<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Chart House Enterprises, Inc.
-----------------------------
(Name of Issuer)
Common Stock, par value $0.01 per share
---------------------------------------
(Title of Class of Securities)
160902102
--------------
(CUSIP Number)
Alisa M. Singer
Rosenberg & Liebentritt
Two North Riverside Plaza, Suite 600
Chicago, Illinois 60606
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 10, 1997
-----------------------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this Schedule because of Rule 13d-1(b)(3) or (4), check the following box [__].
Check the following box if a fee is being paid with the statement [__].
Page 1 of 71 Pages
Exhibit Index Appears on Page 11
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SCHEDULE 13D
CUSIP No. 160902102
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Chart House Investors, LLC
36-4141805
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [__]
(b) [__]
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [__]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. SOLE VOTING POWER
NUMBER OF 1,641,750
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER
REPORTING
PERSON 1,641,750
10. SHARED DISPOSITIVE POWER
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,641,750
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [__]
CERTAIN SHARES
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6%
14. TYPE OF REPORTING PERSON
OO
Page 2 of 71 Pages
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ITEM 1. SECURITY AND ISSUER.
This Statement relates to the common stock, par value $0.01 per share
("Common Stock") of Chart House Enterprises, Inc. (the "Issuer"). The Issuer
has its principal executive offices at 115 South Acacia Avenue, Solana Beach,
California 92057.
ITEM 2. IDENTITY AND BACKGROUND.
(a-c) This Statement is being filed by Chart House Investors, LLC, a
Delaware limited liability company ("CHI"). The members of CHI are Alphabet
Partners, an Illinois general partnership ("Alphabet"), ZFT Partnership, an
Illinois general partnership ("ZFT"), and HHS Partnership, a Florida general
partnership ("HHS"). ZFT is the managing member of CHI. Additional
information concerning Alphabet, ZFT and HHS is set forth in Appendix A hereto.
The principal business of CHI is investment in the securities of the
Issuer. Alphabet and ZFT are general investment partnerships. The business
address of CHI, Alphabet and ZFT is Two North Riverside Plaza, Chicago,
Illinois 60606. HHS is a general investment partnership. The business
address of HHS is 222 West Comstock, Winter Park, Florida 32789.
(d) and (e) Neither CHI, nor, to the best knowledge of CHI, any of
Alphabet, ZFT, HHS, or any of the persons listed in Appendix A hereto, have
during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (ii) been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was, or is, subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
CHI acquired the 1,641,750 shares of the Common Stock to which this
Statement relates from the Issuer (the "Initial Shares") on March 10, 1997,
pursuant to a Stock Purchase and Sale Agreement, dated as of March 10, 1997
(the "Stock Purchase Agreement"), among the Issuer, CHI and, solely for
purposes of Section 4.13 of the Stock Purchase Agreement (relating to the
guaranty of CHI's obligations under the Stock Purchase Agreement), Alpha/ZFT
Partnership, an Illinois general partnership of which Alphabet and ZFT are the
general partners ("Alpha/ZFT"). The membership interests in CHI presently held
by Alphabet and ZFT were previously held by Alpha/ZFT. Subsequent to execution
of the Stock Purchase Agreement, such membership interests in CHI were assigned
by Alpha/ZFT to Alphabet and ZFT. The Stock Purchase Agreement is attached
hereto as
Page 3 of 71 Pages
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Exhibit 1 and is incorporated herein by reference. Pursuant to the
Stock Purchase Agreement, CHI has paid to the Issuer for the Initial Shares the
amount of $5.75 per share, for a total consideration of $9,440,063, the source
of which was capital contributions to CHI by the members of CHI.
As described below, CHI has agreed to acquire an additional 1,758,250
shares of Common Stock from the Issuer (the "Additional Shares"), subject to
the satisfaction of certain conditions precedent, pursuant to the Stock
Purchase Agreement. It is anticipated that the acquisition of the Additional
Shares will be consummated on or before September 30, 1997. Pursuant to the
Stock Purchase Agreement, CHI will pay to the Issuer for the Additional Shares
the amount of $5.75 per share, for a total consideration of $10,109,937, the
source of which will be capital contributions to CHI from the members of CHI.
ITEM 4. PURPOSE OF THE TRANSACTION.
CHI's acquisition of the Initial Shares was, and CHI's anticipated
acquisition of Additional Shares will be, effected for the purpose of investing
in the Issuer.
Pursuant to the Stock Purchase Agreement, CHI agreed to purchase from the
Issuer, and the Issuer agreed to sell to CHI, the Additional Shares at a price
of $5.75 per share, for a total consideration of $10,109,937. The purchase and
sale of the Additional Shares is to occur on the third business day following
the satisfaction or waiver of certain conditions including, without limitation,
the approval, by a majority of votes cast by holders of the Issuer's Common
Stock (provided that holders of a majority of the outstanding Common Stock of
the Issuer vote on such proposal), of the issuance of the Additional Shares.
The purchase and sale of the Additional Shares may be abandoned (a) at the
election of CHI if (1) a bona fide definitive proposal with respect to a
"Competing Transaction" which has a value per share of Common Stock in excess
of $5.75 is presented to the Issuer and publicly announced prior to the vote of
the Issuer's stockholders on the proposal to issue the Additional Shares to
CHI, and the purchase and sale of the Additional Shares has not occurred on or
before September 30, 1997, (2) there is a "Superior Proposal Event," or (3) if
the purchase and sale of the Additional Shares does not occur on or before
September 30, 1997, unless such failure to occur is due to the failure of CHI
to perform its obligations under the Stock Purchase Agreement; (b) at the
election of CHI or the Issuer, if the Issuer's stockholders fail to adopt the
proposal to sell the Additional Shares to CHI; or (c) at the election of the
Issuer, in the event it receives a "Superior Proposal." For purposes of the
foregoing, (x) the term "Competing Transaction" generally means a disposition
of any material part of the assets or capital stock of the Issuer, including,
without limitation, any business combination, tender offer or other transaction
which would result in the issuance or transfer of a more than 5% equity or
voting interest in the Issuer, (y) the term "Superior Proposal" generally means
a bona fide proposal for a Competing Transaction that a majority of the
independent directors of the Issuer determine provides greater aggregate value
to the Issuer or to its stockholders than the transactions contemplated by the
Stock Purchase
Page 4 of 71 Pages
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Agreement, and (z) the term "Superior Proposal Event" generally means (i) the
approval or recommendation by the Issuer's Board of Directors of a Superior
Proposal, (ii) the approval or authorization by the Issuer's Board of Directors
to enter into an agreement with respect to such Superior Proposal, or (iii) the
termination of the Stock Purchase Agreement by the Issuer's Board of Directors
at any time following three business days after notifying CHI of a Superior
Proposal.
Under the Stock Purchase Agreement, if CHI shall have elected not to
proceed with the purchase of the Additional Shares as set forth in clause
(a)(3) above, or if CHI or the Issuer shall have elected not to proceed with
the purchase and sale of the Additional Shares as set forth in clause (b) above
and no Competing Transaction shall have been proposed which has a value per
share in excess of $5.75, the Issuer will reimburse CHI for out-of-pocket
expenses incurred in connection with the transactions contemplated by the Stock
Purchase Agreement, but not more than $250,000 in the aggregate. If CHI shall
have elected not to proceed with the purchase of the Additional Shares as set
forth in clauses (a)(1) or (a)(2) above, CHI or the Issuer shall have elected
not to proceed with the purchase and sale of the Additional Shares as set forth
in clause (b) above and a bona fide definitive proposal with respect to a
Competing Transaction shall have been presented to the Company and publicly
announced prior to the vote of the Company's stockholders with respect to the
issuance of the Additional Shares to CHI which has a value per share in excess
of $5.75, or the Issuer shall have elected not to proceed with the sale of the
Additional Shares as set forth in clause (c) above, the Issuer will pay
$1,000,000 to CHI, and will not be obligated to reimburse CHI for expenses.
In connection with the transactions which are the subject of this
Statement, CHI, the Issuer and Alpha/ZFT have also entered into a Standstill
Agreement, dated as of March 10, 1997 (the "Standstill Agreement"), containing
certain agreements as to certain aspects of the relationship between CHI, as a
stockholder, and the Issuer. The Standstill Agreement is attached hereto as
Exhibit 2 and is incorporated herein by reference.
Pursuant to the Standstill Agreement, CHI agreed that CHI, Alpha/ZFT and
their affiliates will not take any of the following actions prior to June 30,
2002, without the approval of a majority of the Issuer's disinterested
directors, subject to specified limited exceptions: (a) increase their
ownership of Common Stock (or other securities of the Issuer entitled to vote
generally for the election of directors or securities convertible into or
exchangeable for Common Stock or such voting securities or other options or
rights to acquire Common Stock or such voting securities) (collectively the
"Voting Securities") beyond 29.2% of the combined voting power of all such
securities, although the foregoing limitation shall not prohibit the purchase
of Voting Securities directly from the Issuer; (b) sell or otherwise dispose of
any Voting Securities to any person or group (other than an affiliate) that
would own (to the knowledge of CHI, Alpha/ZFT and their affiliates) more than
5% of the combined voting power of the Issuer's securities; (c) solicit
proxies, assist any other person in the solicitation of proxies, become a
"participant" in a "solicitation" or assist any such "participant" (as such
terms are defined in Rule 14a-1 of Regulation 14A
Page 5 of 71 Pages
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under the Securities Exchange Act of 1934, as amended) in opposition to a
recommendation of a majority of disinterested directors, submit any proposal
for the vote of Issuer's stockholders, or seek to advise or influence any other
person with respect to the voting of Voting Securities; (d) form, join or
participate in any other way in a partnership, voting trust or other "group",
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
Voting Securities of the Issuer; (e) engage in certain specified takeover
actions or take any other actions, alone or in concert with any other person,
to seek control of the Issuer; (f) engage in any material transaction with the
Issuer; or (g) take any action to seek to circumvent any of the foregoing
limitations. Notwithstanding clause (b) above, CHI, Alpha/ZFT and their
affiliates are generally permitted to tender Voting Securities of the Issuer
beneficially owned by it in connection with certain tender or exchange offers
approved by a majority of the disinterested directors of the Issuer.
Pursuant to the Standstill Agreement, at all times prior to June 30, 2002,
CHI is entitled to designate two representatives, reasonably acceptable to the
independent directors of the Issuer, to serve on the Issuer's Board of
Directors (the "Board") as long as CHI and Alpha/ZFT together beneficially own
at least 15% of the combined voting power of the Issuer's Voting Securities
and, in the event that CHI and Alpha/ZFT together beneficially own less than
15%, but at least 7.5%, of the combined voting power of the Issuer's Voting
Securities, CHI shall be entitled to designate one representative, reasonably
acceptable to the independent directors of the Issuer, to serve on the Issuer's
Board. The Issuer agreed that it will not increase the size of the Board
beyond seven members as long as CHI is entitled to one or two Board
representatives. In accordance with these provisions, Mr. Zell and Mr. Handy
have been appointed to the Board effective March 10, 1997.
Pursuant to the Standstill Agreement, CHI agreed that CHI, Alpha/ZFT and
their affiliates would vote their Voting Securities with respect to the
election or removal of directors or any other matter that would relate to a
possible change of control of the Issuer either (a) in accordance with the
recommendations of the disinterested directors of the Issuer or (b) in the same
proportions (including abstentions) as the holders of record of the Issuer's
Voting Securities, other than those beneficially owned by CHI, Alpha/ZFT and
their affiliates, vote their securities; provided that (i) CHI may vote in
favor of the election or retention of the one or two directors designated by
CHI as described in the preceding paragraph, and (ii) CHI, Alpha/ZFT and their
affiliates may vote with respect to any matter presented to the Issuer's
stockholders that relate to a change of control of the Issuer (1) in favor of
such matter if it is recommended by a majority of the Board, or (2) against
such matter.
