1
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT dated as of July 24, 1996 among (a) ALLIED
CAPITAL CORPORATION, a Maryland corporation, ("ACC") ALLIED CAPITAL CORPORATION
II ("ACC II"), a Maryland corporation, CAPITAL TRUST INVESTMENTS, LTD., a
Guernsey corporation ("CTI" and collectively with ACC and ACC II, the "Allied
Holders"), (b) PRINCES GATE INVESTORS, L.P., ("Princes Gate"), ACORN PARTNERSHIP
I, L.P., ("Acorn"), PGI INVESTMENTS LIMITED, ("PGI"), PGI SWEDEN AB, ("PGI
Sweden"), and GREGOR VON OPEL, ("GVO" and collectively with Princes Gate, Acorn,
PGI, and PGI Sweden, the "PG Holders"), and (c) AU BON PAIN CO., INC., a
Delaware corporation ("ABP" or the "Issuer").
WHEREAS, ACC, ACC II AND CTI have agreed to extend credit to ABP, Saint
Louis Bread Company, Inc. and ABP Midwest Manufacturing, Inc. pursuant to an
Investment Agreement dated as of July 24, 1996 (the "Investment Agreement"), by
and among ACC, ACC II and CTI and ABP, Saint Louis Bread Company, Inc. and ABP
Midwest Manufacturing, Inc.; and
WHEREAS, pursuant to the terms of a certain Securities Purchase Agreement
(the "Securities Purchase Agreement") dated as of December 1993, Princes Gate,
Acorn, PGI, PGI Sweden, GVO and PG Holdings have purchased from ABP, and are
currently the holders of, ABP's 4.75% Convertible Subordinated Notes due January
2, 2001 in the aggregate principal amount of $30,000,000 (as amended, modified
or restated and in effect from time to time, the "4.75% Subordinated Convertible
Notes") and in connection therewith were granted certain registration rights by
ABP, which rights were granted to the PG Holders in said Securities Purchase
Agreement and Exhibit D thereto (collectively the "Original Registration Rights
Agreements"). The PG Holders and ABP desire to terminate their respective rights
and obligations under the Original Registration Rights Agreements in
consideration of the execution by ABP and each of the PG Holders of this
Agreement; and
WHEREAS, in order to induce Allied Holders to enter into the Investment
Agreement and the other agreements and transactions contemplated thereby, ABP
has agreed to enter into this Agreement with the Allied Holders and the PG
Holders.
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Affiliate" has the meaning provided in Rule 405 promulgated under the
Securities Act.
"Allied Holders" has the meaning provided in the first recital above.
"Allied Majority Holders" means the Holder or Holders of 75% of Registrable
Securities then held by Allied Holders.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Class A Common Stock, par value of $.0001 per
share, of the Issuer.
2
"Demand Registration" means, unless the context requires another meaning, a
registration request pursuant to Section 2.1 (a)(1) or Section 2.1(b)(1) of this
Agreement.
"Holder" means the initial purchaser of any Registrable Security or any
permitted assignee or transferee of such Registrable Security.
"Issuer" has the meaning set forth in the introductory paragraph above.
"Majority Holders" means the Holder or Holders of a majority of Registrable
Securities then outstanding.
"PG Holders" has the meaning set forth in the second recital above.
"PG Majority Holders" means the Holder or Holders of a majority of
Registrable Securities then held by PG Holders.
"Piggy-Back Registration" means a Piggy-Back Registration as defined in
Section 2.2.
"Registrable Securities" means the shares of Common Stock issued or
issuable upon conversion of the 4.75% Subordinated Convertible Notes and the
shares of Common Stock issued or issuable upon exercise of the Warrants, and any
securities into which such Common Stock shall have been changed or any
securities resulting from any reclassification of such Common Stock, until (i) a
registration statement covering such shares of Common Stock has been declared
effective by the Commission and such shares have been disposed of pursuant to
such effective registration statement, (ii) such shares are sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met or (iii) such
shares have been otherwise transferred and the Issuer has delivered a new
certificate or other evidence of ownership for such shares not bearing a legend
referring to restrictions on transfer under the Securities Act and such shares
may be resold without subsequent registration under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a registration statement under the Securities Act.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
"Warrants" means the stock purchase warrants issued and sold by the Issuer
to (i) the Allied Holders pursuant to the Subordinated Investment Agreement and
(ii) to the PG Holders pursuant to the Agreement and Waiver among the Issuer,
certain of its subsidiaries and the PG Holders dated as of the date hereof.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Demand Registration.
