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EXHIBIT 2
STANDSTILL AGREEMENT
Standstill Agreement dated as of March 10, 1997 (this
"Agreement") among Chart House Enterprises, Inc., a Delaware corporation (the
"Company"), Chart House Investors, LLC, a Delaware limited liability company
("CHI"), and Alpha/ZFT Partnership, an Illinois general partnership ("Alpha").
W I T N E S S E T H:
WHEREAS, pursuant to a Stock Purchase and Sale Agreement dated
as of March 10, 1997 (the "Stock Purchase and Sale Agreement") among the
Company, CHI and Alpha, CHI has agreed to purchase from the Company, and the
Company has agreed to sell to CHI, 3,400,000 newly issued shares of the
Company's Common Stock, par value $.01 per share ("Common Stock").
WHEREAS, the Company and CHI are entering into this Agreement
to establish certain arrangements with respect to the relationships between
them.
WHEREAS, the Company believes that these arrangements will be
in the best interests of the Company and all of its stockholders.
NOW, THEREFORE, intending to be legally bound, the parties
hereto agree as follows:
Section 1. Certain Definitions. As used in this Agreement,
the following terms shall have the following meanings:
1.1 "Company Voting Securities" shall mean, collectively,
Common Stock, any preferred stock of the Company that is entitled to vote
generally for the election of directors, any other class or series of Company
securities that is entitled to vote generally for the election of directors and
any other securities, warrants, options or rights of any nature (whether or not
issued by the Company) that are convertible into, exchangeable for, or
exercisable for the purchase of, or otherwise give the holder thereof any
rights in respect of, Common Stock, Company preferred stock that is entitled to
vote generally for the election of directors, or any other class or series of
Company securities that is entitled to vote generally for the election of
directors.
1.2 "Effective Date" means the date hereof.
1.3 The "Combined Voting Power" at any measurement date
shall mean the total number of votes which could have been cast in an election
of directors of the Company had a meeting of the stockholders of the Company
been duly held based upon a record date as of the measurement date if all
Company Voting Securities then outstanding and entitled to vote at such meeting
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were present and voted to the fullest extent possible at such meeting.
1.4 The terms "beneficial ownership," "person" and
"group" shall have the respective meanings ascribed to such terms pursuant to
Regulation 13D-G adopted by the Securities and Exchange Commission (the "SEC")
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
in effect on the date hereof. The term "affiliate" shall have the meaning
ascribed to such term pursuant to Rule 12b-2 under the Exchange Act, as in
effect on the date hereof.
1.5 "Xxxx Group" means CHI, Alpha and their affiliates,
collectively; provided, however, that publicly held entities that might fall
within this definition (a "Public Xxxx Affiliate") shall not be treated as
affiliates of Alpha hereunder unless CHI, Alpha or any of their other
affiliates took any action, directly or indirectly, to suggest, encourage or
assist such entity in taking the relevant action to be attributed to the Xxxx
Group hereunder. For purposes of the preceding sentence and the similar clause
appearing in the second sentence of Section 3.1, the failure of CHI, Alpha or
any of their affiliates, upon learning of a public affiliate's action, to
request that such affiliate refrain from taking such action because of the
provisions of this Agreement will be deemed to constitute "encouraging or
assisting" in such action.
1.6 "Independent Director" means directors of the Company
who (i) are not employees or officers of the Company, (ii) are not serving as
designees of CHI pursuant to Section 4 hereof, and (iii) have no financial
interest in and are not otherwise associated with CHI, Alpha or their
affiliates, excluding however any equity interest of not more than 2% of any
publicly-held entity. The term "associated" means having a business, financial
or familial relationship that might reasonably be expected to affect the
individual's judgment with respect to matters in which a member of the Xxxx
Group might be interested.
1.7 "Disinterested Director" means Independent Directors
who are "disinterested directors" as that term is used in Section 144 of the
Delaware General Corporate Law.
Section 2. Representations and Warranties.
2.1 CHI and Alpha jointly and severally represent and
warrant to the Company as follows:
(a) CHI is a limited liability company duly organized,
validly existing and in good standing under the laws of Delaware.
Alpha is a validly existing partnership under the laws of Illinois.
Each of CHI and Alpha has the power and authority to enter into this
Agreement and perform its respective obligations hereunder.
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(b) This Agreement has been duly authorized, executed and
delivered by CHI and Alpha and constitutes the legal, valid and
binding agreement of CHI and Alpha, enforceable against them in
accordance with the terms hereof.
(c) Neither the execution and delivery of this Agreement
nor the performance of its obligations hereunder will conflict with,
or result in a breach of, or constitute a default under, any law,
rule, regulation, judgment, order or decree of any court, arbitrator
or governmental agency or instrumentality, or of any agreement or
instrument to which CHI or Alpha is bound or by which it is affected
or of any charter documents of CHI or Alpha.
(d) As of the Effective Date, no shares of Common Stock
are currently beneficially owned by any member of the Xxxx Group,
except for those shares of Common Stock acquired pursuant to the Stock
Purchase and Sale Agreement.
2.2 The Company represents and warrants to CHI as
follows:
(a) The Company is a validly existing corporation under
the laws of the jurisdiction of its organization and has the corporate
power and authority to enter into this Agreement and perform its
obligations hereunder.
