REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of March 29,
1996, by and among American Family Restaurants, Inc., a Georgia corporation
("AFR") and the persons whose names appear on the signature page hereto (each
a "Holder," and, collectively, the "Holders").
WHEREAS
A. Each of the Holders is a shareholder of Denwest Restaurant Corp., a
Delaware corporation ("DRC").
B. AFR and DRC have entered into an Amended and Restated Agreement and
Plan of Merger dated as of August 9, 1995 (the "Merger Agreement") pursuant
to which DRC will merge with and into APR (the "Merger"), and the name of AFR
will be changed to DenAmerica Corp. ("DenAmerica").
C. Pursuant to the terms of the Merger Agreement, upon the consummation
of the Merger (i) all outstanding shares of preferred stock of DRC (the "DRC
Preferred Stock") held by the holders will be exchange for shares of common
stock, par value $.10 per share, of DenAmerica (the "DenAmerica Common
Stock") and Series A 13% Subordinated Notes due 2003 of DenAmerica (the
"Series A Notes") together with warrants to purchase shares of DenAmerica
Common Stock (the "DenAmerica Warrants"); and (ii) all outstanding shares of
common stock of DRC (the "DRC Common Stock") will be exchanged for shares of
DenAmerica Common Stock and Series B 13% Subordinated Notes due 2003 of
DenAmerica (the "Series B Notes") together with DenAmerica Warrants.
D. The Merger Agreement requires that, as a condition precedent to the
consummation of the Merger, AFR and each of the Holders shall have entered
into this Agreement on or before the "Effective Date" of the Merger, as that
term is defined in the Merger Agreement.
E. The Holders understand that DenAmerica intends to effect a financing
(the "Subsequent Financing"), which may include an offering of DenAmerica
Common Stock or other securities of DenAmerica, within 36 months after the
Effective Date of the Merger, for the purpose (among others) of redeeming all
then outstanding Series A Notes and Series B Notes (together, the "DenAmerica
Notes").
F. The Merger Agreement also requires that, as a condition precedent to
the consummation of the Merger, AFR and each of the Holders whose names are
listed on Exhibit "A" hereto shall have entered into agreements (the "Lockup
Agreements"), in the form attached as Exhibit "B" hereto, restricting the
right of such Holders to transfer securities of DenAmerica
issued to them in exchange for shares of the DRC Common Stock until the
earlier of (i) the completion of the Subsequent Financing or (ii) 24 months
following the Effective Date of the Merger.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:
A. REGISTRATION RIGHTS
1.1 Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Holder" means any person owning or having the right to
acquire Registrable Securities (as defined below).
(c) The term "Maximum Includable Securities" shall mean the maximum
number of shares of each type or class of Registrable Securities that a
managing or principal underwriter, in its good faith judgment, deems
practicable to offer and sell at that time in a firm commitment underwritten
offering without materially adversely affecting the marketability or price of
the Registrable Securities to be offered. Where more than one type or class
of Registrable Securities are to be included in a registration, the managing
or principal underwriter of the offering shall designate the maximum number
of each such type or class of securities that is included in the Maximum
Includable Securities.
(d) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering
of effectiveness of such registration statement or document.
(e) The term "Registrable Securities" means (i) the shares of
DenAmerica Common Stock issued to the Holders in exchange for shares of DRC
Common Stock and DRC Preferred Stock; (ii) the shares of DenAmerica Common
Stock issuable upon exercise of DenAmerica Warrants; and (iii) any shares of
DenAmerica Common Stock or other securities of DenAmerica issued as (or
issuable on the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, the DenAmerica Notes or any of
the securities referred to in (i) and (ii) above.
(f) The number of shares of "Registrable Securities then outstanding"
shall be equal to the sum of the number of shares of DenAmerica Common Stock
outstanding
which are Registrable Securities plus the number of shares of DenAmerica
Common Stock issuable upon conversion or exercise of all other outstanding
Registrable Securities.
(g) Other capitalized terms shall have the meanings ascribed to them
in the Merger Agreement.
