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EXHIBIT 2.1
CHART HOUSE ENTERPRISES, INC.
AMENDED AND RESTATED STANDSTILL AGREEMENT
DATED OCTOBER 1, 1997
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TABLE OF CONTENTS
PAGE NO.
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Representations and Warranties . . . . . . . . . . . . . . . . . . 3
Section 3. Covenants with Respect to the Company Voting
Securities and Other Matters . . . . . . . . . . . . . . . . . . . 6
3.1 Acquisition of Company Voting Securities . . . . . . . . . . 6
3.2 Distribution of the Company Voting Securities . . . . . . . . 7
3.3 Proxy Solicitations, etc. . . . . . . . . . . . . . . . . . . 7
3.4 No Voting Trusts, Pooling Agreements, or
Formation of "Groups" . . . . . . . . . . . . . . . . . . . . 7
3.5 No Solicitation of Bidders . . . . . . . . . . . . . . . . . 8
3.6 Material Transactions . . . . . . . . . . . . . . . . . . . . 8
3.7 Non-Circumvention . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Confidential Material . . . . . . . . . . . . . . . . . . . . 8
3.9 Guarantee by Alpha . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Voting of Company Securities and Other Related
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . 12
5.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Request for Registration . . . . . . . . . . . . . . . . . . 12
5.2A Shelf Registration . . . . . . . . . . . . . . . . . . . . . 13
5.3 Piggyback Registration . . . . . . . . . . . . . . . . . . . 13
5.4 Obligations of the Company . . . . . . . . . . . . . . . . . 14
5.5 Furnish Information . . . . . . . . . . . . . . . . . . . . . 15
5.6 Expenses of Demand Registration and Shelf
Registration . . . . . . . . . . . . . . . . . . . . . . . . 15
5.7 Expenses of Piggyback Registration . . . . . . . . . . . . . 15
5.8 Underwriting Requirements . . . . . . . . . . . . . . . . . . 15
5.9 Delay of Registration . . . . . . . . . . . . . . . . . . . . 16
5.10 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 16
5.11 Reports Under the Exchange Act . . . . . . . . . . . . . . . 18
5.12 No Assignment of Registration Rights . . . . . . . . . . . . 18
5.13 Waiver Procedures . . . . . . . . . . . . . . . . . . . . . . 19
5.14 "Market Stand-off" Agreement . . . . . . . . . . . . . . . . 19
Section 6. Term of Agreement; Certain Provisions Regarding
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7. Legend and Stop Transfer Order . . . . . . . . . . . . . . . . . . 19
Section 8. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . 20
9.1 Consent to Jurisdiction; Service of Process . . . . . . . . . 20
9.2 Additional ▇▇▇▇ Group Parties; Joint and Several
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . 21
9.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 22
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9.6 Descriptive Headings . . . . . . . . . . . . . . . . . . . . 22
9.7 Counterparts; Facsimile Signatures . . . . . . . . . . . . . 22
9.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . 22
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AMENDED AND RESTATED STANDSTILL AGREEMENT
Amended and Restated Standstill Agreement dated as of October
1, 1997, (this "Agreement") among Chart House Enterprises, Inc., a Delaware
corporation (the "Company"), Chart House Investors, LLC, a Delaware limited
liability company ("CHI"), Samstock, L.L.C., a Delaware limited liability
company ("Samstock"), Samstock/ZFT, L.L.C., a Delaware limited liability
company ("ZFT"), F. ▇▇▇▇▇▇ ▇▇▇▇▇, individually ("Handy"), F. ▇▇▇▇▇▇ ▇▇▇▇▇, as
trustee of the ▇▇▇▇▇▇ Trust ("FPH Trustee"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"),
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇, as tenants by the entirety (collectively,
"▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), and MelChart LLC, an Illinois limited
liability company ("MelChart"), (each of the foregoing parties, other than the
Company, individually a "Stockholder" and collectively the "Stockholders") 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 purchased from the Company, and the Company sold to CHI,
3,400,000 newly issued shares of the Company's Common Stock, par value $.01 per
share ("Common Stock"), representing approximately 29.2% of the Common Stock
then outstanding.