(b) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
agreement of the Company, enforceable against the Company in
accordance with the terms hereof.
(c) Neither the execution and delivery of this Agreement
nor the performance of its obligations hereunder will conflict with,
or result in a breach of, or constitute a default under, any law,
rule, regulation, judgement, order or decree of any court, arbitrator
or governmental agency or instrumentality, or of any agreement or
instrument to which the Company is bound or by which it is affected or
of any charter documents of the Company.
Section 3. Covenants with Respect to the Company Voting Securities and
Other Matters.
3.1 Acquisition of Company Voting Securities. Except as
the same may be approved by a majority of the Disinterested Directors in a
specific resolution to that effect adopted prior to the taking of such action,
prior to June 30, 2002, no member of the Xxxx Group shall, directly or
indirectly, acquire, offer to acquire, agree to acquire, become the beneficial
owner of or obtain any rights in respect of any Company Voting Securities, by
purchase or otherwise, or take any action in furtherance thereof, if the effect
of such acquisition, agreement or other action
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would be (either immediately or upon consummation of any such acquisition
agreement or other action, or expiration of any period of time provided in any
such acquisition, agreement or other action) to increase the aggregate
beneficial ownership of Company Voting Securities by the Xxxx Group to such
number of Company Voting Securities that represents or possesses greater than
29.2% of the Combined Voting Power of Company Voting Securities, without the
approval of the majority of the Company's Disinterested Directors.
Notwithstanding the foregoing maximum percentage limitations, (A) no member of
the Xxxx Group shall be obligated to dispose of any Company Voting Securities
beneficially owned in violation of such maximum percentage limitations if, and
solely to the extent that, its beneficial ownership is or will be increased
solely as a result of (1) a repurchase of any Company Voting Securities by the
Company or any of its subsidiaries if such repurchase was approved by a
majority of the Disinterested Directors or (2) the purchase by any Public Xxxx
Affiliate unless CHI, Alpha or any of their other affiliates took any action,
directly or indirectly, to suggest, encourage or assist in such purchase and
(B) the foregoing shall not prohibit any purchase of Company Voting Securities
directly from the Company (including pursuant to the exercise of rights,
oversubscription rights or standby purchase obligations in connection with
rights offerings by the Company). For purposes of calculating the maximum
percentage limitations, all Company Voting Securities that are the subject of
an agreement, arrangement or understanding pursuant to which the Xxxx Group or
any member thereof has the right to obtain beneficial ownership of such
securities in the future (including, without limitation, the shares of Common
Stock being sold after the date hereof under the Stock Purchase and Sale
Agreement as long as the Stock Purchase and Sale Agreement constitutes a
binding commitment to purchase and sell those shares) shall also be deemed to
be outstanding and beneficially owned by the Xxxx Group or the applicable
member thereof. If the Stock Purchase and Sale Agreement shall be terminated
as a result of a default by CHI thereunder, then the number "29.2%" set forth
in this paragraph shall be adjusted automatically to "17%".
3.2 Distribution of the Company Voting Securities.
(a) Except as the same may be approved by a majority of
the Disinterested Directors in a specific resolution to that effect adopted
prior to the taking of such action, no member of the Xxxx Group shall, directly
or indirectly, sell, transfer any beneficial interest in, pledge, hypothecate
or otherwise dispose of any Company Voting Security other than to another
member of the Xxxx Group prior to June 30, 2002, in a transaction that would
result in a transfer to any person or group that, to the knowledge of the Xxxx
Group, upon consummation of such sale, transfer or disposition, would, directly
or indirectly, have beneficial ownership of or the right to acquire beneficial
ownership of such number of Company Voting Securities as represent greater than
5.0% of the Combined Voting Power, except
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in response to certain tender or exchange offers as permitted by Section
3.2(b).
(b) Notwithstanding Section 3.2(a), on and after the
eleventh business day after commencement of a tender or exchange offer made by
a person who is not a member of the Xxxx Group for outstanding Company Voting
Securities (a "Qualifying Offer"), any member of the Xxxx Group may tender or
exchange any Company Voting Securities beneficially owned by it pursuant to
such Qualifying Offer if the Qualifying Offer shall have been approved by a
majority of the Disinterested Directors.
3.3 Proxy Solicitations, etc. Prior to June 30, 2002, no
member of the Xxxx Group shall solicit proxies, assist any other person in any
way, directly or indirectly, in the solicitation of proxies, become a
"participant" in a "solicitation" or assist any "participant" in a
"solicitation" (as such terms are defined in Rule 14a-1 of Regulation 14A under
the Exchange Act) in opposition to the recommendation of a majority of the
Disinterested Directors, submit any proposal for the vote of stockholders of
the Company, recommend or request or induce or attempt to induce any other
person to take any such actions, or seek to advise, encourage or influence any
other person with respect to the voting of Company Voting Securities, in each
case without the prior approval of the majority of the Disinterested Directors.
