As filed with the Securities and Exchange Commission on May 10, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MAIN STREET AND MAIN INCORPORATED
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 11-2948370
- --------------------------------- ----------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
5050 North 40th Street, Suite 200
Phoenix, Arizona 85018
(602) 852-9000
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(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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BART A. BROWN, JR. COPIES TO:
President and Chief Executive Officer ROBERT S. KANT, ESQ.
5050 North 40th Street, Suite 200 JERE M. FRIEDMAN, ESQ.
Phoenix, Arizona 85018 O'Connor, Cavanagh, Anderson,
(602) 852-9000 Killingsworth & Beshears, P.A.
- --------------------------------------------------------- One East Camelback Road
(Name, address, including zip code, and telephone number, Phoenix, Arizona 85012
including area code, of agent for service) (602) 263-2606
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practical after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM AMOUNT OF
TITLE OF SHARES AMOUNT TO BE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED OFFERING PRICE(1) FEE
- --------------------------------------------------------------------------------
Common Stock(2)...... 3,364,371 Shares $11,354,752 $3,156.62
================================================================================
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c).
(2) Such shares are being registered for resale from time to time by certain
selling stockholders.
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Pursuant to Rule 429, this Registration Statement relates to (a) 257,441
outstanding shares of common stock that have been registered for resale from
time to time as included in the Registrant's Registration Statement on Form S-3
(No. 33-71230) as declared effective on July 18, 1994, for which a registration
fee of $88.77 has been previously paid; and (b) 1,630,938 outstanding shares of
common stock that have been registered for resale from time to time as included
in the Registrant's Registration Statement on Form S-3 (No. 333-28659) as
declared effective on June 30, 1997, for which a registration fee of $1,081.48
has been previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. NO ONE
MAY SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED May 10, 1999
PROSPECTUS
5,252,750 SHARES OF COMMON STOCK
MAIN STREET AND MAIN INCORPORATED
Certain stockholders of Main Street and Main Incorporated may use this
prospectus to sell up to 5,252,750 shares of Main Street common stock from time
to time. Some of the selling stockholders may be considered to be "affiliates"
of Main Street, as that term is defined under the securities laws. The shares
include 3,770,250 currently outstanding shares that were sold in private
placements or purchased by some of our affiliates in the open market. The shares
also include 1,482,500 shares that may be issued upon exercise of outstanding
stock options. We expect that stockholders using this prospectus will sell the
stock
* in broker's transactions;
* in transactions directly with market makers; or
* in privately negotiated sales or otherwise.
The selling stockholders will determine when they will sell shares, and in
all cases they will sell shares at the current market price or at negotiated
prices at the time of the sale. We will pay the expenses incurred to register
the shares for resale, but the selling stockholders will pay any underwriting
discounts, concessions, or brokerage commissions associated with the sale of
their shares. The selling stockholders and any brokers and dealers that they use
may be deemed to be "underwriters" within the meaning of the securities laws,
and any commissions received and any profits realized by them on the sale of
shares may be considered to be underwriting compensation. See "Plan of
Distribution."
We will not receive any of the proceeds of sales by the selling
stockholders. Securities laws and SEC regulations may require the selling
stockholders to deliver this prospectus to purchasers when they resell their
shares of common stock.
Our common stock is traded on the Nasdaq National Market under the symbol
"MAIN." On April 30, 1999, the last sale price of our common stock as reported
on Nasdaq was $3.30 per share.
-----------------
SEE "RISK FACTORS," BEGINNING ON PAGE 6, FOR A DISCUSSION OF CERTAIN RISK
FACTORS THAT YOU SHOULD CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
-----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS ___________, 1999
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AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934. Accordingly, we file reports, proxy statements, and other
information with the SEC. The public may read and copy any materials that we
file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549 upon payment of the prescribed fees. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy, and information statements and other materials that are filed
through the SEC's Electronic Data Gathering, Analysis, and Retrieval system.
This web site can be accessed at http://www.sec.gov.
THIS PROSPECTUS INCORPORATES CERTAIN INFORMATION BY REFERENCE
We hereby incorporate by reference in this prospectus (1) our Annual Report
on Form 10-K for the year ended December 28, 1998, which we filed with the SEC
pursuant to the Exchange Act on March 29, 1999; and (2) the description of our
common stock contained in the registration statement on Form 8-A, which we filed
with the SEC on June 29, 1990. All reports and other documents that we file
pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act after the
date of this prospectus shall be deemed to be incorporated by reference into and
to be a part of this prospectus from the date on which we file them. To the
extent that any statement in this prospectus or in any subsequently filed
document that is incorporated by reference modifies or supersedes any statement
contained in a previously filed document that is incorporated by reference, the
more recent statement will modify or supersede the earlier statement. Any
modified or superseded statement, to the extent that it is modified or
superseded, is not part of this prospectus.
The information contained in this prospectus relating to Main Street
summarizes, is based upon, or refers to information and financial statements
contained in one or more of the documents incorporated by reference in this
prospectus. Accordingly, you should refer to those documents to obtain all the
information you should consider before purchasing our common stock.
If you have received this prospectus in connection with a purchase of our
common stock from a selling stockholder, you may contact us to obtain free
copies of any or all of the documents referred to above that have been
incorporated by reference to this prospectus. We will provide exhibits to such
documents free of charge only if they are specifically incorporated by reference
into this prospectus.
You may contact us at: Main Street and Main Incorporated
Attn: Secretary
5050 North 40th Street, Suite 200
Phoenix, Arizona 85018
(602) 852-9000
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
THE STATEMENTS CONTAINED IN OR INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS THAT ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF APPLICABLE SECURITIES LAWS. FORWARD-LOOKING STATEMENTS INCLUDE
STATEMENTS REGARDING OUR "EXPECTATIONS," "ANTICIPATION," "INTENTIONS,"
"BELIEFS," OR "STRATEGIES" REGARDING THE FUTURE. FORWARD-LOOKING STATEMENTS ALSO
INCLUDE STATEMENTS REGARDING OUR REVENUE, MARGINS, EXPENSES, AND EARNINGS
ANALYSIS FOR FUTURE PERIODS; FUTURE RESTAURANT OPERATIONS AND NEW RESTAURANT
ACQUISITIONS OR DEVELOPMENT; THE RESTAURANT INDUSTRY IN GENERAL; AND LIQUIDITY
AND ANTICIPATED CASH NEEDS AND AVAILABILITY. ALL FORWARD-LOOKING STATEMENTS
INCLUDED IN OR INCORPORATED BY REFERENCE INTO THIS PROSPECTUS ARE BASED ON
INFORMATION AVAILABLE TO US AS OF THE DATE OF THIS PROSPECTUS, AND WE ASSUME NO
OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS. OUR ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY ARE THE FACTORS DISCUSSED
UNDER THE HEADING "RISK FACTORS."
2
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SUMMARY
THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE
IMPORTANT TO PURCHASERS OF OUR COMMON STOCK. PROSPECTIVE PURCHASERS OF COMMON
STOCK SHOULD CAREFULLY REVIEW THE DETAILED INFORMATION AND FINANCIAL STATEMENTS,
INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN OR INCORPORATED BY REFERENCE
INTO THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS
PROSPECTUS ASSUMES NO EXERCISE OF ANY CURRENTLY OUTSTANDING OR AUTHORIZED STOCK
OPTIONS OR WARRANTS.
OUR COMPANY
We are the world's largest franchisee of T.G.I. Friday's restaurants,
currently owning 41 and managing 10 T.G.I. Friday's restaurants. We also own
five Redfish Looziana Roadhouse & Seafood Kitchen restaurants.
T.G.I. Friday's restaurants are full-service, casual dining establishments
featuring a wide selection of freshly prepared, popular foods and beverages
served by well-trained, friendly employees in relaxed settings. Our T.G.I.
Friday's restaurants that were open during all of fiscal 1998 generated an
average of approximately $3.1 million of annual revenue during fiscal 1998.
Alcoholic beverage sales currently account for approximately 23.3% of revenue.
The cost of a typical entree at our T.G.I. Friday's restaurants currently ranges
from $5.50 to $8.00 for lunch and $6.00 to $17.00 for dinner.
T.G.I. Friday's restaurants have been in operation for more than 30 years.
We develop and operate our T.G.I. Friday's restaurants according to specified
standards established by TGI Friday's Inc. We believe that the uniform
development and operating standards of TGI Friday's Inc. facilitate the
efficiency of our restaurants and afford us significant benefits, including the
brand-name recognition and goodwill associated with T.G.I. Friday's restaurants.
As of April 30, 1999, TGI Friday's Inc. had 192 franchisor-operated and 357
franchised restaurants operating worldwide. System-wide sales exceeded $1.4
billion in 1998.
Redfish Looziana Roadhouse & Seafood Kitchen restaurants are full-service,
casual dining restaurants that feature a broad selection of New Orleans style
fresh seafood, Creole and Cajun cuisine, and traditional southern dishes, as
well as a "VooDoo" style lounge, all under one roof. The restaurants offer
unique, freshly prepared food that is served quickly and efficiently in a
fun-filled New Orleans atmosphere. Each Redfish restaurant's VooDoo lounge
features a unique atmosphere decorated with an eclectic collection of authentic
New Orleans artifacts, signs, and antiques. Local bands and, occasionally,
national touring acts present live rhythm and blues music on weekends. Redfish
restaurants are open for lunch and dinner seven days a week from 11 a.m.
until 2 a.m.
Of our 46 currently owned restaurants, we acquired 28 and developed 18. The
following table shows, as of April 30, 1999, information regarding the number of
restaurants in each state in which we operate.
OWNED MANAGED OWNED
STATE T.G.I. FRIDAY'S T.G.I. FRIDAY'S REDFISH
----- --------------- --------------- -------
Arizona.................. 6 -- --
California............... 27 6 1
Colorado................. -- -- 1
Illinois................. -- -- 2
Kansas................... 1 -- --
Louisiana................ -- 3 --
Missouri................. 2 -- --
Nevada................... 3 -- --
New Mexico............... 1 -- --
Ohio..................... -- -- 1
Texas.................... 1 1 --
--- --- ---
Totals 41 10 5
3
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We have the exclusive rights to develop additional T.G.I. Friday's
restaurants in territories encompassing most of the states of Arizona, Nevada,
and New Mexico and in the Kansas City, Kansas; Kansas City, Missouri; and El
Paso, Texas metropolitan areas. We also have the exclusive right, together with
TGI Friday's Inc., to develop additional T.G.I. Friday's restaurants in
territories in northern and southern California. We plan to develop additional
T.G.I. Friday's restaurants in our existing development territories, in which we
are required to open 46 additional restaurants by December 31, 2003. The
following table shows information regarding our minimum requirements to open new
T.G.I. Friday's restaurants under our current development agreements, as well as
the number of existing owned restaurants in each development territory.