WHEREAS, Samstock, ZFT, FPH Trustee, Saltsman, Gaffney, ▇▇▇▇▇▇ and
MelChart have acquired from CHI or its affiliates, directly or indirectly, the
shares of Common Stock set forth on Exhibit A hereto.
WHEREAS, Handy has entered into an Amended and Restated Option
Agreement with CHI, pursuant to which Handy has the option to acquire 163,581
shares of Common Stock from CHI (the "Handy Option Shares").
WHEREAS, reference is made to that certain Standstill Agreement,
dated as of March 10, 1997, among the Company, CHI and Alpha (the "Original
Standstill Agreement").
WHEREAS, the Company, the Stockholders and Alpha are entering
into this Agreement to establish certain arrangements with respect to the
relationships between them, and intend for this Agreement to amend, restate and
supersede the Original Standstill Agreement in its entirety.
WHEREAS, the Company believes that these arrangements will be
in the best interests of the Company and all of its stockholders.
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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 March 10, 1997.
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 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 "▇▇▇▇ Affiliate" means CHI, Samstock, ZFT, Handy, FPH
Trustee and any of their respective affiliates (exclusive of Saltsman, Gaffney,
▇▇▇▇▇▇, MelChart and their respective affiliates).
1.6 "▇▇▇▇ Group" means each Stockholder and any corporations,
partnerships, limited liability companies or other entities that are their
affiliates, collectively; provided, however, that publicly held entities that
might fall within this definition as a result of their affiliation with any
▇▇▇▇ Affiliate (a "Public ▇▇▇▇ Affiliate") shall not be treated as affiliates
of any ▇▇▇▇ Affiliate hereunder unless its affiliates took any action, directly
or indirectly, to suggest, encourage or assist such entity in taking the
relevant action to be attributed to the ▇▇▇▇ Group hereunder. For purposes of
the preceding sentence and the similar clause
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appearing in the second sentence of Section 3.1, the failure of any ▇▇▇▇
Affiliate or any of its affiliates, upon learning of a Public ▇▇▇▇ Affiliate's
action, to request that such Public ▇▇▇▇ Affiliate refrain from taking such
action because of the provisions of this Agreement will be deemed to constitute
"encouraging or assisting" in such action.
1.7 "Independent Director" means directors of the Company who
(i) are not employees or officers of the Company, (ii) are not serving as
designees of Samstock pursuant to Section 4 hereof, and (iii) have no financial
interest in and are not otherwise associated with CHI, Samstock, ZFT, any
Public ▇▇▇▇ Affiliate 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 ▇▇▇▇ Group might be interested.
1.8 "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, Samstock and ZFT jointly and severally represent
and warrant to the Company as follows:
(a) Each of CHI, Samstock and ZFT 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, Samstock, ZFT and Alpha has
the power and authority to enter into this Agreement and perform its
respective obligations hereunder.
(b) This Agreement has been duly authorized, executed and
delivered by CHI, Samstock, ZFT and Alpha and constitutes the
legal, valid and binding agreement of CHI, Samstock, ZFT 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, Samstock, ZFT or Alpha is bound or by which it
is affected or of any charter documents of CHI, Samstock, ZFT or Alpha.
(d) As of the date hereof, no shares of Common Stock are
currently beneficially owned by any member of the ▇▇▇▇ Group
(other than Handy, FPH Trustee, Saltsman, Gaffney, MelChart and ▇▇▇▇▇▇
and their respective affiliates), except for
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those shares of Common Stock originally acquired by CHI pursuant to the
Stock Purchase and Sale Agreement and set forth on Exhibit A hereto
(exclusive of any options granted by the Company).
2.2 Handy and FPH Trustee jointly and severally represent and warrant
to the Company as follows:
(a) He has the legal capacity to enter into this Agreement and
perform his respective obligations hereunder both for himself individually
and on behalf of the ▇▇▇▇▇▇ Trust.
(b) This Agreement has been duly executed and delivered by him
both for himself and on behalf of the ▇▇▇▇▇▇ Trust and constitutes his
legal, valid and binding agreement enforceable against him in accordance
with the terms hereof both in his individual capacity and in his capacity
as trustee of the ▇▇▇▇▇▇ Trust.