-------------------
(a) By Allied Holders.
-----------------
-2-
3
(1) REQUEST FOR REGISTRATION. Allied Majority Holders may make a
written request for registration under the Securities Act of all or part of
their Registrable Securities (an "Allied Demand Registration"); provided, that
(x) the Issuer shall not be obligated to effect more than one Allied Demand
Registration in any 12-month period, and no more than two Allied Demand
Registrations in total and (y) the number of shares requested to be sold in each
such registration shall have an aggregate fair market value (determined at the
time such request is made) of at least Three Million Dollars ($3,000,000) or, if
less, shall constitute all Registrable Securities then held by Allied Holders.
Such request will specify the number of shares of Registrable Securities
proposed to be sold and will also specify the intended method of disposition
thereof. Within 5 Business Days after receipt of such request, the Issuer will
give written notice of such registration request to all other Holders of the
Registrable Securities and include in such registration all such Registrable
Securities with respect to which the Issuer has received written requests for
inclusion therein within 10 Business Days after the receipt by the applicable
Holder of the Issuer's notice. Each such request will also specify the number of
shares of Registrable Securities to be registered and the intended method of
disposition thereof.
(2) ADDITIONAL DEMAND REGISTRATIONS. If the Allied Majority
Holders in an Allied Demand Registration so elect, the offering of such
Registrable Securities pursuant to such Allied Demand Registration shall be in
the form of an underwritten offering. The Allied Majority Holders shall select
the book-running managing Underwriter in connection with such offering and any
additional investment bankers and managers to be used in connection with the
offering; provided that such managing Underwriter and additional investment
bankers and managers must be reasonably satisfactory to the Issuer. To the
extent 10% or more of the Registrable Securities so requested to be registered
by the Allied Majority Holders are excluded from the offering in accordance with
Section 2.3, then such demand shall not count for purposes of the limitations
set forth in Section 2.1(a)(1) above.
(b) By PG Holders.
-------------
(1) REQUEST FOR REGISTRATION. PG Holders may make a written
request for registration under the Securities Act of all or part of their
Registrable Securities (a "PG Demand Registration"); provided, that (x) the
Issuer shall not be obligated to effect more than one PG Demand Registration in
any 12-month period, and no more than two PG Demand Registrations in total and
(y) the number of shares requested to be sold in each such registration shall
have an aggregate fair market value (determined at the time such request is
made) of at least $3 million or, if less, shall constitute all Registrable
Securities then held by PG Holders. Such request will specify the number of
shares of Registrable Securities proposed to be sold and will also specify the
intended method of disposition thereof. Within 5 Business Days after receipt of
such request, the Issuer will give written notice of such registration request
to all other Holders of the Registrable Securities and include in such
registration all such Registrable Securities with respect to which the Issuer
has received written requests for inclusion therein within 10 Business Days
after the receipt by the applicable Holder of the Issuer's notice. Each such
request will also specify the number of shares of Registrable Securities to be
registered and the intended method of disposition thereof.
(2) ADDITIONAL DEMAND REGISTRATIONS. If the PG Majority Holders
in a PG Demand Registration so elect, the offering of such Registrable
Securities pursuant to such PG Demand Registration shall be in the form of an
underwritten offering. The PG Holders shall select the book-running managing
Underwriter in connection with such offering and any additional investment
bankers and managers to be used in connection with the offering; provided that
such managing Underwriter and additional investment bankers and managers shall
be reasonably satisfactory to the Issuer. To the extent 10% or more of the
-3-
4
Registrable Securities so requested to be registered by the PG Holders are
excluded from the offering in accordance with Section 2.3, then such demand
shall not count for purposes of the limitations set forth in Section 2.1 (b)(i)
above.