3.4 No Voting Trusts, Pooling Agreements, or Formation of
"Groups". Except as the same may be approved by a majority of the
Disinterested Directors in a specific resolution to that effect adopted prior
to the taking of such action, prior to June 30, 2002, neither CHI nor Alpha nor
any other member of the Xxxx Group shall form, join or in any other way
participate in a partnership, pooling agreement, syndicate, voting trust or
other "group" other than the Xxxx Group with respect to Company Voting
Securities, or enter into any agreement or arrangement or otherwise act in
concert with any other person, for the purpose of acquiring, holding, voting or
disposing of Company Voting Securities.
3.5 No Solicitation of Bidders. Except as the same may
be approved by a majority of the Disinterested Directors in a specific
resolution to that effect adopted prior to the taking of such action, prior to
June 30, 2002 no member of the Xxxx Group shall directly or indirectly assist,
encourage or induce any person to bid for or acquire outstanding Company Voting
Securities which would result in such other person, directly or indirectly,
beneficially owning in excess of 5.0% of the Combined Voting Power of Company
Voting Securities, provided, however, that the mere sale of Company Voting
Securities by any member of the Xxxx Group shall not constitute assisting,
encouraging or inducing within the meaning of this Section 3.5.
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3.6 Material Transactions. Prior to June 30, 2002, no
member of the Xxxx Group shall engage in any material transaction with the
Company without the prior approval of a majority of the Disinterested
Directors.
3.7 Non-Circumvention. Except as the same may be
approved by a majority of the Disinterested Directors in a specific resolution
to that effect adopted prior to the taking of such action, prior to June 30,
2002 no member of the Xxxx Group shall take any action, alone or in concert
with any other person, to seek control of the Company or otherwise seek to
circumvent the limitations of the provisions of Section 3 of this Agreement.
Without limiting the generality of the foregoing, without such approval no
member of the Xxxx Group shall (i) present to the Company or to any third party
any proposal that can reasonably be expected to result in a change of control
of the Company or in any increase beyond the percentage specified in Section
3.1 in the Combined Voting Power of Company Voting Securities beneficially
owned in the aggregate by the Xxxx Group, (ii) publicly suggest or announce its
willingness or desire to engage in a transaction or group of transactions that
would result in a change of control of the Company or in any increase beyond
the percentage specified in Section 3.1 in the Combined Voting Power of Company
Voting Securities beneficially owned in the aggregate by the Xxxx Group, or
(iii) initiate, request, induce or attempt to induce or give encouragement to
any other person to initiate any proposal that can reasonably be expected to
result in a change of control of the Company or in any increase beyond the
percentage specified in Section 3.1 in the Combined Voting Power of Company
Voting Securities beneficially owned in the aggregate by the Xxxx Group.
3.8 Confidential Material.
(a) Definitions. For purposes of this Section:
(i) The term "Confidential Material" means all
information, whether oral, written or otherwise (including any
information furnished prior to the execution of this Agreement),
furnished by the Company to any member of the Xxxx Group or any of the
Representatives (as defined below), and all notes, reports, analyses,
compilations, studies and other materials prepared by the Xxxx Group
or any of the Representatives (in whatever form maintained, whether
documentary, computer storage or otherwise) containing or based upon,
in whole or in part, any such information, and the fact that such
information has been delivered to the Xxxx Group or any of its
Representatives. The term "Confidential Material" does not include
information which is or becomes generally available to the public
other than as a result of a disclosure by any member of the Xxxx Group
or any of the Representatives or becomes available to any member of
the Xxxx Group or any of the Representatives on a non-confidential
basis from any source that is not known by
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such member of the Xxxx Group or such Representative to be bound by an
obligation of confidentiality to the Company.
(ii) The term "Representatives" shall mean any and all
employees, agents, financial advisors, partners, affiliates or other
representatives of any member of the Xxxx Group.
(b) Each member of the Xxxx Group and each of the
Representatives will preserve the confidentiality of the Confidential Material
and will not disclose any of the Confidential Material in any manner
whatsoever; provided, however, that (i) the Xxxx Group may make any disclosure
of such information to which the Company gives its prior consent, and (ii) any
of such information may be disclosed to the Representatives who need to know
such information, and who are informed of the confidential nature of the
Confidential Material and of the terms of this Section 3.8 and who agree to
keep such information confidential. In any event, the Xxxx Group will be
responsible for any actions by the Representatives which are not in accordance
with the provisions hereof.
(c) If any member of the Xxxx Group or any of the
Representatives are requested or required (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand,
any informal or formal investigation by any government or governmental agency
or authority or otherwise) to disclose any Confidential Material or such
person's opinion, judgment, view or recommendation concerning the Company as
developed from the Confidential Material, the Xxxx Group agrees (i) to promptly
notify the Company of the existence, terms and circumstances surrounding such a
request, (ii) to the extent possible, to consult with the Company on the
advisability of taking legally available steps to resist or narrow such request
and (iii) if disclosure of such information is required, to furnish only that
portion of the Confidential Material which, in the opinion of counsel to the
Xxxx Group, the Xxxx Group is legally compelled to disclose, and to cooperate
with any action by the Company to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Confidential Material.
