to the holders of Registrable Securities in such notice the
opportunity to register such number of shares of Registrable Securities as such
holders may request in writing within fifteen (15) days following receipt of
such notice (a "Piggy-Back Registration"). The Company shall cause such
Registrable Securities to be included in such registration and shall use its
best efforts to cause the managing Underwriter or Underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggy-Back Registration to be included on the same terms and
conditions as any similar securities of the Company and to permit the sale or
other disposition of such Registrable Securities in accordance with the intended
method(s) of distribution thereof. If the Registration Statement proposed to be
filed by the Company pursuant to this Section 2.2(a) is for the Company's
initial public offering, LLCP shall have the right to include all Registrable
Securities then held by LLCP in such public offering; provided that LLCP notify
the Company as to the amount of Registrable Securities it requests registration
of within twenty (20) days following receipt of the Piggy-Back Notice. The
provisions of this Section 2.2 shall apply to such registration.
(b) Reduction of Offering. If the managing Underwriter or
Underwriters for a Piggy-Back Registration that is to be an underwritten
offering of shares for the Company's account advises the Company and the holders
of Registrable Securities in writing that the dollar amount or number of shares
of Common Stock which the Company desires to sell, taken together with the
Registrable Securities as to which registration has been requested hereunder and
the shares of Common Stock, if any, as to which registration has been requested
pursuant to the piggy-back registration rights which other shareholders of the
Company desire to sell, exceeds the Maximum Number of Shares, then the Company
shall include in such registration:
(i) first, the shares of Common Stock or other
securities that the Company desires to sell that can be sold without
exceeding the Maximum Number of Shares;
(ii) second, to the extent the Maximum Number of
Shares has not been reached under the foregoing clause (i) above, the
Registrable Securities as to which registration has been or may be
requested under this Section 2.2; and
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(iii) third, to the extent the Maximum Number of
Shares has not been reached under the foregoing clauses (i) and (ii)
above, the shares of Common Stock, if any, as to which registration has
been requested pursuant to the piggy-back registration rights which
such other shareholders desire to sell that can be sold without
exceeding the Maximum Number of Shares.
(c) Withdrawal. Any holder of Registrable Securities may
withdraw such holder's request for inclusion of Registrable Securities in any
Piggy-Back Registration by giving written notice to the Company of its election
to withdraw prior to the effectiveness of the Registration Statement. The
Company may also elect to withdraw a Registration Statement at any time prior to
the effectiveness of the Registration Statement. Notwithstanding any such
withdrawal, the Company shall pay all expenses incurred by the holders of
Registrable Securities in connection with such Piggy-Back Registration as
provided in Section 3.3.
2.3 Registrations on Form S-3.
(a) At any time on or after the date of this Agreement, after
consummation of a public offering by the Company pursuant to a Registration
Statement (including, for this purpose, a registration in which the only Common
Stock being registered is Common Stock issuable upon conversion of debt
securities that are also being registered), if the registration of Registrable
Securities is permitted to be made on a Registration Statement on Form S-3 (or
any similar short-form registration which may be available at such time) (a
"Form S-3"), the holders of Registrable Securities may at any time request in
writing that the Company register the resale of any or all of its or their
Registrable Securities on a Form S-3. Upon receipt of a written request for
registration of Registrable Securities on Form S-3 (a "Form S-3 Notice"), the
Company will promptly (but not later than three (3) Business Days after receipt
of such Form S-3 Notice) furnish written notice of the proposed registration to
all other holders of Registrable Securities, if any. The Company shall cause to
be filed with the Commission, as soon as practicable after receipt of a Form S-3
Notice but not later than sixty (60) days thereafter, a Form S-3 covering all of
such holder's or holders' Registrable Securities as specified in the Form S-3
Notice and all of the Registrable Securities of any other holders who join in
such request as specified in a written request given within fifteen (15) days
after receipt of such written notice from the Company. In addition, the Company
shall use its best efforts to cause each such Form S-3 to become effective as
soon as practicable but not later than ninety (90) days after the date of
receipt by the Company of the relevant Form S-3 Notice. The Company shall use