SECTION 2.2. PIGGY-BACK REGISTRATION. If the Issuer proposes to file a
registration statement under the Securities Act with respect to an offering by
the Issuer for its own account or for the account of any of its respective
security holders of any class of security (other than a registration statement
on Form S-4 or S-8 (or any substitute form that may be adopted by the
Commission), or filed in connection with an exchange offer or offering of
securities solely to the Issuer's existing security holders), including a
registration statement filed in connection with a Demand Registration, then the
Issuer shall give written notice of such proposed filing to the Holders of
Registrable Securities as soon as practicable (but in no event less than 10
business days before the anticipated filing date), and such notice shall offer
such Holders the opportunity to register such number of shares of Registrable
Securities as each such Holder may request (a "Piggy-Back Registration"). The
Issuer shall use its best efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Issuer
included therein.
SECTION 2.3. REDUCTION OF OFFERING. Notwithstanding anything contained
herein, if the managing Underwriter or Underwriters of an offering described in
Section 2.1(a)(1), Section 2.1 (b)(1 ) or Section 2.2 deliver a written opinion
to the Holders of the Registrable Securities included in such offering that (i)
the size of the offering that the Holders, the Issuer and such other persons
intend to make or (ii) the kind of securities that the Holders, the Issuer and
any other persons or entities intend to include in such offering are such that
the success of the offering would be materially and adversely affected by
inclusion of the Registrable Securities requested to be included, then if the
size of the offering is the basis of such Underwriter's opinion, the amount of
securities to be offered shall be cut back only to the extent necessary and the
accounts of Holders shall be reduced pro rata (according to the Registrable
Securities proposed for registration) to such extent to reduce the total amount
of securities to be included in such offering to the amount recommended by such
managing Underwriter or Underwriters, which securities shall be included in the
following order of priority:
(1) with respect to an Allied Demand Registration, the Issuer will include
in such registration in the following priority: (x) first, up to the
full amount of Registrable Securities proposed to be offered and sold
by the Allied Holders, reduced pro rata to the extent necessary, (y)
second, up to the full amount of Registrable Securities proposed to be
offered and sold by the PG Holders, reduced pro rata to the extent
necessary, and then (z) any shares of Common Stock held by other
persons that the Issuer may be obligated to include in such
registration;
(2) with respect to a PG Demand Registration, the Issuer will include in
such registration in the following priority: (x) first, up to the full
amount of Registrable Securities proposed to be offered and sold by
the PG Holders, reduced pro rata to the extent necessary, (y) second,
up to the full amount of Registrable Securities proposed to be offered
and sold by the Allied Holders, reduced pro rata to the extent
necessary, and then (z) any shares of Common Stock held by other
persons that the Issuer may be obligated to include in such
registration; and
-4-
5
(3) with respect to a registration initiated by the Issuer for its own
account, (x) first, all shares of Common Stock the Issuer proposes to
offer and sell, (y) second, up to the full amount of Registrable
Securities proposed to be offered and sold by Holders of Registrable
Securities, reduced pro rata to the extent necessary, and then (z) any
shares of Common Stock held by other persons that the Issuer may be
obligated to include in such registration; and
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1. FILINGS; INFORMATION. Whenever Holders request that any
Registrable Securities be registered pursuant to Section 2.1 hereof, the Issuer
will use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof as quickly as practicable, and in connection with any such request:
(a) The Issuer will as expeditiously as possible and in any event within 30
days from the receipt of such request prepare and file with the Commission a
registration statement on any form for which the Issuer then qualifies or which
counsel for the Issuer shall deem appropriate and which form shall be available
for the sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and use its best
efforts to cause such filed registration statement to become and remain
effective for a period of not less than 180 days; provided that if the Issuer
shall furnish to the Holders making a request pursuant to Section 2.1 a
certificate signed by its Chairman of the Board (or either Co-Chairman of the
Board) stating that in his good faith judgment it would be significantly
disadvantageous to the Issuer or its shareholders for such a registration
statement to be filed as expeditiously as possible and stating the reasons for
such judgment, the Issuer shall have a period of not more than 90 days within
which to file such registration statement measured from the date of receipt of
the request in accordance with Section 2.1.
(b) The Issuer will, if requested, prior to filing a registration statement
or prospectus or any amendment or supplement thereto, furnish to each Selling
Holder and each Underwriter, if any, of the Registrable Securities covered by
such registration statement copies of such registration statement as proposed to
be filed, and thereafter furnish to such Selling Holder and Underwriter, if any,
such number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such Selling Holder or Underwriter may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Selling Holder. Each
Selling Holder shall provide the Issuer with its or his comments to such
registration statement, prospectus and amendments thereto or supplements
thereof, as the case may be, within five (5) business days of its or his receipt
of such document(s).