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SOUTHERN NORTHERN
CALIFORNIA CALIFORNIA SOUTHWEST MIDWEST
YEAR TERRITORY(1) TERRITORY(1) TERRITORY(2) TERRITORY(3) TOTAL
- ---- ------------ ------------ ------------ ------------ -----
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1999.................... 3 4 1 1 9
2000.................... 4 5 1 1 11
2001.................... 4 4 1 1 10
2002.................... 4 4 1 1 10
2003.................... 3 3 (TBD)(4) (TBD)(4) 6
--- --- -------- -------- ---
18 20 4 4 46
Existing Restaurants.... 20 7(5) 11(6) 3 41
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(1) TGI Friday's Inc. also may develop restaurants in these regions.
(2) Includes the states of Arizona, Nevada, and New Mexico and the El Paso,
Texas metropolitan area.
(3) Includes metropolitan Kansas City, Kansas and Kansas City, Missouri.
(4) To be determined by negotiation between T.G.I. Friday's Inc. and Main
Street during 2002.
(5) Does not include six restaurants managed in the Northern California
Territory.
(6) Does not include one restaurant managed in the Southwest Territory.
We expect that cash flow from operations, together with our current
financing commitments, will be sufficient to develop the nine restaurants that
the development agreements require us to open by the end of 1999. See "Risk
Factors - We may not be able to comply with all of the requirements of our
development agreements."
Main Street was incorporated in 1988. We commenced restaurant operations in
May 1990 with the acquisition of four T.G.I. Friday's restaurants in Arizona and
Nevada. During the past eight years, we have grown through the acquisition and
development of restaurants. During 1996, we changed our management team and
implemented a long-term business strategy designed to enhance our financial
position, to place more emphasis on our casual dining business in certain
designated geographical areas, and to dispose of underperforming assets. To
strengthen our financial position, we (a) sold 1,250,000 shares of common stock
in January 1997 for $2.5 million; (b) sold five restaurants in northern
California in January 1997 for $10.8 million, of which we used $8.0 million to
repay debt; and (c) secured new borrowings of $21.3 million with a repayment
period of 15 years. We used proceeds from the new borrowings primarily to repay
debt with shorter repayment periods. We also renegotiated our development
agreement with T.G.I. Friday's Inc. to reduce the number of T.G.I. Friday's
restaurants we are required to build with the intent of focusing on those
development territories that are most economically favorable.
Our strategy is to (1) capitalize on the brand-name recognition and
goodwill associated with T.G.I. Friday's restaurants; (2) expand our restaurant
operations by developing additional T.G.I. Friday's restaurants in our existing
development territories, by developing new restaurant concepts, including
Redfish, and by acquiring restaurants operating under other restaurants
concepts; and (3) increase our profitability by continuing to enhance the dining
experience of our guests and improving operating efficiencies.
Our principal executive offices are located at 5050 North 40th Street,
Suite 200, Phoenix, Arizona 85018, and our telephone number is (602) 852-9000.
As used in this prospectus, the terms "we," "our," "us," or "Main Street" refers
to Main Street and Main Incorporated and its subsidiaries and operating
divisions.
4
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THE OFFERING
Securities offered by the
selling stockholders............... 5,252,750 shares of common stock
Common stock currently
outstanding........................ 10,011,052 shares. This number does not
include (a) 1,906,000 shares of common
stock reserved for issuance upon
exercise of stock options outstanding as
of April 30, 1999; (b) 1,013,425 shares
reserved for issuance upon the exercise
of stock options that may be granted in
the future under our stock option plans,
including one plan subject to
stockholder approval; and (c) 231,277
shares reserved for issuance upon
exercise of outstanding warrants.
Use of proceeds..................... We will not receive any of the proceeds
of sales of common stock by the selling
stockholders
Risk factors........................ You should carefully consider the
factors discussed under "Risk Factors"
before purchasing our common stock.
Nasdaq National Market symbol....... MAIN
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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FISCAL YEAR ENDED
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DEC. 26, DEC. 25, DEC. 30, DEC. 29, DEC. 28,
1994 1995 1996 1997 1998
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STATEMENT OF OPERATIONS DATA:
Revenue.................................... $111,262 $119,508 $122,563 $107,997 $115,324
Restaurant operating expenses.............. 100,870 110,377 115,477 97,605 103,069
Income from restaurant operations.......... 10,392 9,131 7,086 10,392 12,255
Operating income (loss).................... 5,187 3,390 (18,960) 7,270 6,383
Net income (loss) from continuing
operations before extraordinary item...... 1,285 (1,034) (22,166) 4,804 4,165
Net income (loss)(1)....................... $ 1,285 $ (1,034) $(22,166) $ 3,166 $ 4,165
Diluted earnings per share:
Net income (loss) from continuing
operations before extraordinary item..... $ 0.35 $ (0.22) $ (2.73) $ 0.47 $ 0.39
Net income (loss)(1)...................... $ 0.35 $ (0.22) $ (2.73) $ 0.31 $ 0.39
Weighted average shares outstanding -
diluted................................... 3,692 4,621 8,110 10,098 10,608
BALANCE SHEET DATA:
Working capital........................... $(10,905) $ (7,848) $ (1,343) $ (1,330) $ (2,807)
Total assets.............................. 84,503 88,605 70,848 61,168 70,255
Long-term debt, net of current portion.... 41,265 31,204 33,809 24,308 28,264
Stockholders' equity...................... 22,601 37,261 16,585 22,203 26,372
</TABLE>
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(1) Fiscal 1996 includes $20,208,000, or $2.49 per share, for asset impairment
and restructuring charges. Fiscal 1997 includes an extraordinary loss from
debt extinguishment of $1,638,000, or $0.16 per share.
5
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER
INFORMATION IN THIS PROSPECTUS BEFORE DECIDING TO PURCHASE SHARES OF OUR COMMON
STOCK.
WE DEPEND ON T.G.I. FRIDAY'S, INC.
We currently operate 41 T.G.I. Friday's restaurants as a T.G.I. Friday's
franchisee. We also manage an additional 10 T.G.I. Friday's restaurants for
those restaurants' franchisees. As a result of the nature of franchising and our
franchise agreements with TGI Friday's, Inc., our long-term success depends, to
a significant extent, on
* the continued vitality of the T.G.I. Friday's restaurant concept and
the overall success of the T.G.I. Friday's system;
* the ability of TGI Friday's, Inc. to identify and react to new trends
in the restaurant industry, including the development of popular menu
items;
* the ability of TGI Friday's, Inc. to develop and pursue appropriate
marketing strategies in order to maintain and enhance the name
recognition, reputation, and market perception of T.G.I. Friday's
restaurants;
* the goodwill associated with the T.G.I. Friday's trademark;
* the quality, consistency, and management of the overall T.G.I.
Friday's system; and
* the successful operation of T.G.I. Friday's restaurants owned by TGI
Friday's, Inc. and other T.G.I. Friday's franchisees.
We believe that the experience, reputation, financial strength, and
franchisee support of TGI Friday's Inc. represent positive factors for our
business. We, however, have no control over the management or operation of TGI
Friday's, Inc. or other T.G.I. Friday's franchisees. A variety of factors
affecting TGI Friday's, Inc. or the T.G.I. Friday's concept could have a
material adverse effect on our business. These factors include the following:
* any business reversals that TGI Friday's, Inc. may encounter;
* a failure by TGI Friday's, Inc. to promote the T.G.I. Friday's name or
restaurant concept;
* the inability or failure of TGI Friday's, Inc. to support its
franchisees, including Main Street;
* the failure to operate successfully the T.G.I. Friday's restaurants
that TGI Friday's, Inc. itself owns; or
* negative publicity with respect to TGI Friday's, Inc. or the T.G.I.
Friday's name.
The future results of the operations of our restaurants will not necessarily
reflect the results achieved by TGI Friday's Inc. or its other franchisees, but
will depend upon such factors as the effectiveness of our management team, the
locations of our restaurants, and the operating results of those restaurants.
FRANCHISE AGREEMENTS IMPOSE RESTRICTIONS AND OBLIGATIONS ON US
Our franchise agreement with TGI Friday's Inc. for each T.G.I. Friday's
restaurant that we own generally requires us to
* pay an initial franchise fee of $50,000;
* pay royalties of 4% of the restaurant's gross sales; and
* spend up to 4% of the restaurant's gross sales on advertising, which
may include contributions to a national marketing pool administered by
TGI Friday's Inc.
6
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During fiscal 1998, TGI Friday's Inc. generally required us and its other
franchisees to contribute up to 1.9% of gross sales to the national marketing
pool. We must pay or accrue these amounts regardless of whether or not our
restaurants are profitable. In addition, the franchise agreements require us to
operate our T.G.I. Friday's restaurants in accordance with the requirements and
specifications established by TGI Friday's Inc. These requirements and
specifications relate to a variety of factors, including the following:
* the exterior and interior design, decor, and furnishings of
restaurants;
* menu selection;
* the preparation of food products;
* quality of service;
* general operating procedures;
* advertising;
* maintenance of records; and
* protection of trademarks.
If we fail to satisfy these requirements or otherwise default under the
franchise agreements, we could be subject to potential damages for breach of
contract and could lose our franchise rights for some or all of our T.G.I.
Friday's restaurants. We also could lose our rights to develop additional T.G.I.
Friday's restaurants.
WE MAY NOT BE ABLE TO COMPLY WITH ALL OF THE REQUIREMENTS OF OUR DEVELOPMENT
AGREEMENTS
Our development agreements with TGI Friday's Inc. require us to open at
least 46 additional T.G.I. Friday's restaurants by December 31, 2003. The
acquisition of restaurants does not constitute the opening of new restaurants
under the development agreements. We may not be able to secure sufficient
restaurant sites that we believe are suitable or we may not be able to develop
restaurants on sites on terms and conditions that we consider favorable in order
to satisfy the requirements of the development agreements. The development
agreements give TGI Friday's Inc. certain remedies in the event that we fail to
comply with the development schedule in a timely manner or if we breach the
confidentiality or noncompete provisions of the development agreements. These
remedies include, under certain circumstances, the right to reduce the number of
restaurants we may develop in the related development territory or to terminate
our exclusive right to develop restaurants in the related development territory.
At our request, TGI Friday's Inc. from time to time has agreed to amend the
development schedules to extend the time by which we were required to develop
new restaurants in certain development territories. We requested those
amendments because we were unable to secure sites that we believed to be
attractive on favorable terms and conditions. TGI Friday's Inc. may decline to
extend the development schedule in the future if we experience any difficulty in
satisfying the schedule for any reason, including a shortage of capital.
WE FACE RISKS ASSOCIATED WITH THE EXPANSION OF OUR OPERATIONS
The success of our business depends on our ability to expand the number of
our restaurants, either by developing or acquiring additional restaurants. Our
success also depends on our ability to operate and manage successfully our
growing operations. Our ability to expand successfully will depend upon a number
of factors, including the following:
* the availability and cost of suitable restaurant locations for
development;
* the availability of restaurant acquisition opportunities;
* the hiring, training, and retaining of additional management and
restaurant personnel;
* the availability of adequate financing;
* the continued development and implementation of management information
systems;
7
<PAGE>
* competitive factors; and
* general economic and business conditions.