(c) Neither the execution and delivery of this Agreement nor the
performance of his 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 he is bound
or by which he is affected, both in his individual capacity and in his
capacity as trustee of the ▇▇▇▇▇▇ Trust.
(d) As of the date hereof, no shares of Common Stock are currently
beneficially owned by him or his affiliates, except for those shares of
Common Stock set forth on Exhibit A hereto (exclusive of the Handy Option
Shares and any stock options granted by the Company).
2.3 ▇▇▇▇▇▇▇▇ represents and warrants to the Company as follows:
(a) He has the legal capacity to enter into this Agreement and
perform his respective obligations hereunder.
(b) This Agreement has been duly executed and delivered by him and
constitutes his legal, valid and binding agreement enforceable against him
in accordance with the terms hereof.
(c) Neither the execution and delivery of this Agreement nor the
performance of his 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 he is bound
or by which he is affected.
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(d) As of the date hereof, no shares of Common Stock are currently
beneficially owned by him or his affiliates, except for those shares of
Common Stock set forth on Exhibit A hereto.
2.4 ▇▇▇▇▇▇▇ jointly and severally represent and warrant to the
Company as follows:
(a) They have the legal capacity to enter into this Agreement and
perform their respective obligations hereunder.
(b) This Agreement has been duly executed and delivered by them
and constitutes their legal, valid and binding agreement enforceable
against them in accordance with the terms hereof.
(c) Neither the execution and delivery of this Agreement nor the
performance of their 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 they are
bound or by which they are affected.
(d) As of the date hereof, no shares of Common Stock are currently
beneficially owned by them or their affiliates, except for those shares of
Common Stock set forth on Exhibit A hereto.
2.5 ▇▇▇▇▇▇ represents and warrants to the Company as follows:
(a) He has the legal capacity to enter into this Agreement and
perform his respective obligations hereunder.
(b) This Agreement has been duly executed and delivered by him and
constitutes his legal, valid and binding agreement enforceable against him
in accordance with the terms hereof.
(c) Neither the execution and delivery of this Agreement nor the
performance of his 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 he is bound
or by which he is affected.
(d) As of the date hereof, no shares of Common Stock are currently
beneficially owned by him or his affiliates, except for those shares of
Common Stock set forth on Exhibit A hereto (exclusive of any stock options
granted by the Company).
2.6 MelChart represents and warrants to the Company as follows:
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(a) MelChart is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization. MelChart has the power and authority to enter into this
Agreement and perform its obligations hereunder.
(b) This Agreement has been duly authorized, executed and
delivered by MelChart and constitutes the legal, valid and binding
agreement of MelChart enforceable against MelChart 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 MelChart is
bound or by which MelChart is affected or of any charter documents of
MelChart.
(d) As of the date hereof, no shares of Common Stock are currently
beneficially owned by MelChart or any of its affiliates, except for those
shares of Common Stock set forth on Exhibit A hereto.
2.7 The Company represents and warrants to the Stockholders and Alpha
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,
judgment, 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. CHI, Samstock and ZFT hereby agree with respect to all
members of the ▇▇▇▇ Group, other than Handy, FPH Trustee, Saltsman, Gaffney,
▇▇▇▇▇▇ and MelChart and any of their respective affiliates, and each of Handy,
FPH Trustee, Saltsman, Gaffney, ▇▇▇▇▇▇ and MelChart agree with respect to
themselves and their respective affiliates, as follows:
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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 ▇▇▇▇ 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 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ Affiliate unless CHI,
Samstock, ZFT, 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 or exercise of any stock options granted 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 ▇▇▇▇ Group or any member thereof has the
right to obtain beneficial ownership of such securities in the future shall
also be deemed to be outstanding and beneficially owned by the ▇▇▇▇ Group or
the applicable member thereof.
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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 ▇▇▇▇ Group shall, directly or
indirectly, sell, transfer any beneficial interest in, or otherwise dispose of
any Company Voting Security other than to another member of the ▇▇▇▇ 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 ▇▇▇▇ 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 in response to certain tender or exchange offers
as permitted by Section 3.2(b); provided, however, that, notwithstanding
anything to the contrary in this Agreement, any member of the ▇▇▇▇ Group shall
be entitled to pledge or hypothecate any number of Company Voting Securities to
any bank or other financial institution in connection with a bona fide
financing transaction involving any member of the ▇▇▇▇ Group or their
affiliates, and neither such pledge or hypothecation, nor any exercise of
rights or remedies pursuant thereto, shall be subject to any of the provisions
of this Agreement, and upon any realization of such pledge or hypothecation,
the pledgee shall take such Company Voting Securities free and clear of this
Agreement.