its best efforts to maintain each Form S-3 continuously effective, supplemented
and amended until the Registrable Securities covered thereby have been sold. No
registration effected pursuant to this Section 2.3 shall be counted as a Demand
Registration effected pursuant to Section 2.1.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to effect any such registration pursuant to this Section 2.3 if (i)
Form S-3 is not available to the Company for such offering; (ii) the holders of
Registrable Securities, together with the holders of
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any other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (before deduction of any underwriters' discounts
or commissions) of less than $1,000,000; (iii) the Company shall furnish to the
holders of Registrable Securities a certificate signed by the President of the
Company stating that, in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 registration to be filed at such time, in which
event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than ninety (90) days after
receipt of the request of the holders of Registrable Securities under this
Section 2.3; provided, however, that the Company shall not use this right more
than once in any twelve (12) month period; (iv) if the Company has, within the
six (6) month period preceding the date of such request, already effected one
such registration on Form S-3 for the holders of Registrable Securities pursuant
to this Section 2.3; or (v) the Company within the twelve (12) month period
preceding the date of such request has effected a registration of securities in
which the holders of Registrable Securities requesting registration pursuant to
this Section 2.3 were entitled to participate to the fullest extent they desired
pursuant to Section 2.1 or 2.2.
2.4 Purchase (and Exercise) of the Warrants by the Underwriters.
Notwithstanding any other provision of this Agreement to the contrary, in
connection with any Demand Registration or Piggy-Back Registration which is to
be an underwritten offering, to the extent all or any portion of the Registrable
Securities to be included in such registration consist of Warrant Shares, the
holders of such Registrable Securities may require that the Underwriter or
Underwriters purchase (and exercise) the Warrants or any portion thereof rather
than require the holders of the Registrable Securities to exercise the Warrants
or portion thereof in connection with such registration, unless the Underwriters
inform such holders that such a purchase and exercise of the Warrants will
materially and adversely affect the proposed offering. The Company shall take
all such action and provide all such assistance as may be reasonably requested
by the holders of Registrable Securities to facilitate any such purchase (and
exercise) of the Warrants agreed to by the Underwriter or Underwriters,
including, without limitation, issuing the Warrant Shares or any portion thereof
to be issued within such time period as will permit the Underwriters to make and
complete the distribution contemplated by the underwriting; provided, however,
that the Company shall not be required to register the Warrants pursuant to this
Section 2.4.
3. REGISTRATION PROCEDURES.
3.1 Filings; Information. Whenever the Company is required to effect
the registration of any Registrable Securities pursuant to Section 2, the
Company shall use its best efforts to effect the registration and sale of such
Registrable Securities in accordance with the intended method(s) of distribution
thereof as expeditiously as practicable, and in connection with any such
request:
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(a) Filing Registration Statement. The Company shall, as
expeditiously as possible, prepare and file with the Commission, within sixty
(60) days after receipt of a request for a Demand Registration pursuant to
Section 2.1, a Registration Statement on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate and which form
shall be available for the sale of all Registrable Securities to be registered
thereunder in accordance with the intended method(s) of distribution thereof,
and shall use its best efforts to cause such Registration Statement to become
and remain effective for the period required by Section 3.1(c); provided,
however, that the Company shall have the right to defer such registration for up
to ninety (90) days if the Company shall furnish to the holders a certificate
signed by the President and Chief Executive Officer of the Company stating that,
in the good faith judgment of the Board of Directors of the Company, it would be
materially detrimental to the Company and its shareholders for such Registration
Statement to be effected at such time; provided further, however, that in the
event the Company elects to exercise such right with respect to any
registration, it shall not have the right to exercise such right again prior to
the date which is twelve (12) months after the date on which the Registration
Statement relating to such deferred registration is declared effective.