Pursuant to the Standstill Agreement and subject to certain exceptions,
the Issuer granted CHI and Alpha/ZFT certain demand and "piggyback"
registration rights in connection with certain permitted sales of shares of
Common Stock.
Page 6 of 71 Pages
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The summaries contained in this Statement of certain provisions of each of
the Stock Purchase Agreement and the Standstill Agreement are not intended to
be complete and are qualified in their entirety by reference to each respective
agreement attached as an Exhibit hereto and incorporated herein by reference.
CHI intends to continue to review its investment in Common Stock and, from
time to time depending upon certain factors, including without limitation the
financial performance of the Issuer, the availability and price of shares of
Common Stock and other general market and investment conditions, may determine
to acquire through open market purchases or otherwise additional shares of
Common Stock (in addition to those anticipated to be acquired pursuant to the
Stock Purchase Agreement as described above), or may determine to sell through
the open market or otherwise, in each case, subject to the limitations of the
Standstill Agreement described above.
Except as stated above, CHI does not have any plans or proposals of the
types referred to in clauses (a) through (j) of Item 4 of Schedule 13D, as
promulgated by the Securities and Exchange Commission.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b) To the best knowledge of CHI, there are 9,904,263 shares of
Common Stock outstanding as of the date hereof, and after the issuance of the
Additional Shares there will be 11,662,173 shares of Common Stock outstanding.
As of the date hereof, the 1,641,750 shares of Common Stock beneficially owned
by CHI represent approximately 16.6% of the Common Stock issued and
outstanding. Subject to the limitations of the Standstill Agreement as
described above, CHI has (i) the sole power to vote or to direct the vote of
the 1,641,750 shares of Common Stock acquired by it on March 10, 1997; and (ii)
the sole power to dispose of or to direct the disposition of such shares of
Common Stock.
At the date hereof, neither CHI, nor to the best knowledge of CHI, any of
Alphabet, ZFT, HHS or any of the persons listed in Appendix A hereto owns any
shares of Common Stock (other than shares of Common Stock beneficially owned by
CHI, as described herein, of which one or more of such other persons may be
deemed to have beneficial ownership pursuant to Rule 13d-3 of the Exchange
Act).
(c) During the last sixty days, the only transaction in the Common
Stock effected by CHI, or to the best knowledge of CHI, by Alphabet, ZFT, HHS
or any of the persons listed in Appendix A hereto, was the purchase by CHI of
1,641,750 shares of Common Stock from the Issuer on March 10, 1997 at a price
of $5.75 per share.
(d) No person other than as described above has the right to receive or
the power to direct the receipt of dividends from, or the proceeds from the
sale of, the 1,641,750 issued shares of Common Stock beneficially owned by CHI.
Page 7 of 71 Pages
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(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Except for the agreements described herein, neither CHI nor, to the best
knowledge of CHI, any of Alphabet, ZFT, HHS or any of the persons listed
in Appendix A hereto has any contract, arrangement, understanding or
relationship with any person with respect to any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 - Stock Purchase Agreement.
Exhibit 2 - Standstill Agreement.
Page 8 of 71 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in the statement is true, complete and
correct.
CHART HOUSE INVESTORS, LLC,
by ZFT Partnership, its managing
member, by one of its general partners
Dated: March 20, 1997 By: /s/ Sheli Z. Rosenberg
-----------------------
Name: Sheli Z. Rosenberg
Title: Trustee
Page 9 of 71 Pages
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APPENDIX A
SCHEDULE 13D
CUSIP NUMBER 160902102
ALPHABET PARTNERS, AN ILLINOIS GENERAL PARTNERSHIP: Alphabet Partners is
composed of ten trusts created for the benefit of Mr. Zell and his family.
Arthur A. Greenberg is the sole trustee of the ten trusts. Mr. Greenberg is a
principal in the accounting firm, Greenberg & Pociask, P.C. and an Executive
Vice President of Equity Group Investments ("EGI"). Mr. Greenberg is a citizen
of the United States of America.
ZFT PARTNERSHIP, AN ILLINOIS GENERAL PARTNERSHIP: ZFT Partnership is composed
of fifteen trusts created for the benefit of Mr. Zell and his family. Sheli Z.
Rosenberg is the sole trustee of the fifteen trusts. Mrs. Rosenberg is
President and Chief Executive Officer of EGI and Equity Financial and
Management Company ("EFM") and a principal in the law firm, Rosenberg &
Liebentritt, P.C. Mrs. Rosenberg is a citizen of the United States of America.
SAMUEL ZELL: Mr. Zell is Chairman of the Board of Directors of EGI and EFM.
Both firms are privately owned affiliated investment management firms. Mr.
Zell is also a director of the Issuer. Mr. Zell is a citizen of the United
States of America.
HHS PARTNERS, A FLORIDA GENERAL PARTNERSHIP: HHS Partners is composed of three
partners: F. Philip Handy, Thomas Gaffney and Robert Saltsman.
F. PHILIP HANDY: Mr. Handy is a private investor. Mr. Handy is also a
director of the Issuer. Mr. Handy is a citizen of the United States of
America.
THOMAS GAFFNEY: Mr. Gaffney is a private investor. Mr. Gaffney is a citizen of
the United States of America.
ROBERT SALTSMAN: Mr. Saltsman is an attorney. Mr. Saltsman is a citizen of the
United States of America.
Page 10 of 71 Pages
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EXHIBIT INDEX
Exhibit Page
Number Description Number
1 Stock Purchase and Sale Agreement, 12
dated as of March 10, 1997
2 Standstill Agreement, dated as of 49
March 10, 1997
Page 11 of 71 Pages
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EXHIBIT 1
STOCK PURCHASE AND SALE AGREEMENT
DATED AS OF MARCH 10, 1997
BETWEEN
CHART HOUSE ENTERPRISES, INC.,
CHART HOUSE INVESTORS, LLC
AND
ALPHA/ZFT PARTNERSHIP
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TABLE OF CONTENTS
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ARTICLE 1. PURCHASE AND SALE OF INITIAL SHARES AND
ADDITIONAL SHARES. . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale of Initial Shares . . . . . . . . . . . . . . . 1
1.2 Purchase and Sale of Additional Shares. . . . . . . . . . . . . . 2
1.3 Closings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Organization and Qualification; Subsidiaries. . . . . . . . . . . 2
2.2 Capitalization of the Company and Its Subsidiaries. . . . . . . . 3
2.3 Authority Relative to This Agreement. . . . . . . . . . . . . . . 4
2.4 Non-Contravention; Required Filings and Consents. . . . . . . . . 4
2.5 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . . 6
2.7 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . 6
2.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . 7
2.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 9
2.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . 10
2.13 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . 10
2.14 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.15 Related Party Transactions. . . . . . . . . . . . . . . . . . . . 11
2.16 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.17 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.18 Takeover Status . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.19 Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . 13
2.20 Compliance with Securities Laws . . . . . . . . . . . . . . . . . 13
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND ALPHA . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Authority Relative to this Agreement. . . . . . . . . . . . . . . 13
3.3 Non-Contravention; Required Filings and Consents. . . . . . . . . 14
3.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.5 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . 14
i
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3.6 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 4. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Conduct of the Business. . . . . . . . . . . . . . . . . . . . . 15
4.2 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Notification of Certain Matters. . . . . . . . . . . . . . . . . 17
4.4 Access to Information. . . . . . . . . . . . . . . . . . . . . . 17
4.5 Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . 18
4.6 Public Announcements . . . . . . . . . . . . . . . . . . . . . . 18
4.7 Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . . . 18
4.8 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . 19
4.9 New York Stock Exchange Listing. . . . . . . . . . . . . . . . . 19
4.10 Limitations on Transfer of Initial Shares and Additional Shares. 19
4.11 Expense Reimbursement and Break-Up Fee . . . . . . . . . . . . . 20
4.12 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 20
4.13 Guarantee of Alpha . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Conditions to Each Party's Obligations with Respect to Sale
and Purchase of the Initial Shares. . . . . . . . . . . . . . . 21
5.2 Conditions to the Obligation of Purchaser with Respect to
Purchase of the Initial Shares. . . . . . . . . . . . . . . . . 21
5.3 Conditions to the Obligation of the Company with Respect
to Sale of the Initial Shares . . . . . . . . . . . . . . . . . 22
5.4 Conditions to Each Party's Obligations with Respect to Sale
and Purchase of the Additional Shares . . . . . . . . . . . . . 22
5.5 Conditions to the Obligation of Purchaser with Respect to
Purchase of the Additional Shares . . . . . . . . . . . . . . . 23
5.6 Conditions to the Obligation of the Company with Respect
to Sale of the Additional Shares. . . . . . . . . . . . . . . . 23
ARTICLE 6. INDEMNIFICATION; REMEDIES. . . . . . . . . . . . . . . . . . . . 23
6.1 Survival of Representations and Warranties . . . . . . . . . . . 23
6.2 Indemnification and Payment of Damages by the Company. . . . . . 23
6.3 Indemnification and Payment of Damages by Purchaser. . . . . . . 24
6.4 Time Limitations . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Limitations On Amount. . . . . . . . . . . . . . . . . . . . . . 24
6.6 Other Limitations. . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 Procedure for Indemnification. . . . . . . . . . . . . . . . . . 25
ii
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ARTICLE 7. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Procedure upon Termination . . . . . . . . . . . . . . . . . . . 28
8.3 Abandonment of Additional Closing. . . . . . . . . . . . . . . . 28
8.4 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.5 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . 29
8.6 Execution in Counterparts; Facsimile Signatures. . . . . . . . . 29
8.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.8 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.9 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.11 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.13 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 31
8.14 Assignment, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 31
8.15 No Third-Party Rights. . . . . . . . . . . . . . . . . . . . . . 31
EXHIBITS
Exhibit A Standstill Agreement between Purchaser and the Company
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STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT (the "Agreement"), dated as of
March 10, 1997, between CHART HOUSE ENTERPRISES, INC., a Delaware corporation
(the "Company"), CHART HOUSE INVESTORS, LLC, a Delaware limited liability
company ("Purchaser"), and, solely for purposes of Section 4.13 of this
Agreement, ALPHA/ZFT PARTNERSHIP, an Illinois general partnership ("Alpha").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Purchaser desire to effect the sale and
purchase of newly issued shares of Common Stock of the Company, par value $0.01
per share (the "Common Stock"), as described herein, which sale and purchase
will be accomplished in two installments and will result in Purchaser owning
29.2% of the capital stock of the Company outstanding after completion of both
installments of such sale and purchase;
WHEREAS, as the first installment of such sale and purchase, the
Company will issue to Purchaser, and Purchaser will purchase from the Company,
1,641,750 newly issued shares of Common Stock (the "Initial Shares"), on the
terms and subject to the conditions set forth herein;
WHEREAS, as the second installment of such sale and purchase, the
Company will issue to Purchaser, and Purchaser will purchase from the Company,
1,758,250 newly issued shares of Common Stock (the "Additional Shares"), which
taken together with the Initial Shares shall collectively equal 29.2% of the
outstanding Common Stock after issuance of the Initial Shares and the
Additional Shares, on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, representations and
warranties and the mutual covenants and agreements set forth herein and other
good and valuable consideration the receipt of which is hereby acknowledged,
each of the parties hereto agrees as follows:
ARTICLE 1. PURCHASE AND SALE OF INITIAL SHARES
AND ADDITIONAL SHARES; CLOSINGS; DEFINITIONS
1.1 Purchase and Sale of Initial Shares. Subject to the
applicable terms and conditions set forth herein, the Company hereby agrees to
issue and sell to Purchaser, and Purchaser hereby agrees to purchase from the
Company, the Initial Shares, free and clear of all liens, claims, encumbrances
and pre-emptive rights, other than any created by Purchaser. In consideration
for the Initial Shares, Purchaser hereby agrees to pay to the Company, in cash,
a purchase price of $5.75 per share for the Initial Shares, for an aggregate
purchase price of $9,440,063 (the "Initial Purchase Price").