(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 ▇▇▇▇ Group for outstanding Company Voting Securities
(a "Qualifying Offer"), any member of the ▇▇▇▇ 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 ▇▇▇▇ 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
and, subject to Section 3.7, other than with respect to Company Voting
Securities held by any member of the ▇▇▇▇ Group.
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, no Stockholder or any
other member of the ▇▇▇▇ Group shall form, join or in any other way participate
in a partnership, pooling agreement, syndicate, voting trust or other "group"
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other than the ▇▇▇▇ Group with respect to Company Voting Securities, or enter
into any agreement or arrangement or otherwise act in concert with any other
person other than a member of the ▇▇▇▇ Group, or a holder of any interest in
any entity included within the ▇▇▇▇ Group (provided such entity is itself bound
by the terms of this Agreement), 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 ▇▇▇▇ 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 ▇▇▇▇ Group shall not constitute assisting,
encouraging or inducing within the meaning of this Section 3.5.
3.6 Material Transactions. Prior to June 30, 2002, no member
of the ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ Group.
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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 ▇▇▇▇ Group or any of the Representatives (as defined
below), and all notes, reports, analyses, compilations, studies and other
materials prepared by the ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ Group or any of the Representatives or
becomes available to any member of the ▇▇▇▇ Group or any of the Representatives
on a non-confidential basis from any source that is not known by such member of
the ▇▇▇▇ 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 ▇▇▇▇ Group.
(b) Each member of the ▇▇▇▇ 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 ▇▇▇▇ Group may make any disclosure
of such information to which the Company gives its prior consent, (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, (iii) any ▇▇▇▇ Affiliate may make any
disclosure of such information in connection with any activity which such ▇▇▇▇
Affiliate reasonably believes to be in the best interests of the Company and
not prohibited by this Agreement, provided the recipient of such information is
informed of the confidential nature of the Confidential Material and of the
terms of this Section 3.8 and agrees in writing to keep such information
confidential and otherwise to be fully subject to the terms of this Section
3.8, and (iv) any member of the ▇▇▇▇ Group may make any disclosure of such
information to any other member of the ▇▇▇▇ Group. In any event, the ▇▇▇▇
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 ▇▇▇▇ 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
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14
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 ▇▇▇▇ 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 ▇▇▇▇ Group, the
▇▇▇▇ 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) The Stockholders hereby acknowledge 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.
(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, Samstock and ZFT of all of
their obligations hereunder and under the other agreements and documents
contemplated hereby.
Section 4. Voting of Company Securities and Other Related
Matters. CHI, Samstock and ZFT hereby agree with respect to all members of the
▇▇▇▇ Group, other than Handy, FPH Trustee, Saltsman, Gaffney, ▇▇▇▇▇▇ and
MelChart and any of their respective affiliates, and each of Handy, FPH
Trustee, Saltsman, Gaffney, ▇▇▇▇▇▇ and MelChart agree with respect to
themselves and their respective affiliates, as follows:
(a) Each member of the ▇▇▇▇ Group that is a holder of record
of Company Voting Securities shall be present, and each member of the ▇▇▇▇
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 ▇▇▇▇ 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 Samstock 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
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15
(ii) so long as Samstock 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 Samstock on the one hand and a majority of the
Independent Directors on the other hand. The Company hereby agrees and
acknowledges that ▇▇▇ ▇▇▇▇ and F. ▇▇▇▇▇▇ ▇▇▇▇▇ 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. Samstock 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
▇▇▇▇ Group and the directors designated by Samstock 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.
(c) For purposes of this Agreement, directors "designated by
Samstock" shall include directors designated by Samstock as anticipated by this
Section 4, and any other directors of the Company affiliated or associated with
any member of the ▇▇▇▇ Group, but, notwithstanding the foregoing, shall not
include ▇▇▇▇▇▇.