(b) Copies. The Company shall, prior to filing a Registration
Statement or prospectus, or any amendment or supplement thereto, furnish without
charge to the holders of Registrable Securities included in such registration,
and such holders' legal counsel, copies of such Registration Statement as
proposed to be filed, each amendment and supplement to such Registration
Statement (in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such Registration
Statement (including each preliminary prospectus), and such other documents as
the holders of Registrable Securities included in such registration or legal
counsel for any such holders may request in order to facilitate the disposition
of the Registrable Securities owned by such holders.
(c) Amendments and Supplements. The Company shall prepare and
file with the Commission such amendments, including post-effective amendments,
and supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and in compliance with the provisions of the Securities Act until all
Registrable Securities and other securities covered by such Registration
Statement have been disposed of in accordance with the intended method(s) of
distribution set forth in such Registration Statement (which period shall not
exceed the sum of one hundred eighty (180) days plus any period during which any
such disposition is interfered with by any stop order, injunction or other order
or requirement of the Commission or any governmental agency or court) or such
securities have been withdrawn.
(d) Notification. After the filing of a Registration
Statement, the Company shall promptly, and in no event more than two (2)
Business Days, notify the holders of Registrable Securities included in such
registration statement, and confirm such advice in writing: (i) when such
Registration Statement has been filed or amended or supplemented and becomes
effective, (ii) when any post-effective amendment to such Registration Statement
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becomes effective, (iii) of any stop order issued or threatened by the
Commission (and the Company shall take all actions required to prevent the entry
of such stop order or to remove it if entered) and (iv) of any request by the
Commission for any amendment or supplement to such Registration Statement or any
prospectus relating thereto or for additional information or of the occurrence
of an event requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of the securities
covered by such Registration Statement, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and promptly make available to the holders of Registrable Securities included in
such Registration Statement any such supplement or amendment; except that before
filing with the Commission a Registration Statement or prospectus or any
amendment or supplement thereto, including documents incorporated by reference,
the Company shall furnish to the holders of Registrable Securities included in
such Registration Statement and to the legal counsel for any such holders,
copies of all such documents proposed to be filed sufficiently in advance of
filing (and in no event less than three (3) Business Days prior to filing) to
provide such holders and legal counsel with a reasonable opportunity to review
such documents and comment thereon, and the Company shall not file any
Registration Statement or prospectus or amendment or supplement thereto,
including documents incorporated by reference, to which such holders or their
legal counsel shall object.
(e) State Securities Laws Compliance. The Company shall use
its best efforts to (i) register or qualify the Registrable Securities covered
by the Registration Statement under such securities or "blue sky" laws of such
jurisdictions in the United States as the holders of Registrable Securities
included in such Registration Statement (in light of their intended plan of
distribution) may request and (ii) cause such Registrable Securities covered by
the Registration Statement to be registered with or approved by such other
Governmental Authorities as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be
necessary or advisable to enable the holders of Registrable Securities included
in such Registration Statement to consummate the disposition of such Registrable
Securities in such jurisdictions; provided, however, that the Company shall not
be required to qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3.1(e), or
subject itself to taxation in any such jurisdiction.
(f) Agreements for Disposition. The Company shall enter into
customary agreements (including, if applicable, an underwriting agreement in
customary form) and take such other actions as are reasonably required in order
to expedite or facilitate the disposition of such Registrable Securities. The
representations, warranties and covenants of the Company in any underwriting
agreement which are made to or for the benefit of any Underwriters shall also be
made to and for the benefit of the holders of Registrable Securities included in
such registration statement. No holder of Registrable Securities included in
such registration statement shall be required to make any representations or
warranties in the underwriting agreement except, if applicable, with respect to
such holder's organization, good standing, authority, title to Registrable
Securities, lack of conflict of such sale with such holder's material agreements
and
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organizational documents, and with respect to written information relating to
such holder that such holder has furnished in writing expressly for inclusion in
such registration statement.