(d) CHI hereby acknowledges on behalf of itself and all
members of the Xxxx Group (and agrees to advise the Representatives and members
of the Xxxx Group who are informed in accordance with the terms or this Section
3.8 as to the matters which are the subject of this Section 3.8), that the
United States securities laws prohibit, in certain circumstances, any person
who has received from an issuer material, non-public information, including
certain information that may be part of the Confidential Material, while such
information is non-public, from purchasing or selling securities of such issuer
or from communicating such information to any other person under circumstances
in which it is reasonably foreseeable that such person is likely to purchase or
sell such securities.
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(e) This Section 3.8 shall survive until the earlier of
June 30, 2004 or two years following the date of termination of this Agreement.
3.9 Guarantee by Alpha. Alpha hereby irrevocably and
unconditionally guarantees the performance by CHI of all of its obligations
hereunder and under the other agreements and documents contemplated hereby.
Section 4. Voting of Company Securities and Other Related
Matters.
(a) Each member of the Xxxx Group that is a holder of
record of Company Voting Securities shall be present, and each member of the
Xxxx Group that is a beneficial owner of Company Voting Securities shall cause
the holder of record to be present, in person or by proxy, at all meetings of
stockholders of the Company so that all Company Voting Securities owned of
record or beneficially by the Xxxx Group may be counted for the purpose of
determining the presence of a quorum at such meetings.
(b) At all times prior to June 30, 2002, except to the
extent otherwise provided herein, the Company shall take all necessary or
appropriate action to assist in the nomination and election as directors of (i)
that number of individuals specified in Section 4(d) below designated by CHI to
be elected as directors of the Company, provided such designees are reasonably
acceptable to the Independent Directors at the time of their designation, and
(ii) so long as CHI is entitled to designate one or two directors, Independent
Directors constituting a majority of the total number of directors of the
Company. All persons to be so designated as Independent Directors shall be
individuals selected by a majority of the Independent Directors then in office,
except that one of the Independent Directors shall be an individual mutually
acceptable to CHI on the one hand and a majority of the Independent Directors
on the other hand. The Company hereby agrees and acknowledges that Xxx Xxxx
and Xxxxxx Xxxxx are reasonably acceptable to the Independent Directors as
directors of the Company. The Company further agrees that one position on the
Board of Directors of the Company is intended to be filled by the chief
executive officer to be selected by the Board of Directors of the Company. CHI
shall cause its designees on the Board of Directors of the Company to take all
necessary or appropriate action to assist in the nomination and election as
directors of all such nominees as may be selected to serve as Independent
Directors in the manner described above. The Xxxx Group and the directors
designated by the Xxxx Group shall not vote (as stockholders or directors) in
favor of, and shall not take any other action in furtherance of or seeking to
cause, a reduction of the number of directors of the Company below seven
directors, the removal of any directors, or a majority of the directors not
consisting of Independent Directors.
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(c) For purposes of this Agreement, directors "designated
by CHI" shall include directors designated by CHI as anticipated by this
Section 4, and any other directors of the Company affiliated or associated with
any member of the Xxxx Group.
(d) At all times prior to June 30, 2002, CHI shall be
entitled to designate the following number of directors pursuant to Section
4(b) hereof:
(i) so long as the members of the Xxxx Group that have
executed this Agreement as parties (the "Xxxx Contracting Parties")
beneficially own at least 15% of the Combined Voting Power of all
Company Voting Securities (calculated in accordance with Section 3.1
hereof and including, for these purposes, the shares of Common Stock
to be acquired from the Company pursuant to the Stock Purchase and
Sale Agreement as long as such agreement is in effect), CHI shall have
the right to designate two directors of the Company, provided such
designees are reasonably acceptable to the Independent Directors at
the time of their designation; and
(ii) so long as the Xxxx Contracting Parties beneficially own
less than 15%, but at least 7.5% of the Combined Voting Power of all
Company Voting Securities (as so calculated), CHI shall have the right
to designate one director of the Company, provided such designee is
reasonably acceptable to the Independent Directors at the time of his
or her designation;
provided, however, that at any time when the Xxxx Contracting Parties shall no
longer beneficially own at least 15% of the Combined Voting Power of all
Company Voting Securities (as so calculated), CHI shall cause one of its two
designees to resign forthwith such that only one designee remains on the Board
of Directors of the Company; and provided, further, that at any time when the
Xxxx Contracting Parties shall no longer beneficially own at least 7.5% of the
Combined Voting Power of all Company Voting Securities (as so calculated), CHI
shall not have the right to designate any directors of the Company, CHI's
rights under this Section 4 shall terminate, and CHI shall cause its designees
to resign forthwith such that no designee of CHI remains on the Board of
Directors of the Company. At any time when CHI shall have the right to
designate one or two directors, as the case may be, pursuant to this Section 4,
the Company shall not increase the number of directors to more than seven
directors without the prior written consent of CHI.