The rate at which we will be able to increase the number of restaurants we
operate will vary depending upon whether we acquire existing restaurants or
develop new restaurants. The acquisition of existing restaurants depends upon
our ability to identify and acquire restaurants on satisfactory terms and
conditions. The opening of new restaurants depends upon our ability to
* locate suitable sites in terms of
- favorable population characteristics,
- density and household income levels,
- visibility, accessibility, and traffic volume,
- proximity to demand generators, including shopping malls,
lodging, and office complexes, and
- potential competition;
* obtain financing for construction, tenant improvements, furniture,
fixtures, and equipment;
* negotiate acceptable leases or terms of purchase;
* secure liquor licenses and zoning, environmental, health, and similar
regulatory approvals;
* recruit and train qualified personnel; and
* manage successfully the rate of expansion and expanded operations.
The opening of new restaurants also may be affected by increased
construction costs and delays resulting from governmental regulatory approvals,
strikes or work stoppages, adverse weather conditions, and various acts of God.
Newly opened restaurants may operate at a loss for a period following their
initial opening. The length of this period will depend upon a number of factors,
including
* the time of year the restaurant is opened,
* sales volume, and
* our ability to control costs.
We may not successfully achieve our expansion goals. Additional restaurants
that we develop or acquire may not be profitable. In addition, the opening of
additional restaurants in an existing market may have the effect of drawing
customers from and reducing the sales volume of our existing restaurants in
those markets.
WE MAY NEED ADDITIONAL CAPITAL
The development of new restaurants requires funds for construction, tenant
improvements, furniture, fixtures, equipment, training of employees, permits,
initial franchise fees, and additional expenditures. We expect that cash flow
from operations, together with financing commitments, will be sufficient to
develop the nine restaurants that the development agreements require us to open
by the end of 1999. We will require funds to develop the additional restaurants
that our development agreements require us to open after 1999 and to pursue any
additional restaurant development or restaurant acquisition opportunities. In
the future, we may seek additional equity or debt financing to provide funds so
that we can develop or acquire additional restaurants. Such financing may not be
available or may not be available on satisfactory terms. If financing is not
available on satisfactory terms, we may be unable to satisfy our obligations
under our development agreements with TGI Friday's Inc. or otherwise to expand
our restaurant operations. See "Risk Factors - We may not be able to comply with
all of the requirements of our development agreements." While debt financing
will enable us to add more restaurants than we otherwise would be able to do,
debt financing increases expenses and we must repay the debt regardless of our
operating results. Future equity financings could result in dilution to our
stockholders.
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WE HAVE SIGNIFICANT BORROWINGS
We have incurred significant indebtedness in connection with our growth
strategy. Our growth strategy has focused on restaurant acquisitions and
internal restaurant development. As of December 28, 1998, we had long-term debt
of approximately $28.3 million and a working capital deficit of $2.8 million.
Our borrowings will result in interest expense of approximately $3.0 million in
1999 and $4.0 million in 2000, based on currently prevailing interest rates and
assuming the outstanding indebtedness is paid in accordance with the existing
payment schedules without any prepayments or additional borrowings. We must make
these interest payments regardless of our operating results. Currently, 35 of
our restaurants are pledged to secure our debt obligations. We also may seek
additional equity or debt financing in the future to provide funds to develop or
acquire additional restaurants. See "Risk Factors - We may need additional
capital."
WE FACE RISKS THAT AFFECT THE RESTAURANT INDUSTRY IN GENERAL
The ownership and operation of restaurants may be affected by a variety of
factors over which we have no control. These factors include the following:
* adverse changes in national, * changing consumer tastes, habits,
regional, or local economic or and spending priorities;
market conditions;
* increased costs of labor or food * the cost and availability of
products; insurance coverage;
* fuel shortages and price increases; * management problems;
* competitive factors; * uninsured losses;
* the number, density, and location * limited alternative uses for
of competitors; properties and equipment;
* changing demographics; * changes in government regulation; and
* changing traffic patterns; * weather conditions.
Third parties may file lawsuits against us based on discrimination,
personal injury, claims for injuries or damages caused by serving alcoholic
beverages to an intoxicated person or to a minor, or other claims. As a
multi-unit restaurant operator, we can be adversely affected by publicity about
food quality, illness, injury, or other health and safety concerns or operating
issues at one restaurant or a limited number of restaurants operated under the
same name, whether or not we actually own the restaurants in question. We cannot
predict any of these factors with any degree of certainty. Any one or more of
these factors could have a material adverse effect on our business.
WE FACE INTENSE COMPETITION
The restaurant business is highly competitive with respect to price,
service, and food type and quality. Restaurant operators also compete for
attractive restaurant sites and qualified restaurant personnel and managers. Our
restaurants compete with a large number of other restaurants, including national
and regional restaurant chains and franchised restaurant systems, as well as
with locally owned, independent restaurants. Many of our competitors have
greater financial resources, more experience, and longer operating histories
than we have.
WE DEPEND UPON SENIOR MANAGEMENT
Our success depends, in large part, upon the services of our senior
management. The loss of the services of any members of our senior management
team could have a material and adverse effect on our business.
WE FACE RISKS ASSOCIATED WITH GOVERNMENT REGULATION
Various federal, state, and local laws affect our business. The development
and operation of restaurants depend to a significant extent on the selection and
acquisition of suitable sites. These sites are subject to zoning,
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land use, environmental, traffic, and other regulations of state and local
governmental agencies. City ordinances or other regulations, or the application
of such ordinances or regulations, could impair our ability to construct or
acquire restaurants in desired locations and could result in costly delays. In
addition, restaurant operations are subject to
* licensing and regulation by state and local departments relating to
health, sanitation, safety standards, and fire codes;
* federal and state labor laws, including applicable minimum wage
requirements, tip credit provisions, overtime regulations, workers'
compensation insurance rates, unemployment and other taxes, working
and safety conditions, and citizenship requirements; and
* state and local licensing of the sale of alcoholic beverages.
The delay or failure to obtain or maintain any licenses or permits
necessary for operations could have a material adverse effect on our business.
In addition, an increase in the minimum wage rate, employee benefit costs
(including costs associated with mandated health insurance coverage), or other
costs associated with employees could adversely affect us. We also are subject
to the Americans with Disabilities Act of 1990 that, among other things, may
require us to install certain fixtures or accommodations in new restaurants or
to renovate existing restaurants to meet federally mandated requirements.
Sales of alcoholic beverages represent an important source of revenue for
each of our restaurants. The temporary suspension or permanent loss or the
inability to maintain a liquor license for any restaurant would have an adverse
effect on the operations of that restaurant. We do not plan to open a restaurant
in any location for which we believe we cannot obtain or maintain a liquor
license.
WE FACE RISKS ASSOCIATED WITH "YEAR 2000" COMPLIANCE
Many currently installed computer systems and software products may not
function properly when processing transactions that include dates on and after
January 1, 2000. We continue to assess and quantify the impact that the Year
2000 issue will have on our information systems, imbedded systems, and business
processes. In 1998, we began identifying the most critical areas that might be
deficient and we established a time line to complete the necessary analysis and
remediation plans. We have begun correcting the deficiencies identified in all
affected areas and anticipate that we will complete the remediation plans by
September 30, 1999. The established cost of the analysis and remediation plans
related to the Year 2000 issues is approximately $450,000. We will expense these
costs as incurred. Because the appropriate course of action may include
replacing or upgrading certain equipment or software, we may incur costs in
excess of that amount in resolving our Year 2000 issues. We may not be able to
make our computer system Year 2000 compliant in a timely manner.
We also have assessed the role of critical suppliers of products and
services to determine the extent that we might be vulnerable in the event that
these suppliers have failures due to the Year 2000 issue. We have provided a
questionnaire to and we are conducting research on our critical suppliers to
determine their state of Year 2000 readiness. Computer systems operated by
product and service suppliers and other third parties with which our systems
interface may not be compliant on a timely basis with Year 2000 requirements.
We are establishing contingency plans in the event that critical suppliers
are not "Year 2000" compliant, "Year 2000" compliance is uncertain, or processes
fail to perform after December 31, 1999. We anticipate completing these
contingency plans by September 30, 1999. As of the date of this prospectus, we
are unable to reasonably estimate the effect, if any, that the failure of our
significant vendors to be Year 2000 ready will have on our consolidated
financial position, results of operations, or cash flows.
We have determined that the worst case scenario related to Year 2000 issues
would be a complete failure of our systems and those of our critical suppliers
of products and services. The failure of our information systems, embedded
systems, or business processes or the systems of third parties to timely achieve
Year 2000 compliance could have a material adverse effect on our business,
financial condition, and operating results.
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THE MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE
Historically, the market price of our common stock has been volatile. In
the future, the market price of our common stock will be subject to wide
fluctuations as a result of a variety of factors, including the following:
* quarterly variations in our operating results or those of other
restaurant companies;
* changes in analysts' estimates of our financial performance;
* changes in national and regional economic conditions, the financial
markets, or the restaurant industry;
* natural disasters; or
* other developments affecting our business or other restaurant
companies.
The trading volume of our common stock has been limited, which may increase
the volatility of the market price for our stock. In addition, the stock market
has experienced extreme price and volume fluctuation in recent years. This
volatility has had a significant effect on the market prices of securities
issued by many companies for reasons not necessarily related to the operating
performances of these companies.
THE EXISTENCE OF STOCK OPTIONS AND WARRANTS MAY ADVERSELY AFFECT THE TERMS OF
FUTURE FINANCINGS
Stock options to acquire an aggregate of 1,906,000 shares of common stock
currently are outstanding. An additional 1,013,425 shares have been reserved for
issuance upon exercise of options that may be granted under our existing stock
option plans and a new plan that is subject to stockholder approval. In
addition, warrants to acquire 231,277 shares of common stock currently are
outstanding. During the terms of those options and warrants, the holders of
those securities will have the opportunity to profit from an increase in the
market price of our common stock. The existence of options and warrants may
adversely affect the terms on which we can obtain additional financing in the
future, and the holders of options and warrants can be expected to exercise
those options and warrants at a time when, in all likelihood, we would be able
to obtain additional capital by offering shares of common stock on terms more
favorable to it than those provided by the exercise of such options and
warrants.
SALES OF LARGE NUMBERS OF SHARES COULD ADVERSELY AFFECT THE PRICE OF OUR
COMMON STOCK
Sales of substantial amounts of common stock in the public market
(including those covered by the registration statement of which this prospectus
forms a part), or even the potential for such sales, could adversely affect
prevailing market prices for our common stock and could adversely affect our
ability to raise capital. As of April 30, 1999, there were outstanding
10,011,052 shares of our common stock. Of these shares, 7,861,938 shares are
freely transferable without restriction under the securities laws, unless they
are held by our "affiliates," as that term is defined in the securities laws.