1.2 Request for Registration.
(a) If DenAmerica shall receive at any time after the Effective Date
of the Merger a written request (i) from the Holders of a majority of the
Registrable Securities then outstanding that DenAmerica file a registration
statement under the Act covering the registration of at least fifty percent
(50%) of the Registrable Securities then outstanding (or a lesser percentage
if the anticipated aggregate offering price, net of underwriting discounts
and commissions, would exceed $1,000,000), or (ii) from BancBoston Ventures,
Inc. ("BBV"), so long as BBV holds Registrable Securities representing not
less than 500,000 shares of DenAmerica Common Stock then outstanding or
issuable upon exercise of DenAmerica Warrants, that DenAmerica file a
registration statement under the Act covering the registration of Registrable
Securities held by BBV representing an anticipated aggregate offering price,
net of underwriting discounts and commissions, of not less than $1,000,000,
then DenAmerica shall, within ten (10) days of the receipt thereof, give
written notice of such request to all Holders and shall, subject to the
limitations of subsection 1.2(b), effect as soon as practicable, and in any
event within 120 days of the receipt of such request, the registration under
the Act of all Registrable Securities which the Holders request to be
registered within thirty (30) days of the mailing of such notice by
DenAmerica in accordance with the notice provisions of Section 2.2 hereof.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise
DenAmerica of' the identity of the proposed managing or principal
underwriter(s) as a part of their request made pursuant to this Section 1.2.
The selection of such managing or principal underwriter(s) shall be subject
to the approval of DenAmerica, such approval not to be unreasonably withheld.
DenAmerica shall include information regarding the identity of the managing
or principal underwriter and the proposed terms of the underwriting in the
written notice to all Holders referred to in Subsection 1.2(a). The right of
any Holder to include his Registrable Securities in such underwritten
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of
the initiating Holders and such Holder) to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting
shall (together with DenAmerica as provided in subsection 1.4(j)) enter into
an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders and reasonably acceptable to DenAmerica.
(c) Notwithstanding any other provision of this Section 1.2, if the
underwriter advises DenAmerica in writing that marketing factors require a
limitation of the number of shares or other securities to be underwritten
then DenAmerica shall furnish all Holders of Registrable Securities which
would otherwise be underwritten pursuant hereto with a written statement of
the managing or principal underwriter as to the Maximum Includable
Securities, and the number of each type or class of Registrable Securities
that may be included in the underwriting shall be allocated as follows:
(i) If the registration under this Section 1.2 is initiated at the
request of Holders pursuant to Section 1.2(a)(i), the number of each type or
class of Registrable Securities that may be included in the underwriting
shall be allocated among all Holders requesting registration on a pro rata
basis, with the number of each type or class of Registrable Securities of
each Holder thereof included in the registration to be that number determined
by multiplying the total number of such type or class of security included in
the Maximum Includable Securities by a fraction, the numerator of which will
be the total number of such type or class of security that such Holder owns,
and the denominator of which will be the total number of such type or class
of security owned by all Holders that have requested inclusion of such type
or class of security in the registration. Any reduction of more than 50% of
the Registrable Securities sought to be registered will not be considered a
registration under this Section 1.2.
(ii) If the registration under this Section 1.2 is initiated at
the request of BBV pursuant to Section 1.2(a)(ii), then DenAmerica shall
include in such registration that number of each type or class of Registrable
Securities held by BBV that does not exceed the number of such type or class
of Registrable Securities included in the Maximum Includable Securities. If
the number of a type or class of Registrable Securities Maximum Includable
Securities exceeds the number of such type or class requested by BBV to be
included in such registration, then DenAmerica shall include in such
registration that number of such type or class of Registrable Securities
requested to be included in such registration by Holders other than BBV,
subject to the pro rata allocation set forth in Section 1.2(c)(i) above in
the event that the number of a type or class of Registrable Securities
requested to be included in such registration by such other Holders exceeds
the then-remaining number of Maximum Includable Securities for such type or
class of Registrable Securities.