(g) Cooperation. The President and Chief Executive Officer of
the Company, the Chief Financial Officer of the Company, any vice president of
the Company and any other members of the management of the Company shall
cooperate fully in any offering of Registrable Securities hereunder, which
cooperation shall include, without limitation, the preparation of the
Registration Statement with respect to such offering and all other offering
materials and related documents, and participation in meetings with
Underwriters, attorneys, accountants and potential investors.
(h) Records. The Company shall make available for inspection
by the holders of Registrable Securities included in such Registration
Statement, any Underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other professional
retained by any holder of Registrable Securities included in such Registration
Statement or any Underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, as shall be necessary to
enable them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information requested
by any of them in connection with such registration statement.
(i) Opinions and Comfort Letters. At the request of a holder
of Registrable Securities, the Company shall furnish to such holder of
Registrable Securities included in any Registration Statement a signed
counterpart, addressed to such holder, of (i) any opinion of counsel to the
Company delivered to any Underwriter and (ii) any comfort letter from the
Company's independent public accountants delivered to any Underwriter. In the
event no legal opinion is delivered to any Underwriter, the Company shall
furnish to each requesting holder of Registrable Securities included in such
Registration Statement, at any time that such holder elects to use a prospectus,
an opinion of counsel to the Company to the effect that the Registration
Statement containing such prospectus has been declared effective and that no
stop order is in effect.
(j) Earnings Statement. The Company shall comply with all
applicable rules and regulations of the Commission and the Securities Act, and
make available to its shareholders, as soon as practicable, an earnings
statement covering a period of twelve (12) months, beginning within three (3)
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder.
(k) Listing. The Company shall use its best efforts to cause
all Registrable Securities included in any registration to be listed on such
national securities exchange or otherwise designated for trading in the same
manner as similar securities issued by the Company are then listed or designated
or, if no such similar securities are then listed or designated, in a
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manner satisfactory to the holders of a majority of the Registrable Securities
included in such registration.
3.2 Obligation to Suspend Distribution. Upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
3.1(d)(iv), each holder of Registrable Securities included in any registration
shall immediately discontinue disposition of such Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such holder receives the supplemented or amended prospectus contemplated
by Section 3.1(d)(iv), and, if so directed by the Company, each such holder will
deliver to the Company all copies, other than permanent file copies then in such
holder's possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice.
3.3 Registration Expenses. The Company shall bear all costs and
expenses incurred in connection with any Demand Registration pursuant to Section
2.1, any Piggy-Back Registration pursuant to Section 2.2 and any registration on
Form S-3 pursuant to Section 2.3 and all expenses incurred in performing or
complying with its other obligations under this Agreement, whether or not the
Registration Statement becomes effective, including, without limitation, (i) all
registration and filing fees; (ii) fees and expenses of compliance with state
securities or "blue sky" laws (including fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities); (iii)
printing expenses; (iv) the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees); (v) the
fees and expenses incurred in connection with the listing of the Registrable
Securities as required by Section 3.1(k); (vi) National Association of
Securities Dealers, Inc. fees, if any; (vii) fees and disbursements of counsel
for the Company and fees and expenses for independent certified public
accountants retained by the Company (including the expenses or costs associated
with the delivery of any opinions or comfort letters requested pursuant to
Section 3.1(i)); (viii) the fees and expenses of any special experts retained by
the Company in connection with such registration; (ix) the purchase of selling
stockholder errors and omissions insurance for the benefit of LLCP in any amount
equivalent to the gross proceeds to be received by LLCP in connection with any
registration under this Agreement, on terms and conditions satisfactory to LLCP,
at a cost not to exceed $75,000; and (x) all fees and expenses incurred by LLCP
in connection with its participation in such registration, including, without
limitation, the fees and expenses of LLCP's legal counsel, accountants and other
experts selected by LLCP. The Company shall have no obligation to pay any
underwriting fees, discounts or selling commissions attributable to the
Registrable Securities being sold by LLCP, which expenses shall be borne by
LLCP.