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1.2 Purchase and Sale of Additional Shares. Subject to the
applicable terms and conditions set forth herein, the Company hereby agrees to
issue and sell to Purchaser, and Purchaser hereby agrees to purchase from the
Company, the Additional Shares, free and clear of all liens, claims,
encumbrances and pre-emptive rights, other than any created by Purchaser. In
consideration for the Additional Shares, Purchaser hereby agrees to pay to the
Company, in cash, a purchase price of $5.75 per share for the Additional
Shares, for an aggregate purchase price of $10,109,937 (the "Additional
Purchase Price").
1.3 Closings. (a) The closing of the issuance of the Initial
Shares (the "Initial Closing") shall take place at the offices of Seyfarth,
Shaw, Fairweather & Geraldson, located at 55 East Monroe Street, Chicago,
Illinois, on the date of execution of this Agreement (the "Initial Closing
Date") or such other place or date as the parties may mutually agree. At the
Initial Closing, Purchaser shall pay the Initial Purchase Price for the Initial
Shares to the Company by wire transfer of immediately available funds to the
account or accounts of the Company previously specified by the Company to
Purchaser, and the Company shall deliver to Purchaser certificates representing
the Initial Shares registered in the name of Purchaser and bearing the legend
described in Section 4.10 hereof.
(b) The closing of the issuance of the Additional Shares
(the "Additional Closing") shall take place at the location specified in
paragraph (a) above, on the day (the "Additional Closing Date") which is the
third business day following satisfaction, or waiver by the affected party, of
each condition to the obligations of Purchaser and the Company to consummate
such issuance as specified in this Agreement, or such other place or date as
the parties may mutually agree. At the Additional Closing, Purchaser shall pay
the Additional Purchase Price for the Additional Shares to the Company by wire
transfer of immediately available funds to the account or accounts of the
Company previously specified by the Company to Purchaser, and the Company shall
deliver to Purchaser certificates representing the Additional Shares,
registered in the name of Purchaser and bearing the legend described in Section
4.10 hereof.
1.4 Definitions. Certain terms not otherwise defined in this
Agreement shall have the meanings ascribed thereto in Article 7 hereof.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company hereby represents and warrants to Purchaser as follows:
2.1 Organization and Qualification; Subsidiaries.
2.1.1 Each of the Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as now being conducted.
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2.1.2 Each of the Company and each of its subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
(including any foreign country) in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed
and in good standing would not reasonably be expected to have a Material
Adverse Effect.
2.1.3 The Company has heretofore furnished to Purchaser complete and
correct copies of the Certificate of Incorporation and By-Laws, or other
equivalent organizational documents, as amended, for the Company and each of
its subsidiaries. Such organizational documents are in full force and effect
and no other organizational documents are applicable to or binding upon the
Company or any of its subsidiaries. None of the Company or any of its
subsidiaries are in violation of any of the provisions of its respective
organizational documents.
2.1.4 Except as set forth on Schedule 2.1.4 and except for the
ownership of the capital stock of its subsidiaries by the Company, none of the
Company or any of its subsidiaries owns any direct or indirect economic or
voting interest in any person, except for investments of less than 1% of any
corporation listed on a national securities exchange.
2.2 Capitalization of the Company and Its Subsidiaries. The
authorized capital stock of the Company consists of (i) 30,000,000 shares of
Common Stock, par value $.01 per share, of which, as of the date of this
Agreement, 8,262,513 shares of Common Stock are issued and outstanding and (ii)
10,000,000 shares of Preferred Stock, par value $1.00 per share, of which, as
of the date of this Agreement, no shares are issued and outstanding. All
outstanding shares of Common Stock have been duly authorized and validly
issued, and are fully paid and nonassessable. As of the date of this
Agreement, Employee Options to purchase an aggregate of 610,500 shares of
Common Stock are outstanding and warrants to purchase 435,000 shares of Common
Stock are outstanding and held by Metropolitan Life Insurance Company, First
Boston LBO, Inc. or their successors and assigns (the "Warrants"). Except as
set forth above and except as set forth on Schedule 2.2, there are outstanding
(i) no shares of capital stock or other voting securities of the Company, (ii)
no securities of the Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company, (iii) no written or oral
options, subscriptions, warrants, convertible securities, calls, preemptive or
rescission rights or other rights to acquire from the Company, and no
obligation of the Company to issue, deliver or sell, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company, and (iv) no equity equivalents (including,
without limitation, stock appreciation rights), interests in the ownership or
earnings of the Company or other similar rights (collectively, "Company
Securities"). There are no outstanding obligations of the Company or any of
its subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities. Except as set forth on Schedule 2.2, each of the outstanding
shares of capital stock of each of the Company's subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and is directly or
indirectly owned by the Company, free and clear of all
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<PAGE> 8
Liens. There are no existing options, calls or commitments of any character
relating to the issued or unissued capital stock or other securities of any
subsidiary of the Company. No bonds, debentures, notes or other indebtedness
of the Company or any of its subsidiaries having the right to vote (or
convertible into, or exchangeable for securities having the right to vote) on
any matters on which the stockholders of the Company may vote are issued or
outstanding. The number of shares of Common Stock constituting the Initial
Shares shall be equal to 19.9% of the outstanding shares of Common Stock at the
time of the Initial Closing, without giving effect to the issuance of the
Initial Shares. The Initial Shares and the Additional Shares shall constitute
29.2% of the outstanding shares of Common Stock at the time of the Additional
Closing, after giving effect to the issuance of the Initial Shares and the
Additional Shares, but before giving effect to any other issuances after the
date hereof pursuant to exercise of Employee Options or the Warrants or
pursuant to the 1996 Nonemployee Directors Stock Compensation Plan.
2.3 Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of the Company (the "Board") and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated,
other than, with respect to issuance to Purchaser of the Additional Shares in
accordance with the terms of this Agreement, the stockholder approval specified
in Section 5.4.1. The Board has approved the transactions contemplated hereby
so as to render inapplicable to such transactions, including, without
limitation, the issuance to Purchaser of the Initial Shares and the Additional
Shares, the restrictions contained in Section A of Article Eighth of the
Certificate of Incorporation of the Company and the restrictions contained in
Section 203 of the Delaware General Corporation Law. This Agreement has been
duly and validly executed and delivered by the Company and constitutes a legal,
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms and the other agreements and instruments to be
executed, delivered and performed by the Company in connection with the
transactions contemplated hereby will constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms. Upon the issuance thereof, the Initial Shares and the Additional
Shares shall have been duly authorized and validly issued, and will be fully
paid, nonassessable and free of all Liens, other than any created by Purchaser,
and free of all preemptive and rescission rights.
2.4 Non-Contravention; Required Filings and Consents.
2.4.1 The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not (i) contravene or conflict with, result in the breach of any of
the terms or conditions of, or constitute a default under, the organizational
documents of the Company or any of its
4
<PAGE> 9
subsidiaries; (ii) assuming that all consents, authorizations and approvals
contemplated by Section 2.4.2 have been obtained and all filings described
therein have been made, contravene or conflict with or constitute a violation
of any provision of any law, statute, regulation, rule, ordinance, judgment,
injunction, writ, award, order or decree binding upon or applicable to the
Company, any of its subsidiaries or any of their respective properties; (iii)
assuming that the stockholder approval specified in Section 5.4.1 has been
obtained, conflict with, or result in the breach or termination of any
provision of or constitute a default (with or without the giving of notice or
the lapse of time or both) under, or give rise to any right of modification,
termination, cancellation, or loss of any benefit to which the Company or any
of its subsidiaries is entitled under any provision of, any agreement,
contract, license or other instrument binding upon the Company, any of its
subsidiaries or any of their respective properties, or allow the acceleration
of the performance or maturity of any obligation of the Company or any of its
subsidiaries under any indenture, mortgage, deed of trust, lease, license,
contract, instrument or other agreement to which the Company or any of its
subsidiaries is a party or by which the Company, any of its subsidiaries or any
of their respective assets or properties is subject or bound; or (v) result in
the creation or imposition of any Lien on any asset or property of the Company
or any of its subsidiaries.
2.4.2 Except as set forth on Schedule 2.4, the execution, delivery
and performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby require no action by or in respect of, or
filing with, or notice to, any governmental body, agency, official or authority
(either domestic or foreign) other than compliance with any applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act").
2.5 SEC Reports.
2.5.1 The Company has filed all required forms, reports and
documents with the SEC since December 31, 1993 (collectively, the "SEC
Reports"), each of which has complied with applicable requirements of the
Securities Act and the Exchange Act. As of their respective dates, none of the
SEC Reports, including, without limitation, any financial statements or
schedules included therein, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the SEC Reports fairly present, in conformity with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof and
their consolidated results of operations and cash flows for the periods then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements). The Company has previously provided complete
and correct copies of each of the SEC Reports filed on or prior to the date of
this Agreement to Purchaser.
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<PAGE> 10
2.5.2 Except as reflected or reserved against in the consolidated
balance sheet of the Company and its subsidiaries as of December 30, 1996
previously provided to Purchaser by the Company (the "December 30 Financials"),
the Company and its subsidiaries have no liabilities of any nature (whether
arising out of contract, tort, statute or otherwise and whether direct or
indirect, accrued, matured or unmatured, asserted or unassorted, absolute,
contingent or otherwise) which would be required to be reflected on a balance
sheet prepared in accordance with generally accepted accounting principles (all
of such liabilities being collectively referred to as "Liabilities"), except
for Liabilities incurred in the ordinary course of business since December 30,
1996 which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
2.6 Absence of Certain Changes. Since September 30, 1996, except
as specifically disclosed in the SEC Reports filed on or prior to the date of
this Agreement or as disclosed in the December 30 Financials, neither the
Company nor any of its subsidiaries has entered into any transaction, or
conducted its business or operations, other than in the ordinary course of
business consistent with past practice. Since September 30, 1996, except as
specifically disclosed in the SEC Reports filed on or prior to the date of this
Agreement or as disclosed in the December 30 Financials, there has not been any
material adverse change in the business, assets, liabilities, results of
operations, properties, financial or operating condition or prospects of the
Company and its subsidiaries, taken as a whole, nor has there been any material
adverse change in the ability of the Company to perform its obligations under
this Agreement or consummate the transactions contemplated hereby.
2.7 Brokers. No broker, finder, investment banker or other person
(other than Alex. Brown & Sons, Incorporated) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company.
2.8 Absence of Litigation. Except as specifically disclosed in
the SEC Reports filed on or prior to the date of this Agreement or as set forth
on Schedule 2.8 to this Agreement, there is no action, suit, claim,
arbitration, investigation or proceeding pending against, or to the knowledge
of the Company, threatened against or affecting, the Company or any of its
subsidiaries or any of their respective businesses or properties before any
court or arbitrator or any administrative, regulatory or governmental body, or
any agency or official which (i) individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Company; (ii)
in any manner challenges or seeks to prevent, enjoin, alter or delay any of the
transactions contemplated hereby; or (iii) alleges criminal action or inaction
by the Company, any of its subsidiaries or any of their directors, officers or
employees. Except as specifically disclosed in the SEC Reports filed on or
prior to the date of this Agreement, or as set forth on Schedule 2.8 to this
Agreement, neither the Company nor any of its subsidiaries nor any of their
respective businesses or properties are subject to any order, writ, judgment,
injunction, decree, determination or award having, or which would reasonably be
expected to have, a Material Adverse Effect on the Company or
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<PAGE> 11
which would interfere with the consummation of the transactions contemplated by
this Agreement.