The remaining 2,149,114 shares of common stock currently outstanding are
"restricted securities," as that term is defined in Rule 144 under the
securities laws, and may be sold only in compliance with Rule 144, pursuant to
registration under the securities laws, or pursuant to an exemption from
registration. Affiliates also are subject to certain of the resale limitations
of Rule 144. Generally, under Rule 144, each person who beneficially owns
restricted securities with respect to which at least one year has elapsed since
the later of the date the shares were acquired from us or one of our affiliates
may, every three months, sell in ordinary brokerage transactions or to market
makers an amount of shares equal to the greater of 1% of our then-outstanding
common stock or the average weekly trading volume for the four weeks prior to
the proposed sale of such shares. Currently, most of the restricted shares are
eligible for sale under Rule 144 or under registration statements that we have
filed to permit resales of the restricted shares, including the registration
statements of which this prospectus forms a part or to which it relates.
WE DO NOT ANTICIPATE THAT WE WILL PAY DIVIDENDS
We have never paid any dividends on our common stock, and we do not
anticipate that we will pay dividends in the foreseeable future. We intend to
apply any earnings to the expansion and development of our business. In
addition, the terms of our credit facility limit our ability to pay dividends on
our common stock.
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ACTUAL RESULTS MAY DIFFER FROM THE FORWARD LOOKING STATEMENTS CONTAINED IN
THIS PROSPECTUS
Certain statements and information contained in this prospectus concerning
our future, proposed, and anticipated activities; certain trends with respect to
our operating results, capital resources, and liquidity; the restaurant industry
in general; and other statements contained in this prospectus regarding matters
that are not historical facts are forward-looking statements, as that term is
defined under applicable securities laws. Forward-looking statements, by their
very nature, include risks and uncertainties. Accordingly, actual results may
differ, perhaps materially, from those expressed in or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially include those discussed elsewhere under "Risk Factors."
USE OF PROCEEDS
We will not receive any of the proceeds from sales of shares of common
stock by the selling stockholders.
PRIVATE PLACEMENTS
In March 1994, Main Street issued 1,029,764 shares of Class B Preferred
Stock to TGI Fridays, Inc. in connection with the acquisition of 20 T.G.I.
Friday's restaurants in California and development rights for certain locations
in California, Idaho, Montana, and Wyoming. TGI Friday's, Inc. subsequently
converted the Class B Preferred Stock into shares of common stock. TGI Holdings,
Inc. now owns an aggregate of 257,441 shares of common stock. See "Selling
Stockholders."
During 1996, Main Street sold 500,000 shares of common stock to John F.
Antioco and 266,666 shares to Gerard T. Bisceglia for a total of $1.5 million,
which represented the fair market value of the stock at the time of purchase. In
January 1997, Main Street sold a total of 1,250,000 shares of common stock for
$2.5 million, which exceeded the fair market value of the stock on the date of
purchase. John F. Antioco, Bart A. Brown, Jr., Thomas DuPree, George Sarlo,
David Abell, Joseph Brown, and James Harless purchased 250,000, 250,000,
300,000, 250,000, 100,000, 50,000, and 50,000 shares, respectively, in this
transaction. See "Selling Stockholders."
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SELLING STOCKHOLDERS
The following table sets forth (1) the name of each of the selling
stockholders, (2) the number of shares of common stock beneficially owned by
each selling stockholder that may be offered for the account of such selling
stockholder under this prospectus, and (3) the number of shares of common stock
beneficially owned by each selling stockholder upon completion of this offering.
We obtained this information from the selling stockholders, but have not
independently verified it. The term "selling stockholder" includes the persons
listed below and their respective transferees, pledgees, donees, or other
successors.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(2) SHARES BEING OFFERING (2)(3)
NAME AND ADDRESS OF ------------------- REGISTERED -------------------
BENEFICIAL OWNER(1) NUMBER PERCENT FOR SALE NUMBER PERCENT
- ------------------- ------ ------- --------------- ------ -------
<S> <C> <C> <C> <C> <C>
John F. Antioco 2,118,100(4) 20.3% 2,118,100 0 *
Bart A. Brown 1,613,700(5) 14.9% 1,613,700 0 *
Steven A. Sherman 459,306(6) 4.6% 451,494 7,812 *
Gerard T. Bisceglia(7) 337,202 3.4% 225,000 112,202 1.1%
TGI Holdings, Inc.(8) 257,441 2.6% 257,441 0 *
William G. Shrader 162,015(9) 1.6% 162,015 0 *
George Sarlo 361,000 3.6% 134,500(10) 226,500 2.3%
David Abell(11) 202,183 2.0% 100,000 102,183 1.0%
Joseph Brown(12) 100,000 1.0% 50,000 50,000 *
James Harless(13) 50,000 * 50,000 0 *
John C. Metz 38,000(14) * 38,000 0 *
James C. Yeager 32,500(15) * 32,500 0 *
Jane Evans 20,000(16) * 20,000 0 *
</TABLE>
- ----------
* Less than 1% of outstanding shares of common stock.
(1) Except as indicated in footnotes 7, 8, and 10 through 13, each of the
selling stockholders may be reached through the Company at 5050 North 40th
Street, Suite 200, Phoenix, Arizona 85018.
(2) Except as otherwise indicated, each person named in the table has sole
voting and investment power with respect to all shares of common stock
beneficially owned by him or her, subject to applicable community property
law. The numbers and percentages shown include the shares of common stock
actually owned as of April 30, 1999 and the shares of common stock that the
selling stockholder had the right to acquire upon exercise of outstanding
stock options. Some of the options held by certain of the selling
stockholders currently are not vested and exercisable. In calculating the
percentage of ownership, all shares of common stock that the identified
selling stockholder had the right to acquire upon exercise of options,
including options that are not currently vested and exercisable, are deemed
to be outstanding for the purpose of computing the percentage of the shares
of common stock owned by such selling stockholder, but are not deemed to be
outstanding for the purpose of computing the percentage of the shares of
common stock owned by any other person.
(3) Each of the selling stockholders is assumed to be selling all of the shares
of common stock registered for sale and will own no shares of common stock
after the offering, except for 7,812, 112,202, 226,500, 102,183, and 50,000
shares of common stock to be beneficially owned by Steven A. Sherman,
Gerard T. Bisceglia, George Sarlo, David Abell, and Joseph Brown,
respectively. The selling stockholders may not sell any of the securities
being registered.
(4) Represents 1,700,600 shares of common stock and 417,500 shares issuable
upon exercise of options. Mr. Antioco is the Chairman of the Board of Main
Street.
(5) Represents 813,700 shares of common stock and 800,000 shares issuable upon
exercise of options. Mr. Brown is the President, Chief Executive Officer,
and a director of Main Street.
(6) Includes 7,812 shares held by Mr. Sherman's wife, as to which shares Mr.
Sherman disclaims any beneficial interest; 25,000 shares held by Mr.
Sherman as custodian for his children, as to which shares
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Mr. Sherman disclaims any beneficial interest; 16,250 shares owned by The
Sherman Group, of which Mr. Sherman is the sole proprietor; 2,500 shares
owned by Sherman Capital Group, L.L.C., a limited liability company of
which Mr. Sherman is a managing member; 110,000 shares owned by Sherman
Capital Partners, L.L.C., a limited liability company of which Mr. Sherman
is a managing member; and 40,000 shares issuable upon exercise of options
held by Mr. Sherman. Mr. Sherman is a director of Main Street.
(7) Mr. Bisceglia's address is 15822 E. Thistle Drive, Fountain Hills, Arizona
85268. Mr. Bisceglia is a former officer and director of Main Street.
(8) T.G.I. Holdings, Inc. maintains an address at 7540 LBJ Freeway, Suite 100,
Dallas, Texas 75251.
(9) Represents (a) 11,315 shares of common stock and 150,000 shares issuable
upon exercise of options held by Mr. Shrader; and (b) 700 shares held by
Mr. Shrader as custodian for his children. Mr. Shrader is the Executive
Vice President, Chief Operating Officer, and a director of Main Street.
(10) Represents (a) 100,000 shares of common stock held by George Sarlo as
Trustee for the benefit of the George Sarlo Revocable Trust, and (b) 34,500
shares held by George S. Sarlo, Susan S. Baer, and J.S. Thornborrow as
Co-Trustees for the benefit of the Ashfield & Co. Profit Sharing Plan CAF
UA dated December 27, 1977. Mr. Sarlo maintains an address at 750 Battery
Street, 7th Floor, San Francisco, California 94111.
(11) Mr. Abell maintains an address at 900 S. US Hwy 1, Suite 105, Jupiter,
Florida 33477.
(12) Mr. Brown maintains an address at 8076 US Hwy 42, Florence, Kentucky 41042.
(13) Mr. Harless maintains an address at 210 Larry Joe Harless Drive, Gilbert,
West Virginia 25621.
(14) Represents 15,500 shares of common stock and 22,500 shares issuable upon
exercise of options. Mr. Metz is a director of Main Street.
(15) Represents 32,500 shares of common stock issuable upon exercise of options.
Mr. Yeager is Vice President - Finance, Secretary, and Treasurer of Main
Street.
(16) Represents 20,000 shares of common stock issuable upon exercise of options.
Ms. Evans is a director of Main Street.
DESCRIPTION OF SECURITIES
Main Street's authorized capital consists of 25,000,000 shares of common
stock, $0.001 par value, and 2,000,000 shares of preferred stock, $.001 par
value. As of April 30, 1999, a total of 10,011,052 shares of common stock were
issued and outstanding. There are no shares of preferred stock outstanding. An
additional 2,919,425 shares of common stock may be issued upon exercise of
options outstanding or available for issuance under our stock option plans and
an additional 231,277 shares of common stock may be issued upon exercise of
certain outstanding warrants.
COMMON STOCK
Holders of shares of common stock are entitled to one vote for each share
of common stock held of record on all matters submitted to a vote of the
stockholders. Subject to the preferences of any outstanding preferred stock,
holders of common stock are entitled to receive such dividends as may be
declared by the board of directors out of funds legally available. If Main
Street is liquidated or dissolved, the holders of common stock will be entitled
to share ratably in all assets remaining after we have paid our creditors in
full and paid the liquidation preferences of any outstanding shares of preferred
stock. Holders of common stock do not have preemptive rights to subscribe for
additional shares that we may issue. All of the outstanding shares of common
stock, including the shares of common stock to be sold in this offering, are
fully paid and nonassessable.
PREFERRED STOCK
Main Street's board of directors may issue shares of preferred stock from
time to time in one or more series for such consideration and with such relative
rights and preferences as the board of directors may determine. Accordingly, the
board of directors has the power to fix the dividend rate and to establish the
provisions, if any, relating to voting rights, redemption rate, sinking fund,
liquidation preferences, and conversion rights for any series of preferred stock
issued in the future. We have no present plans, arrangements, or
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understandings for the issuance or sale of any other shares of preferred stock.
Any preferred stock that may be issued in the future could be given voting and
conversion rights that could dilute the voting power and equity of holders of
common stock.
WARRANTS
Main Street has outstanding warrants to purchase 231,277 shares of common
stock at an exercise price of $9.08 per share. Main Street issued these warrants
to its lender in connection with a term loan. The warrants expire in March 2004.
We may redeem the warrants under certain circumstances.
REPORTS TO STOCKHOLDERS
We furnish annual reports to our stockholders containing consolidated
financial statements of our company audited by independent public accountants.
We also distribute quarterly reports containing unaudited financial information.