3.4 Information. The holders of Registrable Securities shall provide
such information as reasonably requested by the Company in connection with the
preparation of any registration statement, including amendments and supplements
thereto, in order to effect the registration of any Registrable Securities under
the Securities Act pursuant to Sections 2.
4. INDEMNIFICATION AND CONTRIBUTION.
12
4.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless LLCP and each other holder of Registrable Securities, and each of
their respective officers, employees, Affiliates (including, without limitation,
Xxxxxx Xxxxxxxxx Capital Partners, Inc.), directors, partners, members,
attorneys and agents, and each Person, if any, who controls LLCP and each other
holder of Registrable Securities (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) (each, an "LLCP Indemnified
Party"), from and against any expenses, losses, judgments, claims, damages or
liabilities, whether joint or several, arising out of or based upon any untrue
statement (or alleged untrue statement) of a material fact contained in any
Registration Statement under which such Registrable Securities were registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arising out of or based upon any
omission (or alleged omission) to state 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 any rule or regulation
promulgated thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration; and
the Company shall promptly, but in no event more than five (5) Business Days
after request for payment, pay directly or reimburse each LLCP Indemnified Party
for any legal and any other expenses reasonably incurred by such LLCP
Indemnified Party in connection with investigating and defending any such
expense, loss, judgment, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
expense, loss, claim, damage or liability arises out of or is based upon any
untrue statement or omission made in such Registration Statement, preliminary
prospectus, final prospectus, or summary prospectus, or any such amendment or
supplement, in reliance upon and in conformity with information furnished to the
Company, in writing, by such selling holder and stated to be specifically for
use therein. The Company also shall indemnify any Underwriter of the Registrable
Securities, their officers, affiliates, directors, partners, members and agents
and each Person who controls such Underwriters on substantially the same basis
as that of the indemnification provided above in this Section 4.1.
4.2 Indemnification by Holders of Registrable Securities. Each selling
holder of Registrable Securities will, in the event that any Registrable
Securities held by such selling holder as to which any registration is being
effected under the Securities Act pursuant to this Agreement, indemnify and hold
harmless (severally and not jointly) the Company, each of its directors and
officers, attorneys and agents, and each Underwriter (if any), and each other
Person, if any, who controls such selling holder or such Underwriter within the
meaning of the Securities Act, against any losses, claims, judgments, damages or
liabilities, whether joint or several, insofar as such losses, claims,
judgments, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement of a material fact contained in any
Registration Statement under which such Registrable Securities were registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission to state a material fact required to be stated therein or
13
necessary to make the statement therein not misleading, if the statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company by such selling holder and stated to be specifically
for use therein, and shall, within five (5) Business Days after a request
therefor, reimburse the Company, its directors and officers, attorneys and
agents, and each such controlling Person for any legal or other expenses
reasonably incurred by any of them in connection with investigation or defending
any such loss, claim, damage, liability or action. Notwithstanding anything to
the contrary, in no event shall any holder of Registrable Securities be liable
or responsible for any amount in excess of the net proceeds actually received by
such holder after Taxes from the sale of Registrable Securities.
4.3 Conduct of Indemnification Proceedings. Promptly after receipt by
any Person of any written notice of any loss, claim, damage or liability or any
action in respect of which indemnity may be sought pursuant to Section 4.1 or
4.2, such Person (the "Indemnified Party") shall, if a claim in respect thereof
is to be made against any other Person for indemnification hereunder, notify
such other Person (the "Indemnifying Party") in writing of the loss, claim,
judgment, damage, liability or action; provided, however, that the failure by
the Indemnified Party to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which the Indemnifying Party may have to
such Indemnified Party hereunder, except to the extent the Indemnifying Party is
actually prejudiced by such failure. If the Indemnified Party is seeking
indemnification with respect to any claim or action brought against the
Indemnified Party, then the Indemnifying Party shall be entitled to participate
in such claim or action, and, to the extent that it wishes, jointly with all
other Indemnifying Parties, to assume the defense thereof with counsel
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that in any action in which both the
Indemnified Party and the Indemnifying Party are named as defendants, the
Indemnified Party shall have the right to employ separate counsel (but no more
than one such separate counsel for all Indemnified Parties) to represent the
Indemnified Party and its controlling Persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Indemnified Party against the Indemnifying Party, with the fees and expenses of
such counsel to be paid by such Indemnifying Party if, based upon the written
opinion of counsel of such Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld), consent to entry of judgment or effect any settlement of any claim or
pending or threatened proceeding in respect of which the Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such judgment or settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such claim
or proceeding.