(d) DenAmerica is obligated to effect only one (1) such registration
pursuant to this Section 1.2 in each twelve (12) month period beginning on
the Effective Date. The Holders shall have the right to require DenAmerica to
effect an aggregate of three (3) registrations pursuant to this Section 1.2.
(e) Notwithstanding the foregoing, if DenAmerica shall furnish to
Holders requesting a registration statement pursuant to this Section 1.2 a
certificate signed by the President of DenAmerica stating that in the good
faith judgment of the Board of Directors of DenAmerica it would be seriously
detrimental to DenAmerica and its shareholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, DenAmerica shall have the right to
defer such filing for a period of not more than 90 days after receipt of the
request of the Initiating Holders, or for a period of not more than 120 days
after receipt of the request of the Initiating Holders in the event such
deferral is a result of a Subsequent Financing; provided, however, that
DenAmerica may not utilize this right more than once in any twelve month
period.
(f) If the Holders give written notice requesting registration of its
Registrable Securities pursuant to this Section 1.2, and if DenAmerica at
that time is not eligible to register its securities on Form X-0, XxxXxxxxxx
shall prepare and file a registration statement on Form S-1 or S-2 (or other
appropriate form for the general registration of securities) as may be
appropriate in accordance with the terms and conditions set forth in this
Section 1.2.
(g) DenAmerica may propose to include additional shares ("Additional
Shares") of DenAmerica Common Stock or other securities to be sold by
DenAmerica and/or by other holders of DenAmerica Common Stock or other
securities in any registration statement to be filed pursuant to this Section
1.2. The Holders shall have the right to reduce the number of Additional
Shares requested to be registered by DenAmerica pursuant to this Section 1.2
if, in the good faith opinion of the underwriter or underwriters of such
offering, the inclusion of such Additional Shares would materially adversely
affect the marketability or price of the Registrable Securities to be offered
by the Holders in such registration.
(h) From and after the date hereof, DenAmerica shall not, without the
prior written consent of the Holders of a majority of the Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of DenAmerica that would allow such holder or prospective
holder to require DenAmerica to include shares or securities in any
registration initiated under Section 1.2 of this Agreement, unless under the
terms of such agreement such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
such securities will not reduce the amount of Registrable Securities that is
included.
1.3 Piggy-Back Registration Rights.
(a) Except as provided in Section 1.3(e), if at any time DenAmerica
proposes to file on its behalf and/or on behalf of any of its security
holders a registration statement under the Act on Form X-0, X-0 or S-3 (or
any other appropriate form for the general registration of securities) with
respect to any of its capital stock or other securities, DenAmerica shall
give each Holder written notice at least thirty (30) days before the filing
with the Securities and Exchange Commission (the "SEC") of such registration
statement. If any Holder desires to have Registrable Securities registered
pursuant to this Section 1.3, such Holder shall so advise DenAmerica in
writing within twenty (20) days after the date of mailing of such notice from
DenAmerica. DenAmerica shall thereupon include in such filing the number of
Registrable Securities for which registration is so requested, subject to its
right to reduce the number of
Registrable Securities as hereinafter provided, and shall use its best
efforts to effect registration under the Act of such Registrable Securities.
Notwithstanding the foregoing, DenAmerica shall not be required to provide
notice of filing of a registration statement and to include therein any
Registrable Securities if the proposed registration is:
(1) a registration of stock options, stock purchases or
compensation or incentive plans, or of securities issued or issuable
pursuant to any such plan or a dividend reinvestment plan on Form
S-8
or other comparable form then in effect; or
(2) a registration of securities proposed to be issued in
exchange for securities or assets of, or in connection with, a
merger
or consolidation with another corporation.