SHARES ELIGIBLE FOR FUTURE SALE
As of April 30, 1999, we had 10,011,052 shares of common stock outstanding,
of which 7,861,938 shares are freely tradeable in the public market without
restriction under the securities laws unless held by one of our "affiliates," as
that term is defined in Rule 144 under the securities laws. Affiliates will be
subject to certain of the resale limitations of Rule 144. The 2,149,114
remaining shares of common stock currently outstanding are "restricted
securities," as that term is defined in Rule 144, and may be sold only in
compliance with Rule 144, pursuant to registration under the securities laws, or
pursuant to an exemption from registration. An aggregate of 5,252,750 shares of
common stock covered by this prospectus, which includes 1,482,500 shares
issuable upon exercise of outstanding options, are being registered for resale
pursuant to the registration statement of which this prospectus forms a part or
have been registered for resale under other registration statements to which
this prospectus relates. These shares include "restricted securities" as well as
otherwise freely tradeable shares that are held by some of our affiliates.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including a person who may be deemed to be an
"affiliate" of Main Street, is entitled to sell, within any three-month period,
a number of restricted shares beneficially owned by such person for at least one
year in an amount that does not exceed the greater of (a) one percent of the
then-outstanding shares of common stock (approximately 100,110 shares as of
April 30, 1999) or (b) the average weekly trading volume of the common stock
during the four calendar weeks immediately preceding the date on which a notice
of the sale is filed with the SEC. Sales under Rule 144 also are subject to
certain other requirements relating to the manner of sale and the availability
of current public information about our company. However, a person who is not
deemed to have been an affiliate at any time within the three months immediately
prior to the date of sale and who has beneficially owned his or her shares for
at least two years is entitled to sell those shares without regard to the
volume, manner of sale, or notice requirements. Sales of substantial amounts of
common stock by our stockholders under Rule 144 or otherwise, or even the
potential for such sales, may have a depressive effect on the market price of
the common stock.
As of April 30, 1999, options to purchase a total of 1,906,000 shares of
common stock were outstanding under our stock option plans and various stock
option agreements with employees. We have filed registration statements under
the securities laws to register for offer and sale the shares of common stock
reserved for issuance pursuant to the exercise of stock options granted under
our stock option plans and option agreements. Shares issued upon the exercise of
such stock options generally will be eligible for sale in the public market.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is American
Securities Transfer, Inc., Denver, Colorado.
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PLAN OF DISTRIBUTION
This prospectus relates to a total of 3,770,250 shares of currently
outstanding common stock and 1,482,500 shares issuable upon exercise of
outstanding options. The selling stockholders may use this prospectus from time
to time to sell some or all of their shares. As used in this prospectus,
"selling stockholders" includes transferees, donees, pledgees, legatees, heirs,
or legal representatives that sell shares received from a named selling
stockholder after the date of this prospectus.
The selling stockholders have advised us that they have not entered into
any agreements, understandings, or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, and no underwriter or
coordinating broker is acting in connection with the proposed sale of shares by
the selling stockholders. At the time a particular offering of common stock is
made and to the extent required, the aggregate number of shares being offered,
the name or names of the selling stockholders, and the terms of the offering,
including the name or names of any underwriters, broker-dealers or agents, any
discounts, concessions or commissions and other terms constituting compensation
from the selling stockholders, and any discounts, concessions or commissions
allowed or reallowed or paid to broker-dealers, will be set forth in an
accompanying prospectus supplement.
Sales of the common stock offered hereby may be effected by or for the
account of the selling stockholders from time to time in transactions, which may
include block transactions, in the Nasdaq market, in negotiated transactions,
through a combination of such methods of sale, or otherwise, at fixed prices
that may be changed, at market prices prevailing at the time of sale, at prices
related to the prevailing market price, or at negotiated prices. The selling
stockholders may effect such transactions by selling the common stock offered
hereby directly to purchasers, through broker-dealers acting as agents for the
selling stockholders, or to broker-dealers that may purchase such shares as
principals and thereafter sell the shares from time to time in transactions,
which may include block transactions, in the Nasdaq market, in negotiated
transactions, through a combination of such methods of sale, or otherwise. In
effecting sales, broker-dealers engaged by selling stockholders may arrange for
other broker-dealers to participate. Such broker-dealers, if any, may receive
compensation in the form of discounts, concessions, or commissions from the
selling stockholders and/or the purchasers of the common stock offered hereby
for whom such broker-dealers may act as agents or to whom they may sell as
principals, or both. As to a particular broker-dealer, such compensation might
be in excess of customary commissions.
The selling stockholders may resell the shares of common stock being
registered for resale hereby (a) in transactions that are exempt from
registration under the securities laws, or (b) as long as the registration
statements of which this prospectus forms a part or to which it relates is
effective, and as long as there is a qualification in effect under, or an
available exemption from, any applicable state securities law with respect to
the resale of such shares. The selling stockholders may determine not to sell
any common stock offered hereby, and any selling stockholder may transfer,
devise, or gift the common stock by other means not described in this
prospectus. For example, in addition to selling pursuant to the registration
statements of which this prospectus is a part or to which it relates, the
selling stockholders also may sell under Rule 144. See "Description of
Securities - Shares eligible for future sale."
The selling stockholders and any broker-dealers, agents, or underwriters
that participate with the selling stockholders in the distribution of common
stock offered hereby may be deemed to be "underwriters" within the meaning of
applicable securities laws. Accordingly, the selling stockholders will be
subject to the prospectus delivery requirements of the securities laws. Any
commissions paid or any discounts or concessions allowed to any such persons,
and any profits received on the resale of the common stock offered hereby and
purchased by them, may be deemed to be underwriting commissions or discounts
under the securities laws. Main Street will not pay any compensation to any NASD
member in connection with this offering. Brokerage commissions, if any,
attributable to the sale of the shares of common stock offered hereby will be
borne by the selling stockholders.
Main Street will not receive any proceeds from the sale of any shares of
common stock by the selling stockholders. Main Street has agreed to bear all
expenses, other than selling commissions, in connection with the registration
and sale of the common stock being offered by the selling stockholders. We have
agreed to indemnify
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certain of the selling stockholders against certain liabilities under the
securities laws. Each selling stockholder may indemnify any broker-dealer that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the securities laws.
To comply with the securities laws of certain jurisdictions, if applicable,
the shares of common stock offered hereby will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the common stock offered hereby may not be sold
unless they have been registered or qualified for sale in the applicable state
or an exemption from the registration or qualifications requirement is available
and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the common stock offered pursuant to this
prospectus may be limited in its ability to engage in market activities with
respect to the common stock. Without limiting the foregoing, each selling
stockholder will be subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including Regulation M. Those rules and
regulations may limit the timing of purchases and sales of the common stock
offered by the selling stockholders pursuant to this prospectus, which may
affect the marketability of the common stock offered hereby.
The selling stockholders also may pledge the shares of common stock being
registered for resale hereby to NASD broker/dealers pursuant to the margin
provisions of each selling stockholder's customer agreements with the
broker/dealers. Upon default by a selling stockholder, the broker/dealer may
offer and sell shares of common stock from time to time as described above.
LEGAL OPINIONS
O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, a professional
association, Phoenix, Arizona will pass upon the validity of the shares of
common stock offered by this prospectus.
EXPERTS
The consolidated financial statements as of and for the year ended December
28, 1998, incorporated by reference in this prospectus and elsewhere in the
registration statement of which this prospectus forms a part have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of that firm as experts in giving the reports.
WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION
This prospectus constitutes a part of a registration statement on Form S-3
filed by us with the SEC under the Securities Act of 1933 with respect to the
securities offered in this prospectus. This prospectus does not contain all of
the information included in the registration statement. We have omitted certain
parts of the registration statement, as allowed by the rules and regulations of
the SEC. You may wish to inspect the registration statement and the exhibits to
that registration statement for further information with respect to our company
and the securities offered in this prospectus. Copies of the registration
statement and the exhibits to such registration statement are on file at the
offices of the SEC and may be obtained upon payment of the prescribed fee or may
be examined without charge at the public reference facilities of the SEC
described above. Statements contained in this prospectus concerning the
provisions of documents are necessarily summaries of the material provisions of
such documents, and each statement is qualified in its entirety by reference to
the copy of the applicable document filed with the SEC.
17
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===================================== =====================================
YOU MAY RELY ON THE INFORMATION 5,252,750 SHARES
CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE
INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR
THE SALE OF COMMON STOCK MEANS THAT
INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT AFTER THE DATE
OF THIS PROSPECTUS. THIS PROSPECTUS
IS NOT AN OFFER TO SELL OR A MAIN STREET AND MAIN
SOLICITATION OF AN OFFER TO BUY THESE INCORPORATED
SHARES OF COMMON STOCK IN ANY
CIRCUMSTANCES UNDER WHICH THE OFFER
OR SOLICITATION IS UNLAWFUL.
COMMON STOCK
---------------
Page
----
---------------
Available Information.............. 2
This Prospectus Incorporates P R O S P E C T U S
Certain Information by Reference.. 2
Statement Regarding ---------------
Forward-Looking Statements........ 2
Summary............................ 3
Risk Factors....................... 6
Use of Proceeds.................... 12
Private Placements................. 12
Selling Stockholders............... 13
Description of Securities.......... 14
Plan of Distribution............... 16
Legal Opinions..................... 17
Experts............................ 17
Where You Can Obtain
Additional Information............ 17 , 1999
===================================== =====================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses payable by the Registrant in
connection with the offering described in the Registration Statement. All of the
amounts shown are estimates except for the registration fee:
Amount to be Paid
-----------------
Registration Fee...................................... $ 3,156.62
Accountants' Fees and Expenses........................ 5,000.00
Legal Fees and Expenses............................... 25,000.00
Printing and Engraving Expenses....................... 2,500.00
Miscellaneous Fees.................................... 1,843.38
----------
Total................................................. $37,500.00
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation and Bylaws of the Registrant provide that
the Registrant will indemnify and advance expenses, to the fullest extent
permitted by the Delaware General Corporation Law, to each person who is or was
a director, officer or agent of the Registrant, or who serves or served any
other enterprise or organization at the request of the Registrant (an
"Indemnitee").
Under Delaware law, to the extent that an Indemnitee is successful on the
merits in defense of a suit or proceeding brought against him or her by reason
of the fact that he or she is or was a director, officer or agent of the
Registrant, or serves or served any other enterprise or organization at the
request of the Registrant, the Registrant shall indemnify him or her against
expenses (including attorney's fees) actually and reasonably incurred in
connection with such action.
If unsuccessful in defense of a third-party civil suit or a criminal suit,
or if such a suit is settled, an Indemnitee may be indemnified under Delaware
law against both (i) expenses, including attorneys' fees, and (ii) judgments,
fines and amounts paid in settlement if he or she acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Registrant, and, with respect to any criminal action, had no
reasonable cause to believe his or her conduct was unlawful.