14
4.4 Contribution. If the indemnification provided for in the foregoing
Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of
any loss, claim, damage, liability or action referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the Indemnified Parties and the
Indemnifying Parties in connection with the actions or omissions which resulted
in such loss, claim, damage, liability or action, as well as any other relevant
equitable considerations. The relative fault of any Indemnified Party and any
Indemnifying Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such Indemnified Party or such Indemnifying Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 4.4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of any loss, claim,
damage, liability or action referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding anything to
the contrary, in no event shall any holder of Registrable Securities be required
to contribute any amount in excess of the net proceeds actually received by such
holder after Taxes from the sale of Registrable Securities which gave rise to
such contribution obligation. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
50 UNDERWRITING AND DISTRIBUTION.
5.1 Rule 144. The Company covenants that as long as the Company is
subject to the reporting requirements of the Exchange Act, it shall file any
reports required to be filed by it under the Securities Act and the Exchange Act
and shall take such further action as the holders of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 under the
Securities Act, as such Rules may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission.
5.2 Restrictions on Sale by the Company and Others. The Company agrees
that it and its Affiliates (a) will not effect any sale or distribution of any
securities similar to those being registered in accordance with Section 2.1, or
any securities convertible into or exchangeable or exercisable for such
securities, during the ninety (90) days prior to, and during the one hundred
15
eighty (180) day period commencing on, the effective date of any Demand
Registration (except as part of such Demand Registration to the extent permitted
by Section 2.1(d)); and (b) will use reasonable best efforts to require that any
agreement entered into after the date hereof pursuant to which the Company
issues or agrees to issue any privately placed securities shall contain a
provision under which holders of such securities agree not to effect any sale or
distribution of any such securities during the periods described in (a) above,
in each case including a sale pursuant to Rule 144 under the Securities Act
(except as part of any such registration, if permitted); provided, however, that
the provisions of this Section 5.2 shall not prevent the conversion or exchange
of any securities pursuant to their terms into or for other securities and shall
not prevent the issuance of securities by the Company under any employee
benefit, stock option or stock subscription plans.
60 MISCELLANEOUS.
6.1 Other Registration Rights.
(a) The Company hereby represents and warrants to LLCP that no
Person has any right to require the Company to register any shares of the
Capital Stock of the Company for sale or to include any shares of the Capital
Stock of the Company in any registration filed by the Company for the sale of
shares of Capital Stock for its own account or for the account of any other
Person.
(b) From and after the date of this Agreement, the Company
shall not, without the prior written consent of LLCP, (i) enter into any
agreement granting any demand registration right (i.e., the right to require the
Company to register the sale of any shares of the Company's capital stock); (ii)
enter into any agreement granting any piggy-back registration right (i.e., the
right to require the Company to register the sale of any shares of the Company's
capital stock in any registration filed by the Company for the sale of shares of
capital stock for its own account or for the account of any other Person) which
is inconsistent with, equal to or superior to any registration rights granted
hereunder; provided, however, that the Company may grant piggy-back registration
rights to Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx, provided, further, that
such rights are no more favorable than the rights granted to LLCP herein and
such rights may not be exercised in the Initial Public Offering; or (iii) enter
into any agreement that adversely affects the rights granted to the holders of
Registrable Securities hereunder.