(b) In the event the offering in which any Holder's Registrable
Securities are to be included pursuant to this Section 1.3 is to be
underwritten on a firm commitment basis, DenAmerica shall furnish the Holders
with a written statement of the managing or principal underwriter as to the
Maximum Includable Securities as soon as practicable after the expiration of
the twenty (20) day period provided for in Section 1.3(a). If the total
number of securities proposed to be included in such registration statement
is in excess of the Maximum Includable Securities, the number of securities
to be included within the coverage of such registration statement shall be
reduced to the Maximum Includable Securities as follows:
(1) no reduction shall be made in the number of shares of
capital stock or other securities to be registered for the account
of DenAmerica; and
(2) the number of Registrable Securities and other securities
that may be included in the registration, if any, shall be allocated
among the Holders of Registrable Securities and holders of other
securities (the "Other Holders") requesting inclusion on a pro rata
basis, with the number of each type or class of securities of each
Holder and Other Holder thereof included in the registration to be
that number determined by multiplying (A) the total number of such
type or class of security included in the Maximum Includable
Securities less (B) the number of such type or class of security to
be registered for the account of DenAmerica, by a fraction, the
numerator of which will be the total number of such type or class of
security that such Holder or Other Holder owns, and the denominator
of which will be the total number of such type or class of security
owned by all Holders and Other Holders that have requested inclusion
of such type or class of security in the registration.
Notwithstanding the foregoing, DenAmerica shall exercise its best
efforts to assist in obtaining inclusion in any such registration of all
Registrable Securities requested
to be included pursuant to this Section 1.3 without reduction, so long as the
marketability or price of shares to be offered is not materially adversely
affected.
(c) To the extent that the offering of Registrable Securities proposed
to be included in a registration statement is not to be underwritten on a
firm commitment basis, then there shall be no reduction in the number of
Holders' Registrable Securities to be registered in such registration
statement. If such offering is to be underwritten on a best efforts basis,
the shares of DenAmerica Common Stock or other securities of all
participants, including DenAmerica and the Holders, shall be sold in a
proportionate basis, based upon the number of shares of DenAmerica Common
Stock or other securities registered on their behalf.
(d) DenAmerica shall, in its sole discretion, select the underwriter
or underwriters, if any, who are to undertake the sale and distribution of
the Registrable Securities to be included in a registration statement filed
under the provisions of this Section 1.3.
(e) At such time that DenAmerica intends to effect the Subsequent
Financing, it shall notify the Holders of such intent and shall designate the
proposed offering as the Subsequent Financing. Except to the extent that
DenAmerica, in its sole discretion, may otherwise permit, the Holders shall
have no right to have any Registrable Securities registered pursuant to this
Section 1.3 in the Subsequent Financing.
(f) The right to registration provided in this Section 1.3 is in
addition to and not in lieu of the demand registration rights provided in
Section 1.2. The provisions of this Section 1.3 shall apply even though the
Holders requesting registration pursuant to this Section 1.3 are or may be
free, at the time, to sell any or all of the Registrable Securities with
respect to which such registration was requested in accordance with Rule 144
(or any similar rule or regulation) promulgated under the Act.
1.4 Obligations of DenAmerica. Whenever required under Section 1.2 or
1.3 to effect the registration of any Registrable Securities, DenAmerica
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement on such
form as DenAmerica deems appropriate with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective, and, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such registration
statement effective for up to one hundred eighty (180) days, or such shorter
period as is required to dispose of all securities covered by such
registration statement.
(b) Notify the Holders promptly after it has received notice of the
time when such registration statement has become effective or any supplement
to any prospectus forming a part of such registration statement has been
filed.
(c) Notify the Holders promptly of any request by the SEC for the
amending or supplementing of such registration statement or prospectus or of
additional information.
(d) Prepare and file with the 513C, and promptly notify the Holders of
the filing of, such amendments and supplements to such registration statement
and the prospectus used in connection with such registration statement as may
be necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement.
(e) Prepare and file with the SEC promptly upon the request of any
such Holders, any amendments or supplements to such registration statement or
prospectus which, in the reasonable opinion of special counsel for such
Holders, is required under the Act or the rules and regulations thereunder in
connection with the distribution of the Registrable Securities by such
Holders.