Also under Delaware law, expenses incurred by an officer or director in
defending a civil or criminal action, suit or proceeding may be paid by the
Registrant in advance of the final disposition of the suit, action or proceeding
upon receipt of an undertaking by or on behalf of the officer or director to
repay such amount if it is ultimately determined that he or she is not entitled
to be indemnified by the Registrant. The Registrant also may advance expenses
incurred by other employees and agents of the Registrant upon such terms and
conditions, if any, that the Board of Directors of the Registrant deems
appropriate.
R-1
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ITEM 16. EXHIBITS
EXHIBIT
NUMBER EXHIBIT
------ -------
3.1 Certificate of Incorporation of the Registrant(1)
3.2 Certificate of Amendment of Restated Certificate of Incorporation(1)
3.3 Amended and Restated Bylaws of the Registrant(1)
10.1 Registrant's 1990 Stock Option Plan(2)
10.5 Form of Franchise Agreement between the Registrant and TGI Friday's
Inc.(3)
10.7 Asset Conveyance Agreement among CNL California Restaurants, LTD.,
Main St, California, Inc., and Registrant(4)
10.8 Stock Purchase Agreement among CNL California Restaurants, LTD.,
Main St. California, Inc., and Registrant(4)
10.9 Form of Management Agreement between Main St. California II, Inc.,
Main St. California, Inc., and Registrant(4)
10.10 Master Incentive Agreements between Main St. California II, Inc. and
Main St California, Inc., a wholly owned subsidiary of Registrant(4)
10.11A Employment Agreement dated January 1, 1999 between Main Street and
Main Incorporated and Bart A. Brown, Jr.(5)
10.13 Promissory Note between Registrant and CNL Financial I, Inc.(6)
10.14 Promissory Note between Registrant and CNL Financial I, Inc.(6)
10.15 Promissory Note between Registrant and CNL Financial I, Inc.(6)
10.16 Registrant's 1995 Stock Option Plan(7)
10.17 Amended and Restated Development Agreement between TGI Friday's Inc.
and Cornerstone Productions, Inc., a wholly owned subsidiary of the
Registrant(8)
10.18 Amended and Restated Development Agreement between TGI Friday's Inc.
and Main St. California, Inc., a wholly owned subsidiary of the
Registrant(8)
10.18A First Amendment to Development Agreement dated February 10, 1999,
between TGI Friday's, Inc. and Main St. California, Inc.(5)
10.19 Amended and Restated Development Agreement between TGI Friday's Inc.
and Main St. Midwest, Inc., a wholly owned subsidiary of the
Registrant(8)
10.20 Amended and Restated Purchase Agreement between RJR Holdings, Inc.
and Main St. California, Inc., a wholly owned subsidiary of the
Registrant(8)
10.21 Development Agreement dated April 22, 1998 between Main St.,
California, Inc. and TGI Friday's, Inc., and First Amendment to
Development Agreement dated February 10, 1999 between TGI Friday's,
Inc. and Main St. California, Inc., a wholly owned subsidiary of the
Registrant(6)
10.22 Stock Option Agreement dated August 5, 1996, between the Registrant
and John F. Antioco for 800,000 shares of Common Stock.(7)
10.22A Stock Option Agreement dated June 15, 1998, between the Registrant
and John F. Antioco amending the Stock Option Agreement dated August
5, 1996.(7)
10.23 Stock Option Agreement dated December 16, 1996, between the
Registrant and Bart A. Brown, Jr. for 250,000 shares of Common
Stock. (The Registrant issued three additional Stock Option
Agreements which are substantially identical in all material
respects, except as to number of shares. The four Stock Option
Agreements give rights to purchase a total of 625,000 shares of
Common Stock.)(7)
10.23A Schedule of Stock Option Agreements substantially identical to
Exhibit 10.23.(7)
10.24 Stock Option Agreement dated July 14, 1997, between the Registrant
and Bart A. Brown, Jr. for 75,000 shares of Common Stock. (The
Registrant issued one additional Stock Option Agreement which is
substantially identical in all material respects, except as to
number of shares. The two Stock Option Agreements give rights to
purchase a total of 175,000 shares of Common Stock.)(7)
10.24A Schedule of Stock Option Agreements substantially identical to
Exhibit 10.24.(7)
R-2
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10.25 Stock Option Agreement dated June 15, 1998, between the Registrant
and James Yeager for 15,000 shares of Common Stock. (The Registrant
issued two additional Stock Option Agreements which are
substantially identical in all material respects, except as to
option holder and number of shares. The three Stock Option
Agreements give rights to purchase a total of 50,000 shares of
Common Stock.)(7)
10.25A Schedule of Stock Option Agreements substantially identical to
Exhibit 10.25.(7)
10.26 Stock Option Agreement dated December 31, 1998, between the
Registrant and Tim Rose for 10,000 shares of Common Stock. (The
Registrant issued one additional Stock Option Agreement which is
substantially identical in all material respects, except as to
option holder and number of shares. The two Stock Option Agreements
give rights to purchase a total of 160,000 shares of Common
Stock.)(7)
10.26A Schedule of Stock Option Agreements substantially identical to
Exhibit 10.26.(7)
10.27 Registration Rights Agreement dated August 5, 1996, between the
Registrant and John F. Antioco.
21 List of Subsidiaries(8)
23 Consent of Independent Public Accountants
- ---------
(1) Incorporated by reference to the Registrant's Form 10-K for the year
ended December 30, 1991, filed with the Securities and Exchange
Commission on or about March 31, 1992.
(2) Incorporated by reference to the Registrant's Registration Statement
on Form S-1 (Registration No. 33-40993) which became effective in
September 1991.
(3) Incorporated by reference to the Registrant's Form 8-K filed with the
Securities and Exchange Commission on or about April 15, 1994.
(4) Incorporated by reference to the Registrant's Form 8-K Report filed
with the Commission in January 1997.
(5) Incorporated by reference to the Registrant's Form 10-K for the year
ended December 28, 1998, filed with the Securities and Exchange
Commission on March 29, 1999.
(6) Incorporated by reference to the Registrant's Form 10-K for the year
ended December 30, 1996, filed with the Securities and Exchange
Commission on or about April 14, 1997.
(7) Incorporated by reference to Registrant's Registration Statement on
Form S-8 (Registration No. 333-78155), filed with the Securities
and Exchange Commission on May 7, 1999.
(8) Incorporated by reference to the Registrant's Form 10-K for the year
ended December 29, 1997, filed with the Securities and Exchange
Commission on March 17, 1998.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement.
R-3
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement, provided,
however, that clauses (1)(i) and (1)(ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference into the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange SEC such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
R-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Phoenix, Arizona, on the 5th day of May, 1999.
MAIN STREET AND MAIN INCORPORATED
By: /s/ Bart A. Brown, Jr.
-------------------------------------
Bart A. Brown, Jr.
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints jointly and severally, Bart A. Brown, Jr. and
James C. Yeager and each one of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including pre-effective and post-effective amendments) to this
registration statement, and to sign any registration statement and amendments
thereto for the same offering pursuant to Rule 462(b) under the Securities Act
of 1933, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all which said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do, or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Capacity Date
- --------- -------- ----
/s/ John F. Antioco Chairman of the Board May 5, 1999
- ---------------------------
John F. Antioco
/s/ Bart A. Brown, Jr. President, Chief Executive Officer, May 5, 1999
- --------------------------- and Director (Principal
Bart A. Brown, Jr. Executive Officer)
/s/ William C. Shrader Executive Vice President, Chief May 5, 1999
- --------------------------- Operating Officer, and Director
William C. Shrader
/s/ James Yeager Vice President - Finance, Secretary, May 5, 1999
- --------------------------- and Treasurer (Principal Financial
James Yeager and Accounting Officer)
/s/ Jane Evans Director May 5, 1999
- ---------------------------
Jane Evans
/s/ John C. Metz Director May 5, 1999
- ---------------------------
John C. Metz
/s/ Steven A. Sherman Director May 5, 1999
- ---------------------------
Steven A. Sherman
EXHIBIT 5.1
The Law Offices of
O'CONNOR, CAVANAGH, ANDERSON, KILLINGSWORTH & BESHEARS
One East Camelback Road, Suite 1100
Phoenix, Arizona 85012
Telephone: (602) 263-2400
Fax: (602) 263-2900
May 7, 1999
Main Street and Main Incorporated
5050 North 40th Street
Suite 200
Phoenix, Arizona 85018
Re: Registration Statement on Form S-3
Main Street and Main Incorporated
Gentlemen:
We have acted as legal counsel to Main Street and Main Incorporated (the
"Company"), in connection with the preparation of the Company's Registration
Statement on Form S-3 (the "Registration Statement"), to be filed with the
Securities and Exchange Commission (the "Commission") on or about May 10, 1999
under the Securities Act of 1933, as amended, covering an aggregate of 3,364,371
shares of the Company's common stock, par value $.001 per share, that may be
sold from time to time by certain of the Company's shareholders (the "Selling
Stockholders") (all such shares of common stock collectively called the
"Shares").
With respect to the opinion set forth below, we have examined originals,
certified copies, or copies otherwise identified to our satisfaction as being
true copies, of the Registration Statement and such other corporate records of
the Company, agreements and other instruments, and certificates of public
officials and officers of the Company as we have deemed necessary as a basis for
the opinions hereinafter expressed. As to various questions of fact material to
such opinions, we have, where relevant facts were not independently established,
relied upon statements of officers of the Company.
Subject to the assumptions that (i) the documents and signatures examined
by us are genuine and authentic, and (ii) the persons executing the documents
examined by us have the legal capacity to execute such documents, and subject to
such further limitations and qualifications set forth below, it is our opinion
that the Shares will be validly issued, fully paid, and non-assessable when (a)
the Registration Statement as then amended shall have been declared effective by
the Commission, and (b) the Shares have been sold by the Selling Stockholders as
described in the Registration Statement.
<PAGE>
O'CONNOR CAVANAGH
Main Street and Main Incorporated
May 7, 1999
Page 2
For purposes of our opinion, we have assumed (i) the payment by the Selling
Stockholders (or the prior holders thereof) of the full and sufficient
consideration due from them to the Company for such Shares, and (ii) that the
Shares have been duly issued, executed, and authenticated by the Company. For
purposes of our opinion, we also have assumed that the Company has paid all
taxes, penalties and interest which are due and owing to the State of Arizona.
We express no opinion as to the applicability or effect of any laws, orders
or judgments of any state or other jurisdiction other than federal securities
laws and the substantive laws of the State of Delaware. Further, our opinion is
based solely upon existing laws, rules and regulations, and we undertake no
obligation to advise you of any changes that may be brought to our attention
after the date hereof.
We hereby expressly consent to any reference to our firm in the
Registration Statement, the inclusion of this opinion as an exhibit to the
Registration Statement, and to the filing of this opinion with any other
appropriate governmental agency.
Very truly yours,
/s/ O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears, P.A.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of August 5,
1996, by and between MAIN STREET AND MAIN INCORPORATED, a Delaware corporation
(the "Company") and JOHN F. ANTIOCO ("Antioco").
WHEREAS
A. Pursuant to an employment agreement of even date herewith (the
"Employment Agreement"), Antioco will become employed as the Company's Chairman
of the Board.