6.2 Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, the parties and their respective successors and
permitted assigns, pursuant to the provisions of this Section 6.2. The rights
and obligations of LLCP under this Agreement shall be freely assignable in whole
or in part. Each such assignee, by accepting such assignment of the rights of
the assignor hereunder, shall be deemed to have agreed to and be bound by the
obligations of the assignor hereunder. The rights and obligations of the Company
hereunder may not be assigned or delegated.
16
6.3 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if transmitted by telecopier with
receipt acknowledged, or upon delivery, if delivered personally or by recognized
commercial courier with receipt acknowledged, or upon the expiration of 72 hours
after mailing, if mailed by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
(i) If to LLCP, to:
Xxxxxx Xxxxxxxxx Capital Partners II, L.P.
c/o Levine Xxxxxxxxx Capital Partners, Inc.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
--------------
Xxxxxxx & XxXxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(ii) If to the Company, at:
The Quizno's Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Legal Department
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or at such other address or addresses as the Purchaser or the Company, as the
case may be, may specify by written notice given in accordance with this Section
6.3.
6.4 Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
17
6.5 Counterparts. This Agreement may be executed in two or more
counterparts and by facsimile, each of which shall be an original, but all of
which together shall constitute one and the same instrument.
6.6 Descriptive Headings, Construction and Interpretation. The
descriptive headings of the several paragraphs of this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
are not to be considered in construing or interpreting this Agreement. All
section, preamble, recital, clause and party references are to this Agreement
unless otherwise stated. No party, nor its counsel, shall be deemed the drafter
of this Agreement for purposes of construing the provisions of this Agreement,
and all provisions of this Agreement shall be construed in accordance with their
fair meaning, and not strictly for or against any party.
6.7 Waivers and Amendments. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally or by course of
dealing, except by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought.
6.8 Remedies. In the event that the Company fails to observe or perform
any covenant or agreement to be observed or performed under this Agreement, LLCP
or any other holder of Registrable Securities may proceed to protect and enforce
its rights by suit in equity or action at law, whether for specific performance
of any term contained in this Agreement or for an injunction against the breach
of any such term or in aid of the exercise of any power granted in this
Agreement or to enforce any other legal or equitable right, or to take any one
or more of such actions. The Company hereby agrees that LLCP shall not be
required or otherwise obligated to, and hereby waives any right to demand that
LLCP, post any performance or other bond in connection with the enforcement of
its rights and remedies hereunder. The Company agrees to pay all fees, costs,
and expenses, including without limitation, fees and expenses of attorneys,
accountants and other experts, and all fees, costs and expenses of appeals,
incurred by LLCP or any other holder of Registrable Securities in connection
with the enforcement of this Agreement or the collection or any sums due
hereunder, whether or not suit is commenced. None of the rights, powers or
remedies conferred under this Agreement shall be mutually exclusive, and each
such right, power or remedy shall be cumulative and in addition to any other
right, power or remedy whether conferred by this Agreement or now or hereafter
available at law, in equity, by statute or otherwise.
6.9 Governing Law. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY, AND PERFORMANCE, THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE (WITHOUT
REGARD TO THE CHOICE OF LAW OR CONFLICTS OF LAW PROVISIONS THEREOF) AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
18
6.10 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE COMPANY AND LLCP WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE COMPANY AND LLCP
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, AND UNDERSTANDING THEY ARE WAIVING A CONSTITUTIONAL
RIGHT, THE COMPANY AND LLCP (BY ACCEPTANCE HEREOF) WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO, THIS AGREEMENT OR THE TRANSACTIONS COMPLETED HEREBY.
19
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be executed and delivered by their duly authorized representatives
as of the date first written above.
COMPANY
THE QUIZNO'S CORPORATION, a Colorado corporation
By:
----------------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
By:
----------------------------------------------
Name:
Title:
LLCP
XXXXXX XXXXXXXXX CAPITAL PARTNERS, INC.,
a California corporation
On behalf of XXXXXX XXXXXXXXX CAPITAL
PARTNERS II, L.P., a California limited
partnership
By:
------------------------------------------
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