(f) Not file any amendment or supplement to the registration statement
or prospectus to which any Holders shall reasonably object after having been
furnished a copy a reasonable time prior to the filing thereof.
(g) Advise each Holder promptly after it has received notice or
obtained knowledge thereof of the issuance of any stop order by the SEC
suspending the effectiveness of any 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
withdrawal if such stop order should be issued.
(h) Furnish to the Holders such numbers of copies of a prospectus.
including a preliminary prospectus, in conformity with the requirements of
the Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(i) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue
Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that DenAmerica shall not be required in connection
therewith or as a condition thereto to qualify to do business, to file a
general consent to service of process, or to become subject to tax liability
in any such states or jurisdictions or to agree to any restrictions as to the
conduct of its business in the ordinary course thereof.
(j) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(k) Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
Act, of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
(l) Prepare and promptly file with the SEC, and promptly notify such
Holders or their special counsel of the filing of, any amendment or
supplement 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 Act, any
event has occurred as the result of which any such prospectus must be amended
in order that it does not make any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, not
misleading, in light of the circumstances in which they were made.
(m) In case any of such Holders or any underwriter for any such
Holders is required to deliver a prospectus at a time when the prospectus
then in effect may no longer be used under the Act, prepare promptly upon
request such amendment or amendments to such registration statement and such
prospectus as may be necessary to permit compliance with the requirements of
the Act.
(n) If any of the Registrable Securities are then listed on any
securities exchange or the Nasdaq Stock Market, DenAmerica will cause all
such Registrable Securities covered by such registration statement to be
listed on such exchange or the Nasdaq Stock Market.
(o) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Section 1, on the date that such
Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement, if such securities
are being sold through underwriters, or, if such securities are not being
sold through underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing DenAmerica for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering, addressed to the underwriters, if any,
and to the Holders requesting registration of Registrable Securities and (ii)
a letter dated such date, from the independent certified public accountants
of DenAmerica, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holder requesting
registration of Registrable Securities.
1.5 Obligations of Holders. It shall be a condition precedent to the
obligations of DenAmerica to take any action pursuant to this Agreement that
each of the selling Holders shall:
(a) Furnish to DenAmerica such information regarding themselves,
the Registrable Securities held by them, the intended method of sale or other
disposition of such securities, the identity of and compensation to be paid
to any underwriters proposed to be employed in connection with such sale or
other disposition, and such other information as may reasonably be required
to effect the registration of their Registrable Securities.
(b) Notify DenAmerica, at any time when a prospectus relating to
Registrable Securities covered by a registration statement is required to be
delivered under the Act, of the happening of any event with respect to such
selling Holder as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of
the circumstances then existing.
1.6 Expenses of Demand Registration. DenAmerica shall bear and pay all
expenses incurred in connection with registrations, filings or qualifications
pursuant to Section 1.2 (other than underwriting discounts and commissions
with respect to Registrable Securities included in such registration),
including (without limitation) all registration, filing, and qualification
fees, Blue Sky fees and expenses, printers' and accounting fees, costs of
listing on any exchange or the Nasdaq Stock Market, costs of furnishing such
copies of each preliminary prospectus, final prospectus, and amendments
thereto as each Holder may reasonably request, fees and disbursements of
counsel for DenAmerica, and fees, expenses or disbursements of one special
counsel for the selling Holders in an amount not to exceed $20,000; provided,
however, that DenAmerica shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 1.2 if the registration
request is subsequently withdrawn at the request of the Holders of a majority
of the Registrable Securities to be registered (in which case the Holders
participating in such offering and favoring such withdrawal shall bear such
expenses), unless the Holders of a majority of the Registrable Securities
agree to forfeit their right to one demand registration pursuant to Section
1.2; provided further, however, that if such registration request has been
withdrawn by virtue of a material adverse change in the condition, business,
or prospects of DenAmerica from that known to the Holders at the time of
their request, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant Section 1.2.