(d) At all times prior to June 30, 2002, Samstock shall be
entitled to designate the following number of directors pursuant to Section
4(b) hereof:
(i) so long as the members of the ▇▇▇▇ Group that have executed
this Agreement as parties (the "▇▇▇▇ 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), Samstock shall have the
right to designate two directors of the Company (it being understood that
▇▇▇▇▇▇ shall not count as one of such two directors), provided such
designees are reasonably acceptable to the Independent Directors at the
time of their designation; and
(ii) so long as the ▇▇▇▇ 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), Samstock shall have the right to
designate one director of the Company (it being understood that ▇▇▇▇▇▇
shall not count as such director), 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 ▇▇▇▇ Contracting Parties shall no
longer beneficially own at least 15% of the Combined Voting Power of all
Company Voting Securities (as so calculated), Samstock shall cause one of its
two designees to resign forthwith such
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16
that only one designee remains on the Board of Directors of the Company; and
provided, further, that at any time when the ▇▇▇▇ Contracting Parties shall no
longer beneficially own at least 7.5% of the Combined Voting Power of all
Company Voting Securities (as so calculated), Samstock shall not have the right
to designate any directors of the Company, Samstock's rights under this Section
4 shall terminate, Samstock shall cause its designees to resign forthwith
suchthat no designee of Samstock remains on the Board of Directors of the
Company and all of the covenants under Section 3 of this Agreement shall lapse
and no longer be of any force or effect. In addition, all of the covenants
under Section 3 of this Agreement shall lapse and no longer be of any force or
effect if for any reason any of the director designees designated by Samstock
pursuant to the rights granted by Section 4(b) shall not be nominated for
election as a director of the Company with the unanimous recommendation of all
of the directors of the Company (other than those directors designated by
Samstock pursuant to Section 4(b)) at the next election of directors of the
Company following Samstock's designation. At any time when Samstock 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 Samstock.
(e) Except as expressly set forth above, each member of the
▇▇▇▇ Group shall vote all Company Voting Securities owned of record by such
member of the ▇▇▇▇ Group and shall cause all Company Voting Securities owned
beneficially by such member of the ▇▇▇▇ Group to be voted with respect to the
election or removal of directors of Company, or any other matter that may be
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 ▇▇▇▇
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 ▇▇▇▇ 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) the
Stockholders may at all times vote their Company Voting Securities for the
election or retention of the one or two directors, as the case may be,
designated by Samstock 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 ▇▇▇▇
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:
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17
(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 ▇▇▇▇ Group.
(c) The term "Holder" means any ▇▇▇▇ Contracting Party who owns of
record Registrable Securities.
(d) The term "Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Act.
(e) The term "Shelf Registration Statement" means a registration
statement intended to effect a shelf registration in connection with a Rule 415
Offering.
5.2 Request for Registration.
(a) If the Company shall at any time receive a written request
from any ▇▇▇▇ Affiliates who are 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 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
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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 Initiating Holders; provided, however, that the
Company may not utilize this right more than twice in any 12-month period.
5.2A Shelf Registration. If the Company shall at any time
receive a written request from any ▇▇▇▇ Affiliates who are the Holders of at
least 500,000 shares of Common Stock that the Company file a Shelf Registration
Statement, then the Company shall upon receipt of such notice prepare and file
a Shelf Registration Statement that shall include all Registrable Securities
(and shall include in the "plan of distribution" of such Shelf Registration
Statement, pledgees of any Holder), provided such Shelf Registration Statement
shall not include securities of the Company for sale for the Company's own
account. The Company shall use its reasonable best efforts to cause such Shelf
Registration Statement to be declared effective within 60 days of such written
request. The Company shall keep such Shelf Registration Statement effective
until such time as all Registrable Securities have been sold or disposed of
thereunder or sold, transferred or otherwise disposed of (other than pursuant
to a pledge of such Registrable Securities) to a person that is not a Holder.
The Shelf Registration Statement shall not be counted as a request for
registration pursuant to Section 5. 2 hereof.
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
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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 (other than with respect
to a Shelf Registration Statement), 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 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.
-16 -
20
(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 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 and Shelf Registration.