(e) Except as expressly set forth above, each member of
the Xxxx Group shall vote all Company Voting Securities owned of record by such
member of the Xxxx Group and shall cause all Company Voting Securities owned
beneficially by such member of the Xxxx Group to be voted with respect to the
election or removal of directors of Company, or any other matter that may be
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presented to the stockholders of the Company that would relate to a possible
change of control of the Company, at the sole option of such member of the Xxxx
Group, either (i) in accordance with the recommendations of a majority of the
Disinterested Directors, or (ii) in the same proportions (including
abstentions) as the holders of record of Company Voting Securities other than
those beneficially owned by the Xxxx Group that are entitled to vote on the
election of directors (or such other matter) vote their Company Voting
Securities, provided, however, that notwithstanding the foregoing (A) CHI may
at all times vote its Company Voting Securities for the election or retention
of the one or two directors, as the case may be, designated by CHI in
accordance with Section 4(b) in elections in which they would cease to be
directors if not elected and (B) any member of the Xxxx Group may vote its
Company Voting Securities with respect to any matter presented to the
stockholders of the Company that would relate to a possible change of control
of the Company either (i) in favor of such matter if such matter was
recommended by a majority of the full Board of Directors or (ii) against such
matter.
Section 5. Registration Rights. The Company covenants and
agrees as follows:
5.1 Definitions. For purposes of this Section 5:
(a) The term "register," "registered" and "registration"
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act of 1933,
as amended (the "Act").
(b) The term "Registrable Securities" means the shares of
Common Stock held, from time to time, by the Xxxx Group.
(c) The term "Holder" means any Xxxx Contracting Party
who owns of record Registrable Securities.
5.2 Request for Registration.
(a) If the Company shall at any time receive a written
request from the Holders of at least 500,000 shares of Common Stock that the
Company file a registration statement under the Act covering the registration
of at least 500,000 shares of Common Stock, then the Company shall, within 10
days after the receipt thereof, give written notice of such request to all
Holders, and shall, subject to the limitations of Section 5.2(b), effect as
soon as practicable after the receipt of such request the registration under
the Act of all Registrable Securities which the Holders request to be
registered within 15 days after the mailing of such notice by the Company in
accordance with Section 9.3.
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the
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Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 5.2 and the Company shall include such information in the written
notice referred to in Section 5.2(a). In such event, the right of any Holder
to include Registrable Securities in such registration 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. All Holders proposing to distribute Registrable Securities through
such underwriting shall (together with the Company as provided in Section
5.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Initiating
Holders and reasonably acceptable to the Company. The Company at its sole
discretion may offer a right to participate in any registration statement filed
pursuant to this Section 5.2 to other holders of Common Stock, and may itself
participate in any registration statement filed pursuant to this Section 5.2.
However, notwithstanding any other provision of this Section 5.2, if the
offering is an underwritten offering and the lead managing underwriter advises
the Initiating Holders in writing that marketing factors require a limitation
of the number of shares of Common Stock to be underwritten, then (subject to
any contrary provisions in registration rights agreements executed by the
Company prior to the date hereof) the total number of shares of Common Stock to
be underwritten shall be reduced, with such reduction coming first from selling
stockholders who are not Holders, and then from the Company. If further
reduction is required, the Company shall so advise all Holders of Registrable
Securities that would have otherwise been underwritten pursuant hereto, and the
number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities sought to be registered by each Holder.
(c) The Company is obligated to effect only two such
registrations pursuant to this Section 5.2; provided, however, that if, as a
result of a reduction in the size of an offering pursuant to Section 5.2(b),
Holders are prevented from registering, in the aggregate, one-half of all of
their Registrable Securities, then the Company shall be obligated to effect a
third such registration pursuant to this Section 5.2.
(d) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
5.2 a certificate signed by the Chief Executive, Chief Operating, or Chief
Financial Officer of the Company stating that, in the good faith judgment of a
majority of the Disinterested Directors, it would be materially detrimental to
the Company for such registration statement to be filed, the Company shall have
the right to defer such filing for a period of not more than 120 days after
receipt of the request of the
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Initiating Holders; provided, however, that the Company may not utilize this
right more than twice in any 12-month period.
5.3 Piggyback Registration. If (but without any
obligation to do so) the Company proposes to register any of its Common Stock
under the Act in connection with the public offering of such Common Stock by
the Company solely for cash (other than a registration relating solely to the
sale of securities to participants in a dividend reinvestment plan, stock plan
or employee benefit plan; a registration relating solely to the issuance of
securities to the security holders of an acquired company in connection with an
acquisition; or a registration on any form which does not permit inclusion of
selling stockholders), or the Company proposes to register any of its
securities on behalf of a holder exercising demand registration rights similar
to those set forth in Section 5.2, the Company shall, at such time, promptly
give each Holder written notice of such registration. Upon the written request
of each Holder given within 15 days after mailing of such notice by the Company
in accordance with Section 9.3, the Company shall, subject to the provisions of
Section 5.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
5.4 Obligations of the Company. Whenever required under
this Section 5 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its
reasonable 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 120 days.
(b) Prepare and file with the SEC 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.
(c) 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.
(d) 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 states or other
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jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required to qualify to do
business or to file a general consent to service of process in any
such states or jurisdictions.