2.9 Taxes. Each of the Company and its subsidiaries has filed all
federal, state, county, local and foreign tax returns and reports, or requests
for extensions to file such returns and reports, which the Company and its
subsidiaries were required to have filed on or before the date hereof. All tax
returns and reports filed by the Company or its subsidiaries are complete and
accurate, except where the failure so to be complete and accurate would not
reasonably be expected to have a Material Adverse Effect. The Company and each
of its subsidiaries have paid (or the Company has paid on behalf of its
subsidiaries) or has made adequate provision for the payment of all taxes shown
as due on such returns and reflected in the most recent financial statements
contained in the SEC Reports for all taxable periods and portions thereof
accrued through the date of such financial statements. No deficiencies for any
taxes or any penalties, interest or assessments have been proposed, asserted or
assessed against the Company or its subsidiaries that are not adequately
reserved for, pursuant to such returns or reports or pursuant to any assessment
received with respect thereto. Except as set forth on Schedule 2.9, there is
no pending audit or examination of any tax return of the Company or any of its
subsidiaries by any Governmental Authority, nor has the Company or any of its
subsidiaries received written notice of any such audit or examination and there
are no unexpired waivers or agreements for the extension of time for the
assessment of taxes on the Company or any of its subsidiaries or extension of
any statute of limitations with respect to any taxes, and there are no pending
nor has the Company or any of its subsidiaries received any written notice of
any threatened actions, proceedings or investigations by any Governmental
Authority with respect to taxes.
2.10 Employee Benefits.
2.10.1 The Company has delivered to the Purchaser copies (or if the
same do not exist in written form, descriptions) of each formal, informal, oral
or written bonus, deferred compensation, incentive compensation, stock
purchase, stock option, restricted stock purchase or other issuance, severance
or termination pay, hospitalization or other medical, life or other insurance
(or similar self-insurance), supplemental unemployment benefits,
profit-sharing, employee stock ownership, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement whether for the benefit of present or former officers,
employees, agents, directors or independent contractors of the Company or any
of its subsidiaries or any ERISA Affiliate, sponsored, maintained or
contributed to or required to be contributed to by the Company or by any trade
or business, whether or not incorporated (an "ERISA Affiliate"), that together
with the Company would be deemed a "single employer" within the meaning of
Section 4001(b) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or Section 414 of the Code (collectively, the "Plans"). Each
of the Plans that is an "employee benefit plan," as that term is defined in
section 3(3) of ERISA is collectively referred to herein as "ERISA Plans."
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<PAGE> 12
2.10.2 No material liability under Title IV of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring a material liability under such Title, other
than liability for premiums due the Pension Benefit Guaranty Corporation
("PBGC") (which premiums have been paid when due). To the extent this
representation applies to sections 4064, 4069 or 4204 of Title IV of ERISA, it
is made not only with respect to each ERISA Plan but also with respect to any
employee benefit plan, program, agreement or arrangement subject to Title IV of
ERISA to which the Company or any ERISA Affiliate made, or was required to
make, contributions during the five-year period ending on the Initial Closing
Date. Neither the Company nor any ERISA Affiliate is required to contribute to
a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) or has
withdrawn from any multiemployer plan where such withdrawal has resulted or
would result in any "withdrawal liability" (within the meaning of Title IV of
ERISA) that has not been fully paid.
2.10.3 The PBGC has not instituted proceedings to terminate any ERISA
Plan and no condition exists that presents a material risk that such
proceedings will be instituted.
2.10.4 Neither the Company nor any ERISA Affiliate, nor any ERISA
Plan, nor any trust created thereunder, nor any trustee or administrator
thereof has engaged in a transaction in connection with which the Company or
any ERISA Affiliate, any ERISA Plan, any such trust, or any trustee or
administrator thereof, or any party dealing with any ERISA Plan or any such
trust could reasonably be subject to either a material civil penalty assessed
pursuant to section 409 or 502(i) of ERISA or a material tax imposed pursuant
to section 4975 or 4976 of the Code.
2.10.5 No ERISA Plan or any trust established thereunder has incurred
any "accumulated funding deficiency" (as defined in section 302 of ERISA and
section 412 of the Code), whether or not waived, as of the last day of the most
recent fiscal year of each ERISA Plan, which could reasonably be expected to
result in a material liability to the Company; and all contributions required
to be made with respect thereto (whether pursuant to the terms of any ERISA
Plan or otherwise) have been timely made.
2.10.6 Each Plan has been operated and administered in accordance
with its terms and applicable law in all material respects, including, but not
limited to, ERISA and the Code. No Plan is subject to any material dispute or
proceeding other than relating to a routine claim for benefits.
2.10.7 Except as set forth on Schedule 2.10.7, there are no material
pending or (to the knowledge of the Company) threatened claims by or on behalf
of any Plan, by any employee or beneficiary covered under any such Plan, or
otherwise involving any such Plan (other than routine claims for benefits).
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2.10.8 No fact exists that could reasonably be expected to result in
the disqualification of any Plan that is intended to be qualified under Section
401(a) of the Code.
2.11 Environmental Matters. Except as set forth on Schedule 2.11
and other than any such exceptions to any of the following representations as
would not reasonably be expected to result in a Material Adverse Effect, to the
knowledge of the Company:
2.11.1 There does not exist at, on, under or about any of the Real
Property (as defined below), nor has there been any release of, any flammables,
contaminants, gasoline, petroleum products, crude oil, explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, polychlorinated biphenyls or related or similar materials, asbestos
or any material containing asbestos, any underground storage tanks, any air,
soil or water pollution or any other substance or material as may be defined as
a hazardous or toxic substance under any federal, state or local governmental
law, rule, regulation or ordinance, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Section 1801, et. seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et seq.), the
Clean Air Act (42 U.S.C. Sections 7401 et seq.) (collectively, "Hazardous
Materials"), other than materials which have been stored and used in material
compliance with applicable laws, rules, regulations and ordinances. None of
the Real Property has been used to generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer, produce, process or in any manner deal
with Hazardous Materials, other than materials which have been stored and used
in material compliance with applicable laws, rules, regulations and ordinances.
To the Company's knowledge, there are no Hazardous Materials located off the
Real Property which originated therefrom. Neither the Company nor any of its
subsidiaries has received any written citation, directive, notice, order,
summons or warning from any Governmental Authority that Hazardous Materials
have been stored or used in noncompliance with applicable laws, rules,
regulations or ordinances.
2.11.2 Neither the Company nor its subsidiaries have received any
written citation, inquiry, order, notice, warning or other communication from
(i) any Governmental Authority, or (ii) the current or prior owner or operator
of any of the Real Property, of any actual or potential violation or failure to
comply with any Environmental Law, or of any actual or threatened obligation to
undertake or bear the cost of any liability under any Environmental Law with
respect to any of the Real Property or any other properties or assets (whether
real, personal, or mixed) in which the Company or its subsidiaries has or had
an interest.
2.11.3 To the Company's knowledge, there are no existing or
threatened claims, encumbrances or other restrictions of any nature, arising
under or pursuant to any Environmental Law with respect to any of the Real
Property or any other properties and
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<PAGE> 14
assets (whether real, personal, or mixed) in which the Company or its
subsidiaries has or had an interest.
2.12 Intellectual Property. Except as set forth on Schedule 2.12
and other than any such exceptions to any of the following representations as
would not reasonably be expected to result in a Material Adverse Effect: (1)
the Company and each of its subsidiaries owns, or is licensed to use (in each
case, free and clear of any Liens), all Intellectual Property used in or
necessary for the conduct of its business as currently conducted; (2) to the
knowledge of the Company, the use of any Intellectual Property by the Company
and its subsidiaries does not infringe on or otherwise violate the rights of
any person; and (3) to the knowledge of the Company, no person is challenging,
infringing on or otherwise violating any right of the Company or any of its
subsidiaries with respect to any Intellectual Property owned by and/or licensed
to the Company or any of its subsidiaries.
2.13 Material Contracts. Except as set forth on Schedule 2.13, the
Company has provided or made available to Purchaser (i) true and complete
copies of all written contracts, agreements (including, but not limited to,
agreements relating to the purchase of food, ingredients and other supplies),
commitments, arrangements, leases (including with respect to personal property)
and other instruments to which it or any of its subsidiaries is a party or by
which it or any such subsidiary is bound (A) which require payments to be made
in excess of $500,000 per year for goods and/or services (including, without
limitation, services performed by employees and independent contractors), (B)
do not by their terms expire and are not subject to termination (without
penalty to the Company or its subsidiaries as the case may be) within six
months from the date of the execution and delivery thereof and require payments
to be made in excess of $500,000, or (C) to which any director, officer or
holder of more than 5% of the outstanding shares of Common Stock or any of
their respective affiliates (other than the Company and its subsidiaries) are a
party (the agreements set forth in (A) through (C) being collectively referred
to herein as "Material Contracts"). Except as set forth on Schedule 2.13, each
Material Contract is in full force and effect, enforceable in accordance with
its terms, and neither the Company nor any of its subsidiaries is, or has
received any notice or has any knowledge that any other party is, in default in
any material respect under or in material breach of any such Material Contract;
and there has not occurred any event that with the lapse of time or the giving
of notice or both would constitute such a material default or breach. To the
Company's knowledge, no party to any Material Contract has threatened to
terminate such contract.
2.14 Compliance. Except as set forth on Schedule 2.14 and other
than any such exceptions to any of the following representations as would not
reasonably be expected to result in a Material Adverse Effect: (a) neither the
Company nor any of its subsidiaries is in violation of, nor has the Company or
any of its subsidiaries violated, any applicable provisions of any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise, or
other instrument or obligations to which the Company or any of its subsidiaries
is a party or by which the Company, any of its subsidiaries or any of their
respective properties are bound or affected; (b) the Company and each of its
subsidiaries has
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in effect all federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights ("Permits") necessary for it to own, lease or operate its properties
and assets and to carry on its business as now conducted, and there has
occurred no default under any such Permit; (c) except as disclosed in the SEC
Reports filed on or prior to the date of this Agreement, the Company and its
subsidiaries are in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Authority, including, without
limitation, those that govern the operation of restaurants; and (d) except as
disclosed in the SEC Reports filed on or prior to the date of this Agreement,
as of the date of this Agreement, no investigation by any Governmental
Authority with respect to the Company or any of its subsidiaries is pending or
threatened.
2.15 Related Party Transactions. Except as set forth on Schedule
2.15 and except as disclosed in the SEC Reports, no director, officer, more
than 5% shareholder or affiliate of the Company or any of its subsidiaries (i)
has borrowed any monies from or has outstanding any indebtedness or other
similar obligations to the Company or any of its subsidiaries; (ii) owns more
than a 5% equity interest in, or is a director, officer, employee, partner,
affiliate or associate of, or consultant or lender to, or borrower from, or has
the right to participate in the management, operations or profits of, any
person which is a competitor, supplier, customer, distributor, lessor, tenant,
creditor or debtor of the Company or any of its subsidiaries; or (iii) is
otherwise a party to any contract, arrangement or understanding with the
Company or any of its subsidiaries, in all cases other than travel and other
expenses and reimbursements, company car charges and other similar transactions
which are customary in amount and in the ordinary course of business.