(c) After the filing of the registration statement, the Issuer will
promptly notify each Selling Holder of Registrable Securities covered by such
registration statement of any stop order issued or threatened by the Commission
and take all reasonable actions required to prevent the entry of such stop order
or to remove it if entered.
(d) The Issuer will use its best efforts to (i) register or qualify the
Registrable Securities under such other securities or blue sky laws of such
jurisdictions in the United States as any Selling Holder reasonably (in light of
such Selling Holder's intended plan of distribution) requests and (ii) cause
such Registrable Securities to be registered with or
-5-
6
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Issuer and do any and all other
acts and things that may be reasonably necessary or advisable to enable such
Selling Holder to consummate the disposition of the Registrable Securities owned
by such Selling Holder: provided that the Issuer will not be required to (A)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (B) subject itself
to taxation in any such jurisdiction or (C) consent to general service of
process in any such jurisdiction.
(e) The Issuer will immediately notify each Selling Holder of such
Registrable Securities, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and promptly make available to each
Selling Holder any such supplement or amendment.
(f) The Issuer and the Selling Holders will enter into customary agreements
(including an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities.
(g) The Issuer will make available for inspection by any Selling Holder of
such Registrable Securities, any Underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
professional retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Issuer (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Issuer's officers, directors and employees to
supply all information reasonably requested by any Inspectors in connection with
such registration statement. Records which the Issuer reasonably determines, in
good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
such registration statement or (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction.
Each Selling Holder of such Registrable Securities agrees that information
obtained by it as a result of such inspections shall be deemed confidential and
shall not be used by it as the basis for any market transactions in the
securities of the Issuer or its Affiliates unless and until such is made
generally available to the public. Each Selling Holder of such Registrable
Securities further agrees that it will, upon learning that disclosure of such
Records is sought by subpoena or in a court of competent jurisdiction, give
notice to the Issuer and allow the Issuer, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
(h) The Issuer will furnish, at the effectiveness of the registration
statement and again at closing, to each Selling Holder and to each Underwriter,
if any, a signed counterpart, addressed to such Selling Holder and such
Underwriter, of (i) an opinion or opinions of counsel to the Issuer and (ii) a
comfort letter or comfort letters from the Issuer's independent public
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be.
(i) The Issuer will otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning
-6-
7
within three months after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11 (a) of the
Securities Act.
(j) The Issuer will use its best efforts to cause all such Registrable
Securities to be listed on each securities exchange or quotation system on which
similar securities issued by the Issuer are then listed. The Issuer's registrar
and transfer agent is Boston Equiserve, L.P., 150 Royal Street, Canton, MA
02021.
As a condition to its rights to sell Registrable Securities in such
registration, each Selling Holder of Registrable Securities shall, upon the
Issuer's request, promptly furnish in writing to the Issuer such information
regarding the distribution of the Registrable Securities as the Issuer may from
time to time reasonably request and such other information as may be legally
required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice from the Issuer
of the happening of any event of the kind described in Section 3 .1 (e) hereof,
such Selling Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Selling Holder's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 3.1 (e) hereof, and, if so
directed by the Issuer, such Selling Holder will deliver to the Issuer all
copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. In the event the Issuer shall give such
notice, the Issuer shall extend the period during which such registration
statement shall be maintained effective (including the period referred to in
Section 3.1 (a) hereof) by the number of days during the period from and
including the date of the giving of notice pursuant to Section 3.1 (e) hereof
to the date when the Issuer shall make available to the Selling Holders of
Registrable Securities covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of Section 3.1(e)
hereof.
SECTION 3.2. REGISTRATION EXPENSES. In connection with any registration
statement required to be filed hereunder, the Issuer shall pay all expenses
incurred in connection with the registration hereunder (the "Registration
Expenses") including, without limitation, the following: (i) all registration
and filing fees, (ii) fees and expenses of compliance with securities or blue
sky laws (including reasonable fees and disbursements of counsel in connection
with blue sky qualifications of the Registrable Securities), (iii) printing
expenses, (iv) internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) the fees and expenses incurred in connection with the listing of
the Registrable Securities, (vi) reasonable fees and disbursements of counsel
for the Issuer and customary fees and expenses for independent certified public
accountants retained by the Issuer (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to Section
3 .1 (h) hereof), (vii) the reasonable fees and expenses of any special experts
retained by the Issuer in connection with such registration, and (viii)
reasonable fees and expenses of not more than one counsel (who shall be
reasonably acceptable to the Issuer) for all Holders whose Registrable
Securities are included in such registration provided however, that if
representation for all such Holders by the same counsel would be inappropriate
due to actual or potential differing interests between them, then in any such
case the Issuer shall pay the reasonable fees and expenses of one additional
counsel. The Issuer shall have no obligation to pay any underwriting fees,
discounts or commissions attributable to the sale of Registrable Securities.