(e) 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 underwriters of such
offering. Each Holder participating in such underwriting shall also
enter into and perform its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating
thereto 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, and then use its best efforts to promptly correct such
statement or omission. Notwithstanding the foregoing and anything to
the contrary set forth in this Section 5.4, each Holder acknowledges
that there may occasionally be times when the Company must suspend the
use of the prospectus forming a part of the registration statement
until such time as an amendment to the registration statement has been
filed by the Company and declared effective by the SEC, or until such
time as the Company has filed an appropriate report with the SEC
pursuant to the Exchange Act. Each Holder hereby covenants that it
will (a) keep any such notice strictly confidential, and (b) not sell
any shares of Common Stock pursuant to such prospectus during the
period commencing at the time at which the Company gives the Holder
notice of the suspension of the use of such prospectus and ending at
the time the Company gives the Holder notice that it may thereafter
effect sales pursuant to such prospectus. The Company shall only be
able to suspend the use of such prospectus for periods aggregating no
more than 60 days in respect of any registration and, in any event,
the 120-day period of effectiveness referred to in Section 5.4(a)
shall be extended one day for each day that sales are suspended under
this Section 5.4(f).
5.5 Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 5 with respect to the Registrable Securities of any selling Holder that
such Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration
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of such Holder's Registrable Securities and as may be required from time to
time to keep such registration current.
5.6 Expenses of Demand Registration. All expenses
incurred by or on behalf of the Company in connection with registrations,
filings or qualifications pursuant to Section 5.2, including, without
limitation, all registration, filing and qualification fees, printers' and
accounting fees, and fees and disbursements of counsel for the Company, shall
be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration begun pursuant to Section
5.2 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 all participating Holders shall reimburse the Company promptly for all
such reasonable expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one demand registration pursuant to
Section 5.2. In no event shall the Company be obligated to bear any
underwriting discounts or commissions relating to registrable Securities or the
fees and expenses of counsel to the selling Holders.
5.7 Expenses of Piggyback Registration. The Company
shall bear and pay all expenses incurred by or on behalf of the Company in
connection with any registration, filing or qualification of Registrable
Securities with respect to the registrations pursuant to Section 5.3 for each
Holder, including, without limitation, all registration, filing, and
qualification fees, printing and accounting fees and fees and disbursements of
counsel for the Company relating or allocable thereto, but excluding any
underwriting discounts or commissions relating to Registrable Securities and
the fees and disbursements of counsel to the selling Holders.
5.8 Underwriting Requirements. In connection with any
offering involving an underwriting of shares being issued by the Company, the
Company shall not be required under Section 5.3 to include any of the Holders'
Registrable Securities in such underwriting or the registration statement
relating thereto unless they accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by the Company. If the
total amount of securities, including Registrable Securities, requested by
Holders and other stockholders to be included in such offering exceeds the
amount of securities offered other than by the Company that the underwriters
reasonably believe can be offered without jeopardizing the success of the
offering, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities, which the
underwriters believe will not jeopardize the success of the offering. To
achieve any necessary reduction in the securities to be sold, the securities to
be excluded from the offering shall first be selected (in each case, pro rata
among such class of holders according to the total amount of securities
proposed to be included in the registration
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statement or in such other proportions as shall mutually be agreed to by such
class of holders) in the following order (subject to any contrary provisions in
registration rights agreements executed by the Company prior to the date
hereof): (i) first, securities being included on behalf of holders other than
members of the Xxxx Group shall be excluded, except for securities of holders
referred to in clause (iii) below; (ii) next, if additional securities must be
excluded, Registrable Securities included pursuant to Section 5.3 shall be
excluded; (iii) thereafter, if additional securities must be excluded,
securities included on behalf of a holder exercising demand registration rights
similar to those set forth in Section 5.2 shall be excluded; and (iv) finally,
if additional securities must be excluded, securities offered by the Company
shall be excluded.
5.9 Delay of Registration. No Holder shall have any
right to obtain or seek an injunction restraining or otherwise delaying any
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 5.
5.10 Indemnification. In the event any Registrable
Securities are included in a registration statement under this Section 5:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder and the affiliates of such
Holder, and their respective directors, officers, general and limited
partners, agents and representatives (and the directors, officers,
affiliates and controlling persons thereof), and each other person, if
any, who controls such Holder within the meaning of the Act, against
any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Act, the Exchange 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 such registration
statement, including any preliminary prospectus (but only if such
statement is not corrected in the 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
(but only if such omission is not corrected in the final prospectus),
or (iii) any violation or alleged violation by the Company in
connection with the registration of Registrable Securities under the
Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Act, the Exchange Act or any state
securities law; and the Company will pay to each such Holder,
affiliate or controlling
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person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 5.10(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 the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection
with such registration by any such Holder or controlling person. Each
indemnified party shall furnish such information regarding itself or
the claim in question as an indemnifying party may reasonably request
in writing and as shall be reasonably required in connection with
defense of such claim and litigation resulting therefrom.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the
Act, any underwriter, any other Holder selling securities in such
registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages or
liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the Exchange 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 pay, as incurred,
any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 5.10(b) in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in
this Section 5.10(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 such Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any
indemnity under this section 5.10(b) exceed the gross proceeds from
the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 5.10 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
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against any indemnifying party under this Section 5.10, 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. The failure to
deliver written notice to the indemnifying party within a reasonable
time after the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under
this Section 5.10 to the extent of such prejudice, 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 5.10. The indemnified party shall
have the right, but not the obligation, to participate in the defense
of any action referred to above through counsel of its own choosing
and shall have the right, but not the obligation, to assert any and
all separate defenses, cross claims or counterclaims which it may
have, and the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the employment of such
counsel has been specifically authorized in advance by the
indemnifying party, (ii) there is a conflict of interest that prevents
counsel for the indemnifying party from adequately representing the
interests of the indemnified party or there are defenses available to
the indemnified party that are different from, or additional to, the
defenses that are available to the indemnifying party, (iii) the
indemnifying party does not employ counsel that is reasonably
satisfactory to the indemnified party, or (iv) the indemnifying party
fails to assume the defense or does not reasonably contest such action
in good faith, in which case, if the indemnified party notifies the
indemnifying party that it elects to employ separate counsel, the
indemnifying party shall not have the right to assume the defense of
such action on behalf of the indemnified party and the reasonable fees
and expenses of such separate counsel shall be borne by the
indemnifying party; provided, however, that, the indemnifying party
shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees and expenses
of more than one separate firm (in addition to one firm acting as local
counsel) for all indemnified parties.