1.7 Expenses of Piggy-Back Registration. DenAmerica shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to each of the
registrations pursuant to Section 1.3 (other than underwriting discounts and
commissions with respect to Registrable Securities included in such
registration) for each Holder, including (without limitation) all
registration, filing, and qualification fees, Blue Sky fees and expenses,
printers' and accounting fees relating or
apportionable thereto, costs of listing on any exchange or the Nasdaq Stock
Market, costs of furnishing such copies of each preliminary prospectus, final
prospectus. and amendments thereto as each Holder may reasonably request, and
fees, expenses or disbursements of one special counsel for the selling
Holders in an amount not to exceed $20,000.
1.8 Limitations on Registration Rights.
(a) The rights of Holders under Sections 1.2 and 1.3 of this
Agreement shall be subject to any limitations and restrictions required in
order to comply with the terms of any registration right previously granted
by DenAmerica and disclosed in DenAmerica's reports, registration statements
or proxy statements as filed with the SEC. Notwithstanding any other
provision of this Agreement, with respect to any other securities of
DenAmerica for which DenAmerica has granted registration rights prior to the
date of this Agreement, the Registrable Securities shall not be registered
and sold at the same time as such other securities are being sold pursuant to
an underwritten offering if the managing underwriter of such offering
believes that the sale of the Registrable Securities could have a material
adverse effect on the amount of, or price at which, such other securities
being registered can be sold.
(b) Notwithstanding any other provision of this Agreement, the
rights of each of the Holders under Sections 1.2 and 1.3 of this Agreement
shall be limited by and subject to the terms and conditions of the respective
Lockup Agreements between DenAmerica and each Holder that is a party to a
Lockup Agreement.
1.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) DenAmerica will indemnify and hold harmless each Holder, the
officers and directors of each Holder, any underwriter (as defined in the
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the Securities Exchange Act of
1934, as amended (the "1934 Act"), against any losses, claims, damages, or
liabilities (joint or several) to which such person or persons may become
subject under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, or (iii) any violation or
alleged violation by DenAmerica of the Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Act, the 1934
Act or any state securities law; and DenAmerica will reimburse each such
Holder, officer or director, underwriter or controlling person for any legal
or other expenses reasonably incurred by such person or persons in connection
with investigating or defending any such loss, claim, damage, liability, or
action;
provided, however, that the indemnity agreement contained in this subsection
1.9(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the
consent of DenAmerica (which consent shall not be unreasonably withheld), nor
shall DenAmerica be liable in any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon (i) a Violation
which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by such
Holder, underwriter or controlling person, or (ii) the failure of such
Holder, underwriter, or controlling person to deliver a copy of the
registration statement or the prospectus, or any amendments or supplements
thereto, after DenAmerica has furnished such person with a sufficient number
of copies of the same.
(b) Each selling Holder will indemnify and hold harmless
DenAmerica, each of its officers and directors, and each person, if any, who
controls DenAmerica within the meaning of the Act, any underwriter and any
other Holder selling securities in such registration statement or any of its
directors or officers or any person who controls such Holder, against any
losses, claims, damages, or liabilities (joint or several) to which
DenAmerica or any such officer, director, controlling person, or underwriter
or controlling person may become subject, under the Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by DenAmerica or any such officer, director, controlling
person, underwriter or controlling person, other Holder, officer, director,
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld. Notwithstanding anything to
the contrary herein contained, a Holder's indemnity obligation, in such
person's capacity as a Holder, shall be limited to the net proceeds received
by such Holder from the offering out of which the indemnity obligation
arises.
(c) Promptly after receipt by an indemnified party under this
Section 1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.9,
deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnified party, except that such fees
and expenses shall be paid by the indemnifying party if representation of
such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 1.9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to
any indemnified party otherwise than under this Section 1.9.
(d) The indemnification provided by this Section 1.9 shall be a
continuing right to indemnification and shall survive the registration and
sale of any of the Registrable Securities hereunder and the expiration or
termination of this Agreement.