2.16 Real Property.
2.16.1 The Company and each of its subsidiaries has good and
marketable title to each parcel of real property owned by it free and clear of
all Liens, except (1) to the extent reflected or reserved against in the most
recent balance sheet of the Company included in the SEC Reports filed on or
prior to the date of this Agreement; (2) taxes and general and special
assessments not in default and payable without penalty and interest or being
contested in good faith; (3) mechanics', carriers', workmen's, repairmen's or
other like Liens arising or incurred in the ordinary course of business with
respect to liabilities that are not yet due or delinquent, or which are being
contested in good faith by appropriate proceedings; (4) leases to third
parties; (5) as set forth on Schedule 2.16; and (6) other liens, mortgages,
pledges, encumbrances and security interests which do not materially interfere
with the Company's, or any of its subsidiaries', use and enjoyment of such real
property or materially detract from or diminish the value thereof.
2.16.2 The Company has previously delivered to Purchaser correct and
complete copies of all leases, subleases and other agreements (the "Real
Property Leases") under which the Company or any of its subsidiaries uses or
occupies or has the right to use or occupy, now or in the future, any real
property (including all modifications, amendments and
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supplements thereto). Each Real Property Lease is valid, binding and in full
force and effect and, to the knowledge of the Company, no termination event or
condition or uncured default on the part of the Company or any such subsidiary
or the landlord, exists under any Real Property Lease. Each of the Company and
its subsidiaries has a good and valid leasehold interest in each parcel of real
property leased by it free and clear of all Liens, except (i) to the extent
reflected or reserved against in the most recent balance sheet of the Company
included in the SEC Reports filed on or prior to the date of this Agreement,
(ii) taxes and general and special assessments not in default and payable
without penalty and interest or being contested in good faith; (iii)
mechanics', carriers', workmen's, repairmen's or other like Liens arising or
incurred in the ordinary course of business with respect to liabilities that
are not yet due or delinquent, or which are being contested in good faith by
appropriate proceedings, (iv) leases to third parties, (v) as set forth on
Schedule 2.16, and (vi) other liens, mortgages, pledges, encumbrances and
security interests which do not materially interfere with the Company's or any
of its subsidiaries' use and enjoyment of such real property or materially
detract from or diminish the value thereof. All of the real property owned by
the Company or its subsidiaries together with all real property subject to the
Real Property Leases is collectively referred to as the "Real Property".
2.16.3 Except as set forth on Schedule 2.16 and other than any such
exceptions to any of the following representations as would not reasonably be
expected to result in a Material Adverse Effect: (a) none of the Real Property
or the businesses conducted by the Company and its subsidiaries thereon are in
material violation of any use or occupancy restriction, limitation, condition
or covenant of record or any zoning or building law, code or ordinance or
public utility easement; (b) there are no material challenges or appeals
pending regarding the amount of the taxes on, or the assessed valuation of, the
Real Property and no special arrangements or agreements exist with any
governmental authority with respect thereto; (c) there are no condemnation
proceedings pending or, to the best of the Company's knowledge, threatened with
respect to any portion of the Real Property; and (d) there is no tax assessment
(in addition to the normal, annual general real estate tax assessment) pending
or, to the best of the Company's knowledge, threatened with respect to any
portion of the Real Property.
2.17 Labor Matters. Except as set forth on Schedule 2.17 and other
than any such exceptions to any of the following representations as would not
result in a Material Adverse Effect: (a) the Company and each of its
subsidiaries is (i) in compliance with all federal and state laws respecting
(A) employment and employment practices (including immigration laws relevant to
employment), and (B) terms and conditions of employment and wages and hours,
and (ii) not engaged in any unfair labor practice; (b) there is no unfair labor
practice charge or complaint against the Company or any of its subsidiaries
pending before the National Mediation Board, the National Labor Relations
Board, or any comparable state or local agency, (c) there is no (x) labor
strike, dispute, slow down or stoppage actually pending or, to the knowledge of
the Company, threatened against or involving the Company or any of its
subsidiaries, or (y) labor grievance or pending arbitration involving the
Company or any of its subsidiaries; (d) neither the Company nor any of its
subsidiaries has experienced any work
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stoppage or other material labor difficulty during the three-year period prior
to the date of this Agreement; (e) there are no collective bargaining
agreements, union contracts or similar types of agreements by which the Company
or any of its subsidiaries is bound or covered; (f) there are no union
representation petitions pending before the National Labor Relations Board, and
no union within the past three years has sought or demanded recognition by the
Company or any of its subsidiaries; and (g) there is no union organizing
activity, to the knowledge of the Company, currently in progress involving the
Company or any of its subsidiaries.
2.18 Takeover Status. No "fair price", "moratorium", "control
share acquisition" or other similar anti-takeover statute or regulation enacted
under state or federal laws in the United States (each a "Takeover Statute"),
including, without limitation, Section 203 of the Delaware General Corporation
Law, applicable to the Company or any of its subsidiaries is applicable to the
transactions contemplated hereby.
2.19 Voting Requirements. The stockholder approval specified in
Section 5.4.1 is the only vote of the holders of any class or series of the
Company's securities necessary to approve this Agreement and the transactions
contemplated hereby.
2.20 Compliance with Securities Laws. The Company has not taken,
and will not take, any action which would subject the sale of the Initial
Shares or the Additional Shares pursuant to this Agreement to the provisions of
Section 5 of the Securities Act, or violate the registration or qualification
provisions of any securities or blue sky laws of any applicable jurisdiction,
and, based in part on the representations of Purchaser in Section 3.6 hereof,
the sale of the Initial Shares and the Additional Shares pursuant to this
Agreement complies with all applicable requirements of federal and state
securities and blue sky laws.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND ALPHA
Purchaser and Alpha hereby jointly and severally represent and warrant
to the Company as follows:
3.1 Organization. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Purchaser has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Alpha is a validly existing general partnership under the laws of the State of
Illinois. Alpha has all requisite power and authority to own, lease and
operate the properties and to carry on its business as now being conducted.
3.2 Authority Relative to this Agreement. Each of Purchaser and
Alpha has all necessary power and authority to execute and deliver this
Agreement, to perform its respective obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance
of this Agreement and the consummation of the
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transactions contemplated hereby have been duly and validly authorized by the
members of Purchaser and the partners of Alpha, and no other proceedings on the
part of Purchaser or Alpha are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Purchaser and Alpha and constitutes a
legal, valid and binding agreement of Purchaser and Alpha, enforceable against
each of Purchaser and Alpha in accordance with its terms.
3.3 Non-Contravention; Required Filings and Consents.
3.3.1 The execution, delivery and performance by Purchaser and Alpha
of this Agreement and the consummation of the transactions contemplated hereby
do not and will not (i) contravene or conflict with the organizational
documents of Purchaser or Alpha; or (ii) assuming that all consents,
authorizations and approvals contemplated by Section 3.3.2 have been obtained
and all filings described therein have been made, contravene or conflict with
or constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to Purchaser or Alpha or
any of its respective properties.
3.3.2 The execution, delivery and performance by Purchaser and Alpha
of this Agreement and the consummation of the transactions contemplated hereby
require no action by or in respect of, or filing with, or notice to, any
governmental body, agency, official or authority (either domestic or foreign)
other than compliance with any applicable requirements of the HSR Act.
3.4 Brokers. No broker, finder, investment banker or other person
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Purchaser or Alpha.
3.5 Absence of Litigation. As of the date hereof, there is no
action, suit, claim, investigation or proceeding pending against, or to the
knowledge of Purchaser or Alpha, threatened against or affecting Purchaser or
Alpha or any of its properties before any court or arbitrator or any
administrative, regulatory or governmental body, or any agency or official
which in any manner challenges or seeks to prevent, enjoin, alter or delay any
of the transactions contemplated hereby. As of the date hereof, neither
Purchaser nor Alpha or any of its properties is subject to any order, writ,
judgment, injunction, decree, determination or award which would prevent or
delay the consummation of the transactions contemplated hereby.
3.6 Investment Intent. Purchaser is purchasing the Initial Shares
and the Additional Shares for its own account for investment, and not with a
view to, or for resale in connection with, any public distribution of the
Initial Shares or the Additional Shares.
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ARTICLE 4. COVENANTS
4.1 Conduct of the Business. During the period from the date of
this Agreement and continuing through the Additional Closing, the Company
agrees as to the Company and its subsidiaries that (except to the extent that
Purchaser shall otherwise consent in writing):
4.1.1 The Company and each of its subsidiaries shall carry on its
business in the usual, regular and ordinary course in substantially the same
manner as previously conducted and shall use all reasonable efforts to preserve
intact its present business organization, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it.
4.1.2 The Company shall not, nor shall it permit any of its
subsidiaries to: (i) declare, set aside or pay any dividends on or make any
other distributions in respect of any of its capital stock (whether in cash,
stock, or property or any combination thereof); (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; or (iii) redeem, repurchase or otherwise
acquire any of its securities or any securities of its subsidiaries, except as
required by the terms of its securities outstanding on the date hereof, as
contemplated by this Agreement or as contemplated by employee benefit and
dividend reinvestment plans as in effect on the date hereof.
4.1.3 The Company shall not, and shall cause its subsidiaries not
to, amend or propose to amend its Certificate of Incorporation or By-Laws or,
except as contemplated by Section 4.8 hereof or the Standstill Agreement, elect
or appoint any person a director of any of them who is not serving as such on
the date hereof.
4.1.4 The Company shall not, nor shall it permit any of its
subsidiaries to acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof,
except for such transactions which involve aggregate consideration of less than
$500,000.
4.1.5 Other than dispositions in the ordinary course of business
consistent with past practice which are not material, individually or in the
aggregate, to the Company and its subsidiaries taken as a whole and
dispositions of Real Property that have been approved by the Board of Directors
of the Company prior to the date hereof, and except for any other such
transactions which involve aggregate consideration of less than $500,000, the
Company shall not, nor shall it permit any of its subsidiaries to, sell, lease,
encumber or otherwise dispose of, or agree to sell, lease (whether such lease
is an operating or capital lease), encumber or otherwise dispose of, any of its
assets.
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4.1.6 The Company shall not authorize, recommend, propose or
announce an intention to adopt a plan of complete or partial liquidation or
dissolution of the Company or any of its subsidiaries.
4.1.7 The Company shall not, and shall not permit any of its
subsidiaries to, enter into any agreement providing for the acceleration of
payment or performance or other consequences as a result of any of the
transactions contemplated by this Agreement.
4.1.8 The Company shall not, and shall not permit any of its
subsidiaries to, enter into any new lines of business or otherwise make
material changes to the operation of its business.