(d) The obligations of the Company and the holders under
this Section 5.10 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section
5.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained
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in the underwriting agreement (if any) entered into in connection with
any underwritten public offering of the Registrable Securities are in
conflict with the foregoing provisions, the provisions in such
underwriting agreement shall control.
5.11 Reports Under the Exchange Act. With a view to
making available to the holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities
of the Company to the public without registration or pursuant to a registration
on Form S-3, the Company agrees to:
(a) use its best efforts to make and keep public
information available, as those terms are understood and defined in
Rule 144;
(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required under the Act and the
Exchange Act; and
(c) furnish to any Holder forthwith upon request (i) a
written statement by the Company as to its compliance with the
reporting requirements of Rule 144, or as to whether it qualifies as a
registrant whose securities may be resold pursuant to Form S-3, (ii) a
copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested 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.
5.12 No Assignment of Registration Rights. The rights to
cause the Company to register Registrable Securities pursuant to this Section 5
may only be assigned by a Holder to a transferee or assignee of any Registrable
Securities if (i) such transferee or assignee is a Xxxx Contracting Party and
(ii) immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Act.
5.13 Waiver Procedures. The observance by the Company of
any provision of this Section 5 may be waived (either generally or in a
particular instance and either retroactively or prospectively) with the written
consent of the Holders of a majority of the Registrable Securities, and any
waiver effected in accordance with this paragraph shall be binding upon each
Holder of Registrable Securities.
5.14 "Market Stand-off" Agreement. Any Holder of
Registrable Securities, if requested by an underwriter of any registered public
offering of Company securities being sold in a firm commitment underwriting,
agrees not to sell or otherwise
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transfer or dispose of any Common Stock (or other Company Voting Securities)
held by such Holder other than shares of Registrable Securities included in the
registration during the seven days prior to, and during a period of up to 120
days following, the effective date of the registration statement. Such
agreement shall be in writing in a form reasonably satisfactory to the Company
and such underwriter. The Company may impose stop-transfer instructions with
respect to the securities subject to the foregoing restriction until the end of
the required stand-off period.
Section 6. Term of Agreement; Certain Provisions Regarding
Termination. Unless this Agreement specifically provides for earlier or later
termination with respect to any particular right or obligation, this Agreement
shall terminate if the Xxxx Group shall, at any time (in compliance with this
Agreement), sell or otherwise dispose of or otherwise cease to own Company
Voting Securities such that the Xxxx Group beneficially owns in the aggregate
Company Voting Securities representing less than 2% of the Combined Voting
Power of all Company Voting Securities (calculated in accordance with Section
3.1 and including the shares of Common Stock to be acquired from the Company
pursuant to the Stock Purchase and Sale Agreement as long as such agreement is
in effect).
Section 7. Legend and Stop Transfer Order. To assist in
effectuating the provisions of this Agreement, CHI hereby consents (i) to the
placement, in connection with the transactions contemplated by the Stock
Purchase and Sale Agreement or otherwise within 10 business days after any
Company Voting Securities become subject to the provisions of this Agreement,
of the legend specified in Section 4.10(b) of the Stock Purchase and Sale
Agreement on all certificates representing ownership of Company Voting
Securities owned of record or beneficially by any member of the Xxxx Group,
until such shares are sold, transferred or disposed in a manner permitted
hereby to a person who is not then a member of the Xxxx Group, and (ii) to the
entry of stop transfer orders with the transfer agent or agents of Company
Voting Securities against the transfer of Company Voting Securities except in
compliance with the requirements of this Agreement. The Company agrees to
remove promptly all legends and stop transfer orders with respect to the
transfer of Company Voting Securities being made to a person who is not then a
member of the Xxxx Group in compliance with the provisions of this Agreement.
Section 8. Remedies.