B. In connection with Antioco's employment with the Company and pursuant to
the terms of the Employment Agreement, the Company has agreed (i) to sell to
Antioco 500,000 shares (the "Shares") of the Company's common stock, par value
of $.001 per share (the "Common Stock"), and (ii) to grant to Antioco options
(the "Options") to purchase an aggregate of 800,000 shares of the Company's
Common Stock (the "Optioned Shares").
C. The Employment Agreement requires that, contemporaneously with the
execution and delivery of the Employment Agreement, the Company and Antioco
shall execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:
1. REGISTRATION RIGHTS
1.1 Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Blackout Period" means any period (A) beginning on the
date on which the Company notifies the Holders (as defined below) that (i) the
Board of Directors of the Company, in its good faith judgement, has determined
that there are material developments with respect to the Company such that it
would be seriously detrimental to the Company and its stockholders to utilize a
registration statement pursuant to Section 1.2 below; (ii) the Board of
Directors of the Company, in its good faith judgment, has determined that
financial statements with respect to the Company, which may be required to
utilize a registration statement pursuant to Section 1.2 below, are unavailable;
or (iii) the Company is actively pursuing the preparation and filing of a
registration statement for an underwritten public offering or has filed a
registration statement for an underwritten public offering and the managing
<PAGE>
underwriter for such offering has objected in writing to the Holders' exercise
of their rights under Section 1.2, and (B) ending on the date (1) with respect
to clause (i) above, as soon as practicable but not more than 90 days after the
date on which the Company notifies the Holders of the Board of Directors'
determination; (2) with respect to clause (ii) above, as soon as financial
statements sufficient to enable the Holders to sell their Registrable Securities
under the Act have become available; and (3) with respect to clause (iii) above,
90 days after the effective date of the registration statement for such public
offering.
(c)The term "Holders" means those persons owning or having the right
to acquire Registrable Securities (as defined below).
(d) The term "Maximum Includable Securities" shall mean the maximum
number of shares of each type or class of the Company's securities that a
managing or principal underwriter, in its good faith judgment, deems practicable
to offer and sell at that time in a firm commitment underwritten offering
without materially and adversely affecting the marketability or price of the
securities of the Company to be offered. Where more than one type or class of
the Company's securities are to be included in a registration, the managing or
principal underwriter of the offering shall designate the maximum number of each
such type or class of securities that is included in the Maximum Includable
Securities.
(e) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(f) The term "Registrable Securities" means (i) the Shares; (ii) the
Optioned Shares; and (iii) any shares of Common Stock or other securities of the
Company issued as (or issuable on the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to the Shares or the Optioned Shares, or in exchange for or in
replacement of the Shares, the Options, or the Optioned Shares.
(g) The number of shares of "Registrable Securities then outstanding"
shall be equal to the sum of the number of shares of Common Stock outstanding
which are Registrable Securities plus the number of shares of Common Stock
issuable upon conversion or exercise of the Warrant (and any other outstanding
Registrable Securities).
(h) "SEC" means the United States Securities and Exchange Commission.
1.2 Demand Registration Rights.
(a) If, at any time after the date on which Antioco ceases to serve as
the Chairman of the Board of the Company, any of the Holders desire to sell any
Registrable Securities and the Company is unable to include such Registrable
Securities in a then-effective Registration Statement on Form S-3 (or any
successor to Form S-3), the holders of a majority
2
<PAGE>
of the Registrable Securities then outstanding that are not then registered
under the Act may deliver to the Company a written request that the Company file
a registration statement under the Act covering the registration of at least 50%
of the Registrable Securities then outstanding that are not registered under the
Act (or a lesser percentage if the anticipated aggregate offering price, net of
underwriting discounts and commissions, would exceed $500,000). Upon receipt of
such request, the Company shall, (i) within 10 days of the receipt of such
requests, give written notice of such request to all Holders; (ii) subject to
the limitations of Section 1.2(b), within 90 days of the receipt of such
request, prepare and file a registration statement for the registration under
the Act of all Registrable Securities which the Holders request to be registered
within 30 days of the mailing of such notice by the Company in accordance with
the notice provisions of Section 2.2 hereof; and (iii) use its best efforts to
cause such registration statement to become effective as soon as practicable
after filing, but in no event more than 90 days after filing.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
of the identity of the proposed managing or principal underwriter(s) as a part
of their request made pursuant to this Section 1.2. The selection of such
managing or principal underwriter(s) shall be subject to the approval of the
Company, such approval not to be unreasonably withheld. The Company shall
include information regarding the identity of the managing or principal
underwriter and the proposed terms of the underwriting in the written notice to
all Holders referred to in Section 1.2(a). The right of any Holder to include
the Holder's Registrable Securities in such underwritten registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. The Company and all Holders
proposing to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders and reasonably acceptable to the Company.
(c) Notwithstanding any other provision of this Section 1.2, if the
underwriter advises the Company in writing that marketing factors require a
limitation of the number of shares or other securities to be underwritten, then
the Company shall furnish all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto with a written statement of the
managing or principal underwriter as to the Maximum Includable Securities, and
the number of each type or class of Registrable Securities that may be included
in the underwriting shall be allocated among all Holders requesting registration
on a pro rata basis, with the number of each type or class of Registrable
Securities of each Holder thereof included in the registration to be that number
determined by multiplying the total number of such type or class of security
included in the Maximum Includable Securities by a fraction, the numerator of
which will be the total number of such type or class of security that such
Holder owns, and the denominator of which will be the total number of such type
or class of security owned by all Holders that have requested inclusion of such
type or class of security in the registration.
3
<PAGE>
Any reduction of more than 50% of the Registrable Securities sought to be
registered will not be considered a registration under this Section 1.2 for the
purposes of Section 1.2(d).
(d) The Company shall be obligated to effect only one such
registration pursuant to this Section 1.2.
(e) Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting a registration statement pursuant to this Section 1.2 a
certificate signed by the President of the Company stating that a Blackout
Period is in effect, the Company shall have the right to defer such filing
during the term of such Blackout Period; provided, however, that the Company may
not utilize this right more than twice in any 12-month period or in a manner
that results in Blackout Periods pursuant to any and all provisions of this
Agreement aggregating more than 180 days during any 12-month period.
(f) If the Holders give written notice requesting registration of
their Registrable Securities pursuant to this Section 1.2, and if the Company at
that time is not eligible to register its securities on Form S-3, the Company
shall prepare and file a registration statement on Form S-1 or S-2 (or other
appropriate form for the general registration of securities) as may be
appropriate in accordance with the terms and conditions set forth in this
Section 1.2.
(g) The Company may propose to include additional shares ("Additional
Shares") of Common Stock or other securities to be sold by the Company and/or by
other holders of Common Stock or other securities in any registration statement
to be filed pursuant to this Section 1.2. The Holders shall have the right to
reduce the number of Additional Shares requested to be registered by the Company
pursuant to this Section 1.2(g) (including, if necessary, to zero) if, in the
good faith opinion of the underwriter or underwriters of such offering, the
inclusion of such Additional Shares would materially and adversely affect the
marketability or price of the Registrable Securities to be offered by the
Holders in such registration.
(h) From and after the date hereof, the Company shall not, without the
prior written consent of the Holders of a majority of the Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company that would allow such holder or prospective holder
to require the Company to include shares or securities in any registration
initiated under Section 1.2 of this Agreement, unless under the terms of such
agreement such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of such securities is
subject to the cutback contained in Section 1.2(g) above.
1.3 Piggy-Back Registration Rights.
(a) If at any time the Company proposes to file on its behalf and/or
on behalf of any of its securityholders a registration statement under the Act
on Form S-1, S-2 or S-3 (or any other appropriate form for the general
registration of securities) with respect to any of its
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capital stock or other securities, the Company shall give each Holder written
notice at least 20 days before the filing with the SEC of such registration
statement. If any Holder desires to have Registrable Securities registered
pursuant to this Section 1.3, such Holder shall so advise the Company in writing
within 15 days after the date of mailing of such notice from the Company. The
Company shall thereupon include in such filing the number of Registrable
Securities for which registration is so requested, subject to its right to
reduce the number of Registrable Securities as hereinafter provided, and shall
use its best efforts to effect registration under the Act of such Registrable
Securities. Notwithstanding the foregoing, the Company shall not be required to
provide notice of filing of a registration statement and to include therein any
Registrable Securities if the proposed registration is:
(1) a registration of stock options, stock purchases or
compensation or incentive plans, or of securities issued or issuable
pursuant to any such plan or a dividend reinvestment plan on Form S-8
or other comparable form then in effect; or
(2) a registration of securities proposed to be issued in
exchange for securities or assets of, or in connection with, a merger
or consolidation with another corporation.
(b) In the event the offering in which any Holder's Registrable
Securities are to be included pursuant to this Section 1.3 is to be underwritten
on a firm commitment basis, the Company shall furnish the Holders with a written
statement of the managing or principal underwriter as to the Maximum Includable
Securities as soon as practicable after the expiration of the 15 day period
provided for in Section 1.3(a). If the total number of securities proposed to be
included in such registration statement is in excess of the Maximum Includable
Securities, the number of securities to be included within the coverage of such
registration statement shall be reduced to the Maximum Includable Securities as
follows:
(1) no reduction shall be made in the number of shares of capital
stock or other securities to be registered for the account of the
Company; and
(2) the number of Registrable Securities and other securities
that may be included in the registration, if any, shall be allocated
among the Holders of Registrable Securities and holders of other
securities (the "Other Holders") requesting inclusion on a pro rata
basis, with the number of each type or class of securities of each
Holder and Other Holder thereof included in the registration to be
that number determined by multiplying (A) the total number of such
type or class of security included in the Maximum Includable
Securities less (B) the number of such type or class of security to be
registered for the account of the Company, by a fraction, the
numerator of which will be the total number of such type or class of
security that such Holder or Other Holder owns, and the denominator of
which will be the total number of such type or class of security owned
by all Holders and Other Holders that have requested inclusion of such
type or class of security in the registration.
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(c) To the extent that the offering of Registrable Securities proposed
to be included in a registration statement is not to be underwritten on a firm
commitment basis, then there shall be no reduction in the number of Holders'
Registrable Securities to be registered in such registration statement. If such
offering is to be underwritten on a best efforts basis, the shares of Common
Stock or other securities of all participants, including the Company and the
Holders, shall be sold in a proportionate basis, based upon the number of shares
of Common Stock or other securities registered on their behalf.
(d) The Company shall, in its sole discretion, select the underwriter
or underwriters, if any, who are to undertake the sale and distribution of the
Registrable Securities to be included in a registration statement filed under
the provisions of this Section 1.3.
(e) The right to registration provided in this Section 1.3 is in
addition to and not in lieu of the demand registration rights provided in
Section 1.2. The provisions of this Section 1.3 shall apply even though the
Holders requesting registration pursuant to this Section 1.3 are or may be free,
at the time, to sell any or all of the Registrable Securities with respect to
which such registration was requested in accordance with Rule 144 (or any
similar rule or regulation) promulgated under the Act.