4.2 No Solicitation.
4.2.1 The Company will immediately cease any existing discussions or
negotiations with any third parties conducted prior to the date hereof with
respect to any sale, transfer, liquidation or other disposition, directly or
indirectly, of all or any material part of the assets or the capital stock of
the Company, including, without limitation, any such transaction involving one
or more subsidiaries of the Company, or any business combination, tender offer,
exchange offer, merger, recapitalization or other transaction which would
result in the issuance or transfer of a more than 5% equity or voting interest
in the Company, or any instrument or right convertible into or exchangeable for
any such interest (a "Competing Transaction"). Until the earlier of the
Additional Closing or the termination of this Agreement, the Company shall not,
directly or indirectly, through any officer, director, employee, representative
or agent or any of its subsidiaries, (i) solicit, initiate or encourage any
inquiries, proposals or offers that constitute, or could reasonably be expected
to lead to, a proposal or offer for a Competing Transaction, (ii) solicit,
initiate, continue or engage in negotiations or discussions concerning, or
provide any non-public information or data to any person relating to, any
Competing Transaction, or (iii) agree to, provide or recommend any Competing
Transaction; provided, that nothing contained in this Section 4.2 shall prevent
the Company from (A) furnishing non-public information or data to, or entering
into discussions or negotiations with, any person in connection with an
unsolicited bona fide written proposal for a Competing Transaction by such
person or recommending an unsolicited bona fide written proposal for a
Competing Transaction to the stockholders of the Company, if and only to the
extent that a majority of the Company's independent directors determine in good
faith, based upon the written advice of independent financial advisors, that
such Competing Transaction would, if consummated, result in a transaction more
favorable to the Company's stockholders from a financial point of view than the
transactions contemplated by this Agreement and a majority of the Company's
independent directors determine in good faith, based upon the written advice of
independent legal counsel, that such action is required for the discharge of
their fiduciary duties to stockholders under applicable law, or (B) complying
with Rule 14e-2 promulgated under the Exchange Act with regard to a Competing
Transaction. If a majority of the independent directors determine in good
faith that any proposal for a Competing Transaction constitutes a Superior
Proposal (as defined below), the
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Board shall promptly give written notice, specifying the structure and material
terms of such Superior Proposal (a "Notice of Superior Proposal") to Purchaser,
provided that the Company shall be permitted to refrain from making such
disclosure to the extent that the independent directors of the Company have
determined in good faith, based upon written advice of independent legal
counsel, that such action is required for the discharge of their fiduciary
duties to stockholders under applicable law. The Board may (subject to the
following sentences of this subsection and compliance with Section 4.11), to
the extent a majority of the independent directors of the Company determine in
good faith based upon written advice of independent legal counsel that it is
necessary in order to comply with their fiduciary duties under applicable law,
(i) approve or recommend any such Superior Proposal, (ii) approve or authorize
the Company's entering into an agreement with respect to such Superior
Proposal, or (iii) terminate this Agreement, in each case at any time after the
third business day following delivery to Purchaser of the Notice of Superior
Proposal (each of the actions referred to in clauses (i) through (iii) of this
sentence being hereinafter referred to as a "Superior Proposal Event"). The
Company may take any of the foregoing actions pursuant to the preceding
sentence only if the proposal for a Competing Transaction that was a Superior
Proposal at the time of delivery of a Notice of Superior Proposal continues to
be a Superior Proposal in light of any improved transaction proposed by
Purchaser prior to the expiration of the three business day period specified in
the preceding sentence. For purposes of this Agreement, a "Superior Proposal"
means any bona fide proposal for a Competing Transaction that a majority of the
independent directors of the Company determine in their good faith reasonable
judgment, based on the written advice of independent financial advisors, to be
made by a person with the financial ability to consummate such proposal and to
provide greater aggregate value to the Company and/or the Company's
stockholders than the transactions contemplated by this Agreement or otherwise
proposed by Purchaser as contemplated above.
4.2.2 The Company shall notify Purchaser immediately (but in no
event later than 24 hours) after receipt by the Company of any proposal for a
Competing Transaction. Such notice shall be made orally and in writing and
shall indicate in reasonable detail the identity of the offeror and the terms
and conditions of such proposal, provided that the Company shall be permitted
to refrain from making such disclosure to the extent that the independent
directors of the Company have determined in good faith, based upon written
advice of independent legal counsel, that such action is required for the
discharge of their fiduciary duties to stockholders under applicable law.
4.3 Notification of Certain Matters. The Company shall promptly
provide Purchaser (or its counsel) with copies of all filings made by the
Company with the SEC or any other Governmental Authority in connection with
this Agreement and the transactions contemplated hereby.
4.4 Access to Information. Subject to applicable law, between the
date hereof and the Additional Closing Date, the Company will give each of
Purchaser and its counsel, financial advisors, auditors, and other authorized
representatives reasonable access to all
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employees, plants, offices, warehouses and other facilities and to all books
and records of the Company and its subsidiaries, will permit each of Purchaser
and its counsel, financial advisors, auditors and other authorized
representatives to make such inspections as Purchaser may reasonably request
and will cause the Company's and its subsidiaries' officers to furnish
Purchaser or its representatives with such financial and operating data and
other information with respect to the business and properties of the Company
and its subsidiaries as Purchaser may from time to time reasonably request. All
such information obtained pursuant to this Section shall be subject to the
Confidentiality Agreement.
4.5 Reasonable Best Efforts. Subject to the terms and conditions
herein provided, and subject to the fiduciary duties of the Company's Board of
Directors to stockholders under applicable law, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things reasonably necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, Purchaser and the Company shall
cooperate with one another (i) in the preparation and filing of any required
filings under the HSR Act; (ii) in determining whether action by or in respect
of, or filing with, any Governmental Authority is required, proper or advisable
or any actions, consents, waivers or approvals are required to be obtained from
parties to any contracts, in connection with the transactions contemplated by
this Agreement; and (iii) in seeking timely to obtain any such actions,
consents and waivers and to make any such filings.
4.6 Public Announcements. The Company and Purchaser will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement
(including any announcements to employees of the Company or its subsidiaries),
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by applicable law or by
applicable rules of any securities exchange or inter-dealer quotation system.
4.7 Stockholders' Meeting. The Company, acting through the Board,
shall, in accordance with applicable law, as soon as practicable:
4.7.1 duly call, give notice of, convene and hold an annual or
special meeting of its stockholders (the "Stockholders' Meeting") for the
purpose of considering and taking action upon the issuance of the Additional
Shares in accordance with the terms of this Agreement;
4.7.2 include in the proxy statement to be distributed to the
Company's stockholders in connection with the issuance of the Additional
Shares, including any amendments or supplements thereto (the "Proxy
Statement"), the recommendation of the Board that stockholders of the Company
vote in favor of the approval of the issuance of the Additional Shares in
accordance with the terms of this Agreement;
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4.7.3 use its best efforts (A) to obtain and furnish the information
required to be included by it in the Proxy Statement and respond promptly to
any comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof and cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable time and (B) to obtain the necessary
approvals by its stockholders of the issuance of the Additional Shares in
accordance with the terms of this Agreement; and
4.7.4 cause the Proxy Statement (i) not to contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading, and (ii) to
comply as to form in all material respects with the applicable provisions of
the Exchange Act and the rules and regulations thereunder.
4.7.5 The Company shall not be obligated to take the actions set
forth in Sections 4.7.1, 4.7.2 and 4.7.3, if and only to the extent, that a
majority of the Company's independent directors determine in good faith, based
upon the written advice of independent legal counsel, that the discharge of
their fiduciary duties to stockholders under applicable law requires that such
actions not be taken.
4.8 Board of Directors. The Company hereby agrees to take all
action within its power to cause two of the members of the Board to be replaced
on the Initial Closing Date by persons designated by Purchaser.
4.9 New York Stock Exchange Listing. As promptly as practicable
following the execution of this Agreement, the Company will apply to the New
York Stock Exchange to list the Initial Shares and the Additional Shares, and
the Company will use its reasonable efforts to cause the Initial Shares and the
Additional Shares to be listed on the New York Stock Exchange at the Initial
Closing Date or the Additional Closing Date, as applicable, subject to official
notice of issuance.
4.10 Limitations on Transfer of Initial Shares and Additional
Shares. (a) Purchaser agrees not to sell, transfer, assign, offer, pledge or
otherwise dispose of all or any portion of the Initial Shares or the Additional
Shares unless (i) Purchaser is in compliance with the provisions of the
Standstill Agreement and (ii) either (A) a registration statement relating
thereto has been duly filed and becomes effective under the Securities Act and
all applicable state securities laws or (B) such sale, transfer, assignment,
offer, pledge or other disposition is exempt from the registration and
prospectus delivery requirements of the Securities Act and such laws (as
evidenced by an opinion of counsel for Purchaser reasonably satisfactory in
form and substance to the Company or, in the case of a transfer by Purchaser to
any of its affiliates, other evidence reasonably satisfactory to the Company).
(b) Purchaser also agrees to the placing on the certificates
representing the Initial Shares or the Additional Shares of a legend, in
substantially the following form, referring to the restrictions set forth in
the immediately foregoing paragraph:
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"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or applicable state securities laws and may not be
sold, transferred, assigned, offered, pledged or otherwise
disposed of unless (i) there is an effective registration
statement under such Act and such laws covering such securities
or (ii) such sale, transfer, assignment, offer, pledge or other
disposition is exempt from the registration and prospectus
delivery requirements of such Act and such laws. The securities
evidenced by this certificate are subject to the restrictions
on transfer contained in the Standstill Agreement dated as of
March 10, 1997 to which the Company is a party, as amended,
supplemented or otherwise modified from time to time, and
may not be transferred except in compliance therewith."
4.11 Expense Reimbursement and Break-Up Fee. If Purchaser shall
have elected not to proceed with the Additional Closing pursuant to Section
8.3(b) hereof, or if Purchaser or the Company shall have elected not to proceed
with the Additional Closing pursuant to Section 8.3(c) hereof and no Competing
Transaction shall have been proposed which has a value per share of Common
Stock in excess of $5.75, the Company shall reimburse Purchaser for
out-of-pocket expenses incurred by Purchaser in connection with the
transactions contemplated hereby, including without limitation, all expenses
incurred in connection with this Agreement, the negotiations leading to its
execution, the due diligence investigations of the Company, the preparation and
negotiation of any related agreements, and all fees and expenses incurred by
Purchaser and its affiliates to investment bankers, accountants, attorneys and
other representatives, provided that the Company shall not be obligated to
reimburse Purchaser for more than $250,000 of such expenses in the aggregate.
If (i) Purchaser shall have elected not to proceed with the Additional Closing
pursuant to Section 8.3(a) hereof, (ii) Purchaser or the Company shall have
elected not to proceed with the Additional Closing pursuant to Section 8.3(c)
hereof and a bona fide definitive proposal with respect to a Competing
Transaction shall have been presented to the Company and publicly announced
prior to the vote of the Company's stockholders in accordance with Section
5.4.1, which has a value per share of Common Stock in excess of $5.75, or (iii)
the Company shall have elected not to proceed with the Additional Closing
pursuant to Section 8.3(d) hereof, then in the case of any of (i), (ii) or
(iii) of this Section 4.11, the Company will pay $1,000,000 to Purchaser. In
the event the immediately preceding sentence of this Section 4.11 is
applicable, then the first sentence of this Section 4.11 will not be
applicable.
4.12 Use of Proceeds. The Company will use the net proceeds
derived by it from the issuance of the Initial Shares and the Additional Shares
to repay indebtedness, whether at scheduled maturity or, at the option of the
Company, at an earlier time, and until so used will be held by the Company in
appropriate fixed income investments.
4.13 Guarantee of Alpha. Alpha hereby irrevocably and
unconditionally guarantees the performance by Purchaser of all of its
obligations hereunder and under the other
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agreements and documents contemplated hereby, including without limitation the
obligation of Purchaser to purchase the Additional Shares subject to the terms
and conditions hereof.
ARTICLE 5. CONDITIONS PRECEDENT
5.1 Conditions to Each Party's Obligations with Respect to Sale
and Purchase of the Initial Shares. The respective obligations of each party
hereto to consummate the sale and purchase of the Initial Shares are subject to
the satisfaction at or prior to the Initial Closing of the following
conditions:
5.1.1 There shall not be in effect any order, decree or ruling or
other action restraining, enjoining or otherwise prohibiting the issuance of
the Initial Shares or any of the other transactions contemplated by this
Agreement which order, decree, ruling or action shall have been issued or taken
by any court of competent jurisdiction or other Governmental Authority.
5.1.2 All regulatory approvals necessary for the consummation of the
issuance of the Initial Shares shall have been obtained and there shall have
been no material modification to the terms of the transactions contemplated by
this Agreement.
5.1.3 The parties shall have entered into a Standstill Agreement
with respect to the Initial Shares and the Additional Shares in the form of
Exhibit A hereto (the "Standstill Agreement").
5.2 Conditions to the Obligation of Purchaser with Respect to
Purchase of the Initial Shares. The obligation of Purchaser to consummate the
purchase of the Initial Shares is subject to the satisfaction at or prior to
the Initial Closing of the following further conditions:
5.2.1 The Company shall have performed in all material respects its
covenants, agreements and obligations under this Agreement up to the Initial
Closing.