All expenses incurred by or on behalf of the Company in connection with
registrations, filings or qualifications pursuant to Section 5.2 and Section
5.2A, 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
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21
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 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 ▇▇▇▇
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:
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(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 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
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23
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 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
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24
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 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 ▇▇▇▇ 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.
-21 -
25
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 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 ▇▇▇▇ 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 ▇▇▇▇ 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).
Section 7. Legend and Stop Transfer Order. To assist in
effectuating the provisions of this Agreement, each Stockholder hereby consents
(i) to the placement 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ Group in
compliance with the provisions of this Agreement.
Section 8. Remedies.
(a) The Stockholders 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 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
-22 -
26
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 ▇▇▇▇
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
▇▇▇▇ Group or which have been transferred by a member of the ▇▇▇▇
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 ▇▇▇▇ Group Parties; Joint and Several Obligations.
All of the obligations of the ▇▇▇▇ Group and its members (other than Handy, FPH
Trustee, Saltsman, Gaffney, ▇▇▇▇▇▇, MelChart and their affiliates) hereunder
shall be joint and several. All of the obligations of Handy, FPH Trustee,
Saltsman, Gaffney, ▇▇▇▇▇▇, MelChart and their affiliates hereunder shall be
several and not joint. Each member of the ▇▇▇▇ 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 Agreement to the same extent as if it had
signed this Agreement as an original signatory as a member of the ▇▇▇▇ 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
▇▇▇▇ Group shall transfer securities to another member of the ▇▇▇▇ Group unless
the transferee shall agree to be bound by this Agreement in the manner
specified above in this Section 9.2.
-23 -
27
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.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
With a copy to:
Sidley & Austin
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to any Stockholder or any member of the ▇▇▇▇ Group:
Samstock, L.L.C.
Two ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: F. ▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇
Two ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
And to:
Seyfarth, Shaw, ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-24 -
28
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.
-25 -
29
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Title: President and Chief Executive
Officer
--------------------------------
CHI: CHART HOUSE INVESTORS, L.L.C., by
ALPHABET PARTNERS, its managing
member, by a general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Trustee
--------------------------------
Samstock: SAMSTOCK, L.L.C., by SZ INVESTMENTS, L.L.C.,
its sole member, by ▇▇▇▇ GENERAL
PARTNERSHIP, INC., its sole member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
--------------------------------
ZFT: SAMSTOCK/ZFT, L.L.C., by ZFT
PARTNERSHIP,
its sole member, by a general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Title: Trustee
--------------------------------
Handy:
/s/ F. ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
F. ▇▇▇▇▇▇ ▇▇▇▇▇, individually
-26 -
30
FPH Trustee:
/s/ F. ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------
F. ▇▇▇▇▇▇ ▇▇▇▇▇, as Trustee of the ▇▇▇▇▇▇
Trust
▇▇▇▇▇▇▇▇:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
MelChart: MELCHART, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, manager, by ▇▇▇▇▇▇▇ ▇. ▇▇▇
under Power of Attorney
Alpha: ALPHA/ZFT PARTNERSHIP, by a general partner
of one of its general partners, solely for
purposes of Section 3.8 of this Agreement
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: Trustee
---------------------------------
- 27 -
31
EXHIBIT A
OWNERSHIP OF COMMON STOCK
As of the date of the Amended and Restated Standstill Agreement, the 3,400,000
shares of Common Stock of Chart House Enterprises, Inc. (the "Company")
originally acquired by Chart House Investors, L.L.C. ("CHI") from the Company
pursuant to that certain Stock Purchase and Sale Agreement dated as of March
10, 1997, and subsequently acquired, directly or indirectly, by sale,
distribution, contribution or otherwise by other Stockholders, are held by the
Stockholders as follows:
Stockholder Number of Shares Held
----------- ---------------------
Samstock, L.L.C. 1,860,000
Samstock/ZFT, L.L.C. 705,808
Chart House Investors, L.L.C. 428,591
F. ▇▇▇▇▇▇ ▇▇▇▇▇, as Trustee
of the ▇▇▇▇▇▇ Trust 103,539
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 4,137
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ 20,708
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 75,000
MelChart LLC 202,217
------------ -------
Total 3,400,000
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