1.4 Obligations of the Company. Whenever required under Section 1.2 or
Section 1.3 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 on such
form as the Company deems appropriate with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective. With respect to the registration statement filed pursuant to
Section 1.2 hereof, the Company shall keep such registration statement effective
for one year, or such shorter period as is required to dispose of all securities
covered by such registration statement; provided, however, that the one-year
period shall be extended by that number of days equal to the number of days that
the Holders were prohibited from selling any Registrable Securities as a result
of any Blackout Period. With respect to registration statements filed pursuant
to Section 1.3 hereof, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder the Company shall keep such
registration statement effective for up to 180 days, or such shorter period as
is required to dispose of all securities covered by such registration statement.
(b) Notify the Holders promptly of any request by the SEC for the
amending or supplementing of such registration statement or prospectus or of
additional information.
(c) Prepare and file with the SEC, and promptly notify the Holders of
the filing of, such amendments and supplements to such registration statement
and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement.
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(d) Prepare and file with the SEC promptly upon the request of any
such Holders, any amendments or supplements to such registration statement or
prospectus which, in the reasonable opinion of special counsel for such Holders,
is required under the Act or the rules and regulations thereunder in connection
with the distribution of the Registrable Securities by such Holders.
(e) Not file any amendment or supplement to the registration statement
or prospectus to which any Holders shall reasonably object after having been
furnished a copy a reasonable time prior to the filing thereof.
(f) Notify the Holders promptly after it has received notice of the
time when such registration statement has become effective or any supplement to
any prospectus forming a part of such registration statement has been filed.
(g) Advise each Holder promptly after it has received notice or
obtained knowledge thereof of the issuance of any stop order by the SEC
suspending the effectiveness of any such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
(h) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(i) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business, to file a general consent to
service of process, or to become subject to tax liability in any such states or
jurisdictions or to agree to any restrictions as to the conduct of its business
in the ordinary course thereof.
(j) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering, together with each Holder
participating in such underwritten offering, as provided in Section 1.5(c).
(k) Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the Act, of the
happening of any event of which it has knowledge 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.
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(l) Prepare and promptly file with the SEC, and promptly notify such
Holders or their special counsel of the filing of, any amendment or supplement
to such registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Act, any event has occurred as
the result of which any such prospectus must be amended in order that it does
not make any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, not misleading, in light of the
circumstances in which they were made.
(m) In case any of such Holders or any underwriter for any such
Holders is required to deliver a prospectus at a time when the prospectus then
in effect may no longer be used under the Act, prepare promptly upon request
such amendment or amendments to such registration statement and such prospectus
as may be necessary to permit compliance with the requirements of the Act.
(n) If any of the Registrable Securities are then listed on any
securities exchange or the Nasdaq Stock Market, the Company will cause all such
Registrable Securities covered by such registration statement to be listed on
such exchange or the Nasdaq Stock Market.
1.5 Obligations of Holders. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
each of the selling Holders shall:
(a) Furnish to the Company such information regarding themselves, the
Registrable Securities held by them, the intended method of sale or other
disposition of such securities, the identity of and compensation to be paid to
any underwriters proposed to be employed in connection with such sale or other
disposition, and such other information as may reasonably be required to effect
the registration of their Registrable Securities.
(b) Notify the Company, at any time when a prospectus relating to
Registrable Securities covered by a registration statement is required to be
delivered under the Act, of the happening of any event with respect to such
selling Holder as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
(c) In the event of any underwritten public offering, each Holder
participating in such underwriting shall enter into and perform its obligations
under the underwriting agreement for such offering, and, if requested to do so
by the underwriters managing such offering, each Holder shall enter into a
customary holdback agreement.
1.6 Expenses of Demand Registration. The Company shall bear and pay all
expenses incurred in connection with registrations, filings or qualifications
pursuant to Section 1.2 (other than underwriting discounts and commissions with
respect to Registrable Securities included in
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such registration), including (without limitation) all registration, filing, and
qualification fees, Blue Sky fees and expenses, printers' and accounting fees,
costs of listing on any exchange or the Nasdaq Stock Market, costs of furnishing
such copies of each preliminary prospectus, final prospectus, and amendments
thereto as each Holder may reasonably request, fees and disbursements of counsel
for the Company; provided, however, that the Company shall not be required to
pay for any expenses of any registration proceeding begun pursuant to Section
1.2 if the registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case the Holders participating in such offering and favoring such withdrawal
shall bear such expenses); provided further, however, that if such registration
request has been withdrawn by virtue of a material adverse change in the
condition, business, or prospects of the Company from that known to the Holders
at the time of their request, then the Holders shall not be required to pay any
of such expenses and shall retain their rights pursuant Section 1.2.
1.7 Expenses of Piggy-Back Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to each of the registrations pursuant to
Section 1.3 (other than underwriting discounts and commissions with respect to
Registrable Securities included in such registration) for each Holder, including
(without limitation) all registration, filing, and qualification fees, Blue Sky
fees and expenses, printers' and accounting fees relating or apportionable
thereto, costs of listing on any exchange or the Nasdaq Stock Market, costs of
furnishing such copies of each preliminary prospectus, final prospectus, and
amendments thereto as each Holder may reasonably request.
1.8 Limitations on Registration Rights. Notwithstanding any other provision
of this Agreement, with respect to any other securities of the Company for which
the Company has granted registration rights prior to the date of this Agreement,
the Registrable Securities shall not be registered and sold at the same time as
such other securities are being sold pursuant to an underwritten offering if the
managing underwriter of such offering believes that the sale of the Registrable
Securities could have a material adverse effect on the amount of, or price at
which, such other securities being registered can be sold.
1.9 Indemnification. In the event any Registrable Securities are included
in a registration statement under this Agreement:
(a) The Company will indemnify and hold harmless each Holder, the
officers and directors of each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Securities Exchange Act of 1934, as amended
(the "1934 Act"), against any losses, claims, damages, or liabilities (joint or
several) to which such person or persons may become subject under the Act, the
1934 Act or other federal or state law, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement,
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including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will reimburse each such Holder, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by such person or persons in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 1.9(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon (i) a Violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by such Holder, underwriter or controlling
person, or (ii) the failure of such Holder, underwriter, or controlling person
to deliver a copy of the registration statement or the prospectus, or any
amendments or supplements thereto, after the Company has furnished such person
with a sufficient number of copies of the same.
(b) Each selling Holder will indemnify and hold harmless the Company,
each of its officers and directors, and each person, if any, who controls the
Company within the meaning of the Act, any underwriter and any other Holder
selling securities in such registration statement or any of its directors or
officers or any person who controls such Holder, against any losses, claims,
damages, or liabilities (joint or several) to which the Company or any such
officer, director, controlling person, or underwriter or controlling person may
become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company or any such
officer, director, controlling person, underwriter or controlling person, other
Holder, officer, director, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 1.9(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld. Notwithstanding
anything to the contrary herein contained, a Holder's indemnity obligation, in
such person's capacity as a Holder, shall be limited to the net proceeds
received by such Holder from the offering out of which the indemnity obligation
arises.
(c) Promptly after receipt by an indemnified party under this Section
1.9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.9, deliver to the
indemnifying party a written notice of the commencement thereof and
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the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnified party, except that such fees and expenses shall be paid by
the indemnifying party if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.9, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 1.9.
(d) If the indemnification provided for in this Section 1.9 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other hand in
connection with the statements or omissions which resulted in such loss,
liability claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount any Holder shall be obligated to
contribute pursuant to this Section 1.9(d) shall be limited to an amount equal
to the proceeds to such Holder of the Registrable Securities sold pursuant to
the registration statement which gives rise to such obligations to contribute
less the aggregate amount of any damages which the Holder has otherwise been
required to pay in respect of such loss, claim, damage, liability or action or
any substantially similar loss, claim, damage, liability or action arising from
the sale of such Registrable Securities.
(e) The indemnification provided by this Section 1.9 shall be a
continuing right to indemnification and shall survive the registration and sale
of any of the Registrable Securities hereunder and the expiration or termination
of this Agreement.
1.10 Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the Act, the
Company agrees to use its best efforts to:
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(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Act and the
1934 Act, (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.
1.11 Amendment and Waiver. Any amendment or waiver of any provision
under this Agreement may be effected only with the written consent of the
Company and the holders of at least a majority of the Registrable Securities
then outstanding.
1.12 Remedies. The parties hereto acknowledge and agree that the
breach of any part of this Agreement may cause irreparable harm and that
monetary damages alone may be inadequate. The parties hereto therefore agree
that either party shall be entitled to injunctive relief or such other
applicable remedy as a court of competent jurisdiction may provide. Nothing
contained herein will be construed to limit any party's right to any remedies at
law, including recovery of damages for breach of any part of this Agreement.
2. MISCELLANEOUS
2.1 Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement, shall be governed by and
construed in accordance with the laws of the State of Arizona, notwithstanding
any Arizona or other conflict-of-law provisions to the contrary.
2.2 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received when delivered against
receipt, upon receipt of a facsimile transmission or when deposited in the
United States mails, first class postage prepaid, addressed as set forth below:
(a) If to the Company:
Main Street and Main Incorporated
5050 North 40th Street, Suite 200
Phoenix, Arizona 85018
Facsimile: (602) 852-0001
Attention: President
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with a copy given in the manner
prescribed above, to:
O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears, P.A.
One East Camelback Road
Phoenix, Arizona 85012
Facsimile: (602) 263-2900
Attention: Robert S. Kant, Esq.
(b) If to any Holder, to the address of such Holder as it appears in
the stock or warrant ledger of the Company.
Any party may alter the address to which communications or copies are to be
sent by giving notice of such change to each of the other parties hereto of
address in conformity with the provisions of this paragraph for the giving of
notice.
2.3 Binding Nature of Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors, and assigns, including any subsequent Holders of
the Warrant or any Registrable Securities.
2.4 Entire Agreement. This Agreement contains the entire understanding
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.
This Agreement may not be modified or amended other than by an agreement in
writing.
2.5 Section Headings. The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
2.6 Gender. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.
2.7 Indulgences, Not Waivers. Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or any other right, remedy, power or privilege, nor shall
any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
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2.8 Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories. Any
photographic or xerographic copy of this Agreement, with all signatures
reproduced on one or more sets of signature pages, shall be considered for all
purposes as of it were an executed counterpart of this Agreement.
2.9 Provisions Separable. The provisions of this Agreement are independent
and separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.
2.10 Number of Days. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and holidays;
provided, however, that if the final day of any time period falls on a Saturday,
Sunday or holiday, then the final day shall be deemed to be the next day which
is not a Saturday, Sunday or holiday.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MAIN STREET AND MAIN INCORPORATED,
a Delaware corporation
By: /s/ Joe W. Panter
----------------------------------
Joe W. Panter
Chief Executive Officer
/s/ John F. Antioco
----------------------------------
John F. Antioco
14
EXHIBIT 23.1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 19, 1999,
included in Main Street and Main Incorporated's Form 10-K for the year ended
December 28, 1998, and to all references to our firm included in this
registration statement.
/s/ Arthur Andersen LLP
Phoenix, Arizona,
April 30, 1999.