(a) CHI and the Company acknowledge and agree that (i)
the provisions of this Agreement are reasonable and necessary to
protect the proper and legitimate interests of the parties hereto, and
(ii) the parties would be irreparably damaged in the event any of the
provisions of this Agreement were not performed in accordance with
their
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specific terms or were otherwise breached. It is accordingly agreed
that, except as otherwise provided in Section 5.9 hereof, each party
shall be entitled to preliminary and permanent injunctive relief to
prevent breaches of the provisions of this Agreement by the other
party (or its affiliates) without the necessity of proving actual
damages or of posting any bond, and to enforce specifically the terms
and provisions hereof and thereof in any court of the United States or
any state thereof having jurisdiction, which rights shall be
cumulative and in addition to any other remedy to which the parties
may be entitled hereunder or at law or equity.
(b) In addition to any other remedy the Company may have
under this Agreement or in law or equity, if any member of the Xxxx
Group shall acquire or transfer any Company Voting Securities in
violation of this Agreement, such Company Voting Securities which are
in excess of the number permitted to be owned or controlled by the
Xxxx Group or which have been transferred by a member of the Xxxx
Group in violation of the provisions of this Agreement may not be
voted by the owner thereof or any proxy therefor.
Section 9. General Provisions.
9.1 Consent to Jurisdiction; Service of Process. This
agreement shall be governed by and interpreted and enforced in accordance with
the laws of the State of Delaware without giving effect to any conflicts of law
provisions. Each of the parties hereto irrevocably and unconditionally (a)
agrees that any suit, action or other legal proceeding (collectively, "suit")
arising out of this agreement shall be brought and adjudicated in the United
States District Court for the District of Delaware or the Southern District of
California, or, if such courts will not accept jurisdiction, in any court of
competent civil jurisdiction sitting in either the State of Delaware or the
City of San Diego, California, (b) submits to the jurisdiction of any such
court for the purposes of any such suit and (c) waives and agrees not to assert
by way of motion, as a defense or otherwise in any such suit, any claim that it
is not subject to the jurisdiction of the above courts, that such suit is
brought in an inconvenient forum or that the venue of such suit is improper.
Each of the parties also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers in a manner
permitted by the notice provisions of Section 9.3.
9.2 Additional Xxxx Group Parties; Joint and Several
Obligations. All of the obligations of the Xxxx Group and its members
hereunder shall be joint and several. Each member of the Xxxx Group that shall
become or have the right to become the beneficial owner, within the meaning and
scope of Section 3.1 hereof, of Company Voting Securities shall, promptly upon
becoming such owner or holder, execute and deliver to the Company a joinder
agreement, agreeing to be legally bound by this
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Agreement to the same extent as if it had signed this Agreement as an original
signatory as a member of the Xxxx Group; provided that failure to execute such
an agreement shall not excuse such member's non-compliance with any provision
of this Agreement. No member of the Xxxx Group shall transfer securities to
another member of the Xxxx Group unless the transferee shall agree to be bound
by this Agreement in the manner specified above in this Section 9.2.
9.3 Notices. All notices, consents, requests,
instructions, approvals and other communications provided for herein and all
legal process in regard hereto shall be in writing and shall be decreed to be
validly given, made or served when delivered personally or deposited in the
U.S. mail, postage prepaid, for delivery by express, registered or certified
mail, or delivered to a recognized overnight courier service, addressed as
follows:
If to the Company:
Chart House Enterprises, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
If to CHI or any member of the Xxxx Group:
Chart House Investors, LLC
Two Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxx
With a copy to:
Xxxxxxxxx & Xxxxxxxxxxx
Two Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
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And to:
Seyfarth, Shaw, Xxxxxxxxxxx & Xxxxxxxxx
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
or to such other address as may be specified in a notice given pursuant to this
Section 9.3.
9.4 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions shall remain in full force and effect and shall in
no way be affected, impaired or invalidated. The parties hereto agree that
they will use their best efforts at all times to support and defend this
Agreement.
9.5 Amendments. This Agreement may be amended only by an
agreement in writing signed by each of the parties hereto; provided, however,
that any amendment executed by the Company must prior thereto be approved by a
majority of the Disinterested Directors then in office.
9.6 Descriptive Headings. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
9.7 Counterparts; Facsimile Signatures. This Agreement
shall become binding when one or more counterparts hereof, individually or
taken together, bears the signatures of each of the parties hereto. This
Agreement may be executed in any number of counterparts, each of which shall be
an original as against the party whose signature appears thereon, or on whose
behalf such counterpart is executed, but all of which taken together shall be
one and the same agreement. A facsimile copy of a signature of a party to this
Agreement or any such counterpart shall be fully effective as if an original
signature.
9.8 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the successors
and assigns of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto intending to be legally
bound have duly executed this Agreement, all as of the day and year first above
written.
Company: CHART HOUSE ENTERPRISES, INC.
By :/s/ Xxxxxxx X. Xxxxx Xx.
-------------------------------
Name: Xxxxxxx X. Xxxxx Xx.
--------------------------
Title: Executive Vice President
-------------------------
CHI: CHART HOUSE INVESTORS, LLC,
by ALPHA/ZFT PARTNERSHIP, its
managing member, by a general
partner of one of its general
partners
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxxx
--------------------------
Title: Trustee
-------------------------
Alpha: ALPHA/ZFT PARTNERSHIP
by a general partner of one
of its general partners,
solely for purposes of
Section 3.9 of this Agreement
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxxx
--------------------------
Title: Trustee
-------------------------