5.2.2 Except as otherwise contemplated by this Agreement, the
representations and warranties of the Company contained in this Agreement which
are qualified as to materiality shall be true and correct, and which are not so
qualified shall be true and correct in all material respects, in each case, as
of the date when made and at and as of the Initial Closing as though newly made
at and as of that time.
5.2.3 The Company shall have executed and delivered, or caused to be
executed and delivered, to Alpha, such certificates, opinions and other
documents related to the consummation of the transactions contemplated hereby
as may be reasonably requested by Alpha, including without limitation, an
opinion of Simpson Thacher & Bartlett, in the form of Exhibit 5.2.3.
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<PAGE> 26
5.3 Conditions to the Obligation of the Company with Respect to
Sale of the Initial Shares. The obligation of the Company to consummate the
sale of the Initial Shares is subject to the satisfaction at or prior to the
Initial Closing of the following further conditions:
5.3.1 Purchaser shall have performed in all material respects its
covenants, agreements and obligations under this Agreement up to the Initial
Closing.
5.3.2 Except as otherwise contemplated by this Agreement, the
representations and warranties of Purchaser contained in this Agreement which
are qualified as to materiality shall be true and correct, and which are not so
qualified shall be true and correct in all material respects, in each case, as
of the date when made and at and as of the Initial Closing as though newly made
at and as of that time.
5.3.3 Purchaser shall have executed and delivered, or caused to be
executed and delivered, to the Company, such certificates, opinions and other
documents related to the consummation of the transactions contemplated hereby
as may be reasonably requested by the Company.
5.4 Conditions to Each Party's Obligations with Respect to Sale
and Purchase of the Additional Shares. The respective obligations of each
party hereto to consummate the sale and purchase of the Additional Shares are
subject to the satisfaction at or prior to the Closing of the following
conditions:
5.4.1 The issuance of the Additional Shares in accordance with the
terms of this Agreement shall have been approved by a majority of the votes
cast by holders of the Company's Common Stock on the proposal, provided that
the holders of a majority of the outstanding Common Stock of the Company cast
votes on the proposal.
5.4.2 There shall not be in effect any order, decree or ruling or
other action restraining, enjoining or otherwise prohibiting the issuance of
the Additional Shares or any of the other transactions contemplated by this
Agreement which order, decree, ruling or action shall have been issued or taken
by any court of competent jurisdiction or other Governmental Authority.
5.4.3 All regulatory approvals necessary for the consummation of the
issuance of the Additional Shares shall have been obtained.
5.4.4 Any waiting period applicable to the issuance of the
Additional Shares under the HSR Act shall have terminated or expired.
5.4.5 Neither Purchaser nor the Company shall have terminated this
Agreement pursuant to Section 8.1 hereof or elected not to proceed with the
Additional Closing pursuant to Section 8.3 hereof.
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<PAGE> 27
5.5 Conditions to the Obligation of Purchaser with Respect to
Purchase of the Additional Shares. The obligation of Purchaser to consummate
the purchase of the Additional Shares is subject to the satisfaction at or
prior to the Additional Closing of the following further condition:
5.5.1 The Company shall have performed in all material respects its
covenants, agreements and obligations under this Agreement up to the Additional
Closing.
5.6 Conditions to the Obligation of the Company with Respect to
Sale of the Additional Shares. The obligation of the Company to consummate the
sale of the Additional Shares is subject to the satisfaction at or prior to the
Additional Closing of the following further condition:
5.6.1 Purchaser shall have performed in all material respects its
covenants, agreements and obligations under this agreement up to the Additional
Closing.
ARTICLE 6. INDEMNIFICATION; REMEDIES
6.1 Survival of Representations and Warranties. All
representations and warranties specifically set forth in this Agreement will
survive the Initial Closing and the Additional Closing and will survive for the
periods specified in Section 6.4.
6.2 Indemnification and Payment of Damages by the Company. The
Company will indemnify and hold harmless Purchaser and its stockholders,
controlling persons, and affiliates (collectively, the "Indemnified Persons")
for, and will pay to the Indemnified Persons the amount of, any loss,
liability, claim, damage or expense (including reasonable attorneys' fees and
expenses) or diminution of value (collectively, "Damages") actually incurred by
the Indemnified Persons, arising, directly or indirectly, from or in connection
with: (a) any breach of any representation or warranty specifically made by the
Company in this Agreement; (b) any breach by the Company of any covenant or
obligation of the Company specifically contained in this Agreement; (c) any
claim by any Person for brokerage or finder's fees or commissions or similar
payments based upon any agreement or understanding alleged to have been made by
any such Person with the Company (or any Person acting on behalf of the
Company) in connection with any of the transactions contemplated hereby. A
diminution of the value of Purchaser's holdings of the Company's Common Stock
will be included in the definition of Damages actually incurred in the
preceding sentence if and to the extent that, but only if and to the extent
that, it can be established that such diminution of value was caused by one or
more events or conditions which also constitute one or more of the matters
referred to in clauses (a), (b) and (c) of this Section 6.2. The remedies
provided in this Section 6.2 will be the sole remedies available to Purchaser
and the other Indemnified Persons with respect to the matters referred to in
clauses (a), (b) and (c) of this Section 6.2, provided that the foregoing shall
not limit any right to specific performance or injunctive relief that a party
may otherwise have.
23
<PAGE> 28
6.3 Indemnification and Payment of Damages by Purchaser.
Purchaser will indemnify and hold harmless the Company, and will pay to the
Company the amount of any Damages actually incurred by the Company, arising,
directly or indirectly, from or in connection with (a) any breach of any
representation or warranty specifically made by Purchaser in this Agreement,
(b) any breach by Purchaser of any covenant or obligation of Purchaser
specifically contained in this Agreement, or (c) any claim by any Person for
brokerage or finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by such Person with
Purchaser (or any Person acting on its behalf) in connection with any of the
transactions contemplated hereby. The remedies provided in this Section 6.3
will be the sole remedies available to the Company with respect to the matters
referred to in clauses (a), (b) and (c) of this Section 6.3, provided that the
foregoing shall not limit any right to specific performance or injunctive
relief that a party may otherwise have.
6.4 Time Limitations. The Company will have no liability (for
indemnification or otherwise) with respect to any representation or warranty,
or covenant or obligation to be performed and complied with prior to the
Initial Closing Date or the Additional Closing Date, other than those in
Sections 2.9 or 2.11, unless on or before the first anniversary of the
Additional Closing Date (or the first anniversary of the Initial Closing Date
if the Additional Closing shall not have occurred by such anniversary date),
Purchaser notifies the Company of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by Purchaser; a claim with
respect to Sections 2.9 or 2.11 may be brought at any time on or before the
fourth anniversary of the Additional Closing Date (or the fourth anniversary of
the Initial Closing Date if the Additional Closing shall not have occurred by
such anniversary date). If the Initial Closing and/or the Additional Closing
shall occur, Purchaser will have no liability (for indemnification or
otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Initial Closing Date
or the Additional Closing Date, unless on or before the first anniversary of
the Additional Closing Date (or the first anniversary of the Initial Closing
Date if the Additional Closing shall not have occurred by such anniversary
date) the Company notifies Purchaser of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by the Company.
6.5 Limitations On Amount. (a) The Company will have no liability
to Purchaser pursuant to clause (a) of Section 6.2, and, with respect to
Section 4.1 hereof, pursuant to clause (b) of Section 6.2, until the total of
all Damages with respect to such matters exceeds $1,500,000, and then only for
the amount by which such Damages exceed $1,500,000. The liability of the
Company to Purchaser pursuant to clause (a) of Section 6.2 and, with respect to
Section 4.1 hereof, pursuant to clause (b) of Section 6.2, shall not exceed
$5,000,000 in the aggregate.
(b) Purchaser will have no liability to the Company pursuant to
clause (a) of Section 6.3 until the total of all Damages with respect to such
matters exceeds $1,500,000, and then only for the amount by which such Damages
exceed $1,500,000. The liability of
24
<PAGE> 29
Purchaser to the Company pursuant to clause (a) of Section 6.3 shall not exceed
$5,000,000 in the aggregate.
6.6 Other Limitations. The Company will have no liability to
Purchaser or the Indemnified Persons for any breach of representation or
warranty to the extent that the Company can establish that Purchaser or Alpha
had actual knowledge of the facts which form the basis of such claim prior to
the Initial Closing Date. Purchaser will have no liability to the Company for
any breach of representation or warranty to the extent that Purchaser can
establish that the Company had actual knowledge of the facts which form the
basis of such claim prior to the Initial Closing Date.
6.7 Procedure for Indemnification. Promptly upon an indemnified
party under Section 6.2 or 6.3 becoming aware of a claim it may have against an
indemnifying party under such Section, such indemnified party will if a claim
is to be made against an indemnifying party under such Section, give notice to
the indemnifying party, but the failure so to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to
any indemnified party, except to the extent that the indemnifying party
demonstrates that it shall have been materially prejudiced by the indemnifying
party's failure to give such notice. The parties shall cooperate in resolving
questions as to Damages payable under Section 6.2 or 6.3 and determining the
amount of any Damages payable. If the parties shall not be able, for a period
of 30 days, to concur and agree upon the amount of Damages payable under said
Section, as applicable, either party may, upon the expiration of such number of
days, submit such difference to a court of competent jurisdiction in the United
States of America for final determination. The final determination of such
court with respect to any difference so submitted, after all appeals have been
taken or the time to appeal shall have expired (the "Final Determination"),
shall be conclusive and binding upon the parties. Promptly after the exact
amount and nature of any Damages under Section 6.2 or 6.3 payable has been
determined or agreed upon by the parties or fixed by a Final Determination, the
indemnifying party shall pay such Damages to the indemnified party. Such
Damages shall be deemed to be due and payable by the indemnifying party as of a
date no later than the date when notice of the claim therefor was first given
to the indemnifying party on behalf of the indemnified party.
ARTICLE 7. DEFINITIONS
7.1 Definitions. The following terms shall have the meanings set
forth below unless otherwise defined herein.
"affiliate" of a person means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person.
"Code" means the Internal Revenue Code of 1986, as amended.
25
<PAGE> 30
"Confidentiality Agreement" means the letter agreement dated December
24, 1996 between Alex. Brown & Sons Incorporated and Equity Group Investments,
Inc.
"Employee Options" means options to purchase shares of Common Stock
issued pursuant to the Company's 1989 Non-Qualified Stock Option Plan, 1992
Stock Option Plan, 1996 Stock Option Plan and the Stock Option Agreement dated
June 1, 1988 between the Company and William Kuntz.
"Environmental Law" means any legal requirement that requires or
relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or Hazardous Materials into the environment;
(c) reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and
used so that they do not present unreasonable risks to human health or the
environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of Hazardous Materials, pollutants, oil, or other potentially
harmful substances;
(g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"generally accepted accounting principles" shall mean the generally
accepted accounting principles set forth in the opinions and pronouncements of
the Accounting
26
<PAGE> 31
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession in the United States, in each case applied
on a consistent basis.
"Governmental Authority" means any national, supranational, federal,
state or local legislative body, court, arbitral tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency.
"Intellectual Property" means trademarks, service marks, certification
marks, assumed names, trade names and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdictions to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, processes, discoveries and ideas, whether patentable or not in any
jurisdiction; patents, applications for patents (including, without limitation,
division, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; writings and
other works, whether copyrightable or not in any jurisdiction; registrations or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual property or
proprietary rights; and any claims or causes of action arising out of or
related to any infringement or misappropriation of any of the foregoing.
"knowledge" of the Company means the actual knowledge of William
Kuntz, Roy Bream, Timothy Halverson, Stephen McGillin, Randall McNamara or
James Wendler.