1.10 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under
the Act DenAmerica agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of DenAmerica under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by
DenAmerica that it has complied with the reporting requirements of SEC Rule
144, the Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of DenAmerica and such other reports and documents so filed
by DenAmerica, and (iii) such other information as may be reasonably
requested in availing any holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant
to such form.
1.11 Amendment and Waiver. Any amendment or waiver of any provision
under this Agreement may be effected only with the written consent of
DenAmerica and the holders of at least 51% of the Registrable Securities then
outstanding, except that no amendment or waiver that would reduce or
adversely affect the rights of BBV under this Agreement may be effected
without the written consent of BBV.
1.12 Remedies.
(a) DenAmerica agrees that time is of the essence of each of the
covenants contained herein and that, in the event of a dispute hereunder,
this Agreement is to be interpreted and construed in a manner that will
enable the Holders to sell their Registrable Securities as quickly as
possible after such Holders have indicated to DenAmerica that they desire
their Registrable Securities to be registered. Any delay on the part of
DenAmerica not
expressly permitted under this Agreement or waived by thc Holders, whether
material or not, shall be deemed a material breach of this Agreement.
(b) DenAmerica acknowledges that the breach of any part of this
Agreement may cause irreparable harm to a Holder and that monetary damages
alone may be inadequate. DenAmerica therefore agrees that the Holders shall
be entitled to injunctive relief or such other applicable remedy as a court
of competent jurisdiction may provide. Nothing contained herein will be
construed to limit a Holder's right to any remedies at law, including
recovery of damages for breach of any part of this Agreement.
B. MISCELLANEOUS
2.1 Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement, shall be governed by
and construed in accordance with the laws of the State of Delaware,
notwithstanding any Delaware or other conflict-of-law provisions to the
contrary.
2.2 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received when delivered against
receipt, upon receipt of a facsimile transmission or when deposited in the
United States mails, first class postage prepaid, addressed as set forth
below:
(a) If to DenAmerica:
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxx X-000
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
with a copy given in the manner
prescribed above, to:
X'Xxxxxx, Cavanagh, Anderson,
Xxxxxxxxxxxxx & Xxxxxxxx, P.A.
Xxx Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
(b) If to any Holder, to the address of such Holder as it
appears in the stock, note, or warrant ledger of DenAmerica.
Any party may alter the address to which communications or copies are to
be sent by giving notice of such change to each of the other parties hereto
of address in conformity with the provisions of this paragraph for the giving
of notice.
2.3 Binding Nature of Agreement. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, and successors.
2.4 Entire Agreement. This Agreement contains the entire understanding
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except as
herein contained. The express terms hereof control and supersede any course
of performance and/or usage of the trade inconsistent with any of the terms
hereof. This Agreement may not bc modified or amended other than by an
agreement in writing.
2.5 Section Headings. The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect
its interpretation.
2.6 Gender. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as
the context requires.
2.7 Indulgences, Not Waivers. Neither the failure nor any delay on the
part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted
such waiver.
2.8 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories. Any photographic or xerographic copy of this Agreement, with all
signatures reproduced on one or more sets of signature pages, shall be
considered for all purposes as of it were an executed counterpart of this
Agreement.
2.9 Provisions Separable. The provisions of this Agreement are
independent and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole
or in part.
2.10 Number of Days. In computing the number of days for purposes of
this Agreement, all days shall be counted, including Saturdays, Sundays and
holidays; provided, however, that if the final day of any time period falls
on a Saturday, Sunday or holiday, then the final day shall be deemed to be
the next day which is not a Saturday, Sunday or holiday.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
AMERICAN FAMILY RESTAURANTS, HOLDERS:
INC.
By: /s/ Xxxxxxx X. Xxxxxx /s/ Xxxx X. Xxxxx
------------------------------- -------------------------------
Xxxxxxx X. Xxxxxx, President Xxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx
BANCBOSTON VENTURES, INC.
By:
----------------------------
Its:
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XXXXXXX FAMILY TRUST
By:
----------------------------
Its:
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Exhibits have been omitted due to immateriality.