ARTICLE IV
-7-
8
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. INDEMNIFICATION BY THE ISSUER. The Issuer agrees to indemnify
and hold harmless each Selling Holder of Registrable Securities, its officers,
directors and agents, and each Person, if any, who controls the Issuer (an
"Issuer Control Person") or such Selling Holder within the meaning, in each
case, of Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities (as
amended or supplemented if the Issuer shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Issuer by such Selling Holder or on such
Selling Holder's behalf expressly for use therein provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Selling Holder from whom the person asserting
any such loss, claim, damage or liability purchased the Registrable Securities
if it is determined that (i)it was the responsibility of such Selling Holder to
provide such person with a current copy of the prospectus, (ii) such Selling
Holder had been furnished with copies of such current prospectus within a
reasonable time prior to such purchase, and (iii) such current copy of the
prospectus would have cured the defect giving rise to such loss, claim, damage
or liability. The Issuer also agrees to indemnify any Underwriters of the
Registrable Securities, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section 4.1.
SECTION 4.2. INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. Each
Selling Holder agrees, severally but not jointly, to indemnify and hold harmless
the Issuer, its officers, directors and agents and each Person, if any, who
controls the Issuer within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Issuer to such Selling Holder, but only with reference to
information related to such Selling Holder furnished in writing by such Selling
Holder or on such Selling Holder's behalf expressly for use in any registration
statement or prospectus relating to the Registrable Securities, or any amendment
or supplement thereto, or any preliminary prospectus subject to the proviso that
the liability of each Selling Holder to the Issuer and its officers, directors,
agents and control persons set forth in this Section 4.2 shall be limited to the
net proceeds received by such Selling Holder as a result of his or its sale of
Registrable Securities pursuant to such registration statement or prospectus
(including amendments and supplements thereto) Notwithstanding the foregoing,
each Selling Holder also agrees to indemnify and hold harmless Underwriters of
the Registrable Securities, their officers and directors and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Issuer provided in this Section 4.2.
SECTION 4.3. CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to Section 4.1 or
4.2, such person (an "Indemnified Party") shall promptly notify the person
against whom such indemnity may be sought (an "Indemnifying Party") in writing
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
-8-
9
and expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel, (ii) the named parties to any such
proceeding (including any impleaded parties) include both the Indemnified Party
and the Indemnifying Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them as reasonably determined by the Indemnified Party or (iii)
Indemnifying Party fails to retain counsel or diligently pursue the defense. It
is understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such Indemnified Parties, and
that all such fees and expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for the Indemnified Parties, such firm shall be
designated in writing by the Indemnified Parties. The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its consent,
but if settled with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an Indemnified Party shall have requested an
Indemnifying Party to reimburse the Indemnified Party for fees and expenses of
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 business days after receipt by such Indemnifying Party
of the aforesaid request and (ii) such Indemnifying Party shall not have
reimbursed the Indemnified Party in accordance with such request prior to the
date of such settlement. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened proceeding in respect of with any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such proceeding.
SECTION 4.4. CONTRIBUTION. If the indemnification provided for in this
Article 4 is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (i) as between the Issuer and the Selling Holders
(subject to the limitations on liabilities of each Selling Holder to the Issuer
set forth in the proviso contained in Section 4.2 hereof) on the one hand and
the Underwriters on the other, in such proportion as is appropriate to reflect
the relative benefits received by the Issuer and the Selling Holders on the one
hand and the Underwriters on the other from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Issuer and the Selling Holders on the one hand and of
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations and (ii) as between the Issuer on the
one hand and each Selling Holder on the other, in such proportion as is
appropriate to reflect the relative fault of the Issuer and of each Selling