"Liens" means security interests, mortgages, liens, claims, pledges,
charges, voting agreements or other encumbrances of any nature whatsoever.
"Material Adverse Effect" with respect to any person means a material
adverse effect on the business, assets, liabilities, results of operations,
properties, financial or operating condition or prospects of such person and
its subsidiaries taken as a whole or the ability of such person (and to the
extent applicable, its subsidiaries) to perform its (or their) obligations
under this Agreement or consummate the transactions contemplated hereby.
"person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, other
entity or group (as defined in Section 13(d)(3) of the Exchange Act).
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"subsidiary" or "subsidiaries" of any person means any corporation,
partnership, limited liability company, joint venture or other legal entity of
which such person (either
27
<PAGE> 32
alone or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holder of
which is generally entitled to vote for the election of the board of directors
or other governing body of such corporation, partnership, limited liability
company, joint venture or other legal entity.
"taxes" shall mean all taxes, however denominated, including, without
limitation, any interest, penalties, assessments or deficiencies or other
additions to tax that may become payable in respect thereof, imposed by any
federal, territorial, state, local or foreign government or any agency or
political subdivision of any such government, which taxes shall include,
without limiting the generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and state income taxes),
real property gains taxes, payroll and employee withholding taxes, unemployment
insurance taxes, social security taxes, sales and use taxes, ad valorem taxes,
excise taxes, franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes, environmental
taxes, transfer taxes, workers' compensation, Pension Benefit Guaranty
Corporation premiums and other governmental charges, and other obligations of
the same or of a similar nature to any of the foregoing, which is required to
be paid, withheld or collected.
ARTICLE 8. MISCELLANEOUS
8.1 Termination. This Agreement may be terminated at any time:
(a) by mutual consent of the Company and Purchaser;
(b) by either Purchaser or the Company, if the Initial Closing
shall not have occurred on or before March 31, 1997, unless the absence of
such occurrence shall be due to the failure of the party seeking to
terminate the Agreement to perform in all material respects each of its
obligations under this Agreement required to be performed by it at or prior
to the Initial Closing; or
(c) as provided in Section 8.3, by the specific party
identified therein as may have right to elect not to proceed with the
Additional Closing; provided that such termination shall not affect the
rights and obligations of the parties under Section 4.11 hereof.
8.2 Procedure upon Termination. In the event of the termination and
abandonment of this Agreement by a party hereto, written notice thereof shall
promptly be given to the other parties hereto and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned without further
action by any of the parties hereto.
8.3 Abandonment of Additional Closing. The specified party or
parties may elect not to proceed with the Additional Closing as follows:
28
<PAGE> 33
(a) Purchaser, upon notice to the Company, if (i) a bona fide
definitive proposal with respect to a Competing Transaction which has a
value per share of Common Stock in excess of $5.75 shall have been
presented to the Company and publicly announced prior to the vote of the
Company's stockholders in accordance with Section 5.4.1, and the Additional
Closing shall not have occurred on or before September 30, 1997, or (ii)
there shall have been a Superior Proposal Event;
(b) Purchaser, upon notice to the Company, if the Additional Closing
shall not have occurred on or before September 30, 1997, unless the absence
of such occurrence shall be due to the failure of Purchaser to perform in
all material respects each of its obligations under this Agreement required
to be performed by it at or prior to the Additional Closing.
(c) Purchaser or the Company, upon notice to the other, if the
Company's stockholders fail to adopt the proposal specified in Section
5.4.1 at the forthcoming meeting of the Company's stockholders; or
(d) the Company, upon notice to Purchaser, in the event of its
receipt of a Superior Proposal.
8.4 Amendment. This Agreement may be amended by the parties
hereto, but may only be amended by an instrument or instruments in writing
signed and delivered on behalf of each of the parties hereto.
8.5 Extension; Waiver. At any time prior to the Additional
Closing Date, any party hereto which is entitled to the benefits hereof may (a)
extend the time for the performance of any of the obligations or other acts of
any of the other parties hereto, (b) waive any inaccuracy in the representations
and warranties of any of the other parties hereto contained herein, and (c)
waive compliance with any of the agreements of any of the other parties hereto
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid if set forth in an instrument in
writing signed and delivered on behalf of such party.
8.6 Execution in Counterparts; Facsimile Signatures. This Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same document.
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.
8.7 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been given or made when
delivered personally or three business days after having been sent by registered
or certified mail, postage prepaid, return receipt requested, or one business
day after having been sent by
29
<PAGE> 34
Federal Express or other comparable nationally recognized overnight courier
service (receipt requested), as follows:
If to the Company:
Chart House Enterprises, Inc.
115 South Acacia Avenue
Solana Beach, California 92057
Attention: Chief Executive Officer
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert L. Friedman
If to Purchaser or Alpha to:
Chart House Investors, LLC
Two North Riverside Plaza, Suite 1900
Chicago, Illinois 60606
Attention: Phillip Handy
With a copy to:
Rosenberg & Liebentritt
Two North Riverside Plaza
Suite 600
Chicago, Illinois 60606
Attention: Alisa Singer
and to
Seyfarth, Shaw, Fairweather
& Geraldson
55 East Monroe Street - Suite 4200
Chicago, Illinois 60603-5803
Attention: Robert F. Weber
30
<PAGE> 35
or to such other persons or at such other addresses as either party shall have
designated by like notice in writing to the other party.
8.8 Waivers. No action taken pursuant to this Agreement shall be deemed
to constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
8.9 Publicity. None of the parties will issue any press release or
otherwise make any public statements with respect to the transactions
contemplated by this Agreement, without the prior consent of the other party
hereto except as may be required by law.
8.10 Severability. If any provision of this Agreement shall be declared
by any court of competent jurisdiction to be illegal, void or unenforceable,
all other provisions of this Agreement shall not be affected and shall remain
in full force and effect.
8.11 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
8.12 Headings. The headings contained in this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
8.13 Entire Agreement. This Agreement, together with the agreements
attached as exhibits hereto, constitutes the entire agreement among the parties
hereto and supersedes all other prior agreements and understandings, both
written and oral, among the parties hereto with respect to the subject matter
hereof.
8.14 Assignment, Etc. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
Neither this Agreement nor any of the parties' rights, interests or obligations
hereunder shall be assignable by any party hereto without the prior written
consent of the other parties hereto. No assignment shall relieve the
assigning party of any of its obligations hereunder. Any attempted assignment
of this Agreement in breach of this provision shall be void and of no effect.
8.15 No Third-Party Rights. Nothing in this Agreement, expressed or
implied, shall or is intended to confer upon any person other than the parties
hereto or their respective successors or assigns any rights or remedies
of any nature or kind whatsoever under or by reason of this Agreement.
31
<PAGE> 36
IN WITNESS WHEREOF, this Agreement has been duly executed by or on
behalf of each of the parties hereto as of the date first above written.
CHART HOUSE ENTERPRISES, INC.
By: /s/ William R. Kuntz, Jr.
---------------------------
Name: William R. Kuntz, Jr.
Title: Executive Vice
President
CHART HOUSE INVESTORS, LLC,
by ALPHA/ZFT PARTNERSHIP,
its managing member, by a
general partner of one of
its general partners
By: /s/ Sheli Z. Rosenberg
-------------------------
Name: Sheli Z. Rosenberg
Title: Trustee
ALPHA/ZFT PARTNERSHIP,
by a general partner of one
of its general partners,
solely for purposes of
Section 4.13 of this
Agreement
By: /s/ Sheli Z. Rosenberg
-------------------------
Name: Sheli Z. Rosenberg
Title: Trustee
3/10/97
1134425.7
32
<PAGE> 37
EXHIBIT A TO
STOCK PURCHASE
AGREEMENT
STANDSTILL AGREEMENT BETWEEN PURCHASER AND THE COMPANY
<PAGE> 1
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
<PAGE> 2
2
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 "Zell Group" means CHI, Alpha and their affiliates,
collectively; provided, however, that publicly held entities that might fall
within this definition (a "Public Zell 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 Zell
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 Zell
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.
<PAGE> 3
3
(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 Zell 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 Zell 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
<PAGE> 4
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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 Zell 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 Zell 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 Zell
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 Zell 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 Zell 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 Zell 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 Zell 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 Zell
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
<PAGE> 5
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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 Zell Group for outstanding Company Voting
Securities (a "Qualifying Offer"), any member of the Zell 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 Zell 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 Zell Group shall form, join or in any other way
participate in a partnership, pooling agreement, syndicate, voting trust or
other "group" other than the Zell 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 Zell 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 Zell 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 Zell 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 Zell 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 Zell 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 Zell 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 Zell 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 Zell 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 Zell Group or any of the
Representatives (as defined below), and all notes, reports, analyses,
compilations, studies and other materials prepared by the Zell 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 Zell 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 Zell Group
or any of the Representatives or becomes available to any member of
the Zell Group or any of the Representatives on a non-confidential
basis from any source that is not known by
<PAGE> 7
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such member of the Zell 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 Zell Group.
(b) Each member of the Zell 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 Zell 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 Zell 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 Zell 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 Zell 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
Zell Group, the Zell 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 Zell Group (and agrees to advise the Representatives and members
of the Zell 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.
<PAGE> 8
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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 Zell Group that is a holder of
record of Company Voting Securities shall be present, and each member of the
Zell 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 Zell 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 Sam Zell
and Philip Handy 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 Zell Group and the directors
designated by the Zell 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.
<PAGE> 9
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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 Zell 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 Zell Group that have
executed this Agreement as parties (the "Zell 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 Zell 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 Zell 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
Zell 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 Zell Group shall vote all Company Voting Securities owned of record by such
member of the Zell Group and shall cause all Company Voting Securities owned
beneficially by such member of the Zell Group to be voted with respect to the
election or removal of directors of Company, or any other matter that may be
<PAGE> 10
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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 Zell
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 Zell 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 Zell 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 Zell Group.
(c) The term "Holder" means any Zell 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
<PAGE> 11
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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
<PAGE> 14
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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
<PAGE> 15
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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 Zell 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
<PAGE> 16
16
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
<PAGE> 17
17
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
<PAGE> 18
18
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 Zell 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
<PAGE> 19
19
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 Zell 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 Zell 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 Zell 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 Zell 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 Zell 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
<PAGE> 20
20
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 Zell
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
Zell Group or which have been transferred by a member of the Zell
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 Zell Group Parties; Joint and Several
Obligations. All of the obligations of the Zell Group and its members
hereunder shall be joint and several. Each member of the Zell 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
<PAGE> 21
21
Agreement to the same extent as if it had signed this Agreement as an original
signatory as a member of the Zell 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 Zell Group shall transfer securities to
another member of the Zell 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.
115 South Acacia Avenue
Solana Beach, California 92075
Attn: Chief Executive Officer
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Robert L. Friedman
If to CHI or any member of the Zell Group:
Chart House Investors, LLC
Two North Riverside Plaza
Suite 1900
Chicago, Illinois 60606
Attn: Philip Handy
With a copy to:
Rosenberg & Liebentritt
Two North Riverside Plaza
Suite 1515
Chicago, Illinois 60606
Attn: Alisa M. Singer
<PAGE> 22
22
And to:
Seyfarth, Shaw, Fairweather & Geraldson
55 East Monroe Street
Suite 4200
Chicago, Illinois 60603
Attn: Robert F. Weber
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.
<PAGE> 23
23
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/ William R. Kuntz Jr.
-------------------------------
Name: William R. Kuntz Jr.
--------------------------
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/ Sheli Z. Rosenberg
-------------------------------
Name: Sheli Z. Rosenberg
--------------------------
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/ Sheli Z. Rosenberg
-------------------------------
Name: Sheli Z. Rosenberg
--------------------------
Title: Trustee
-------------------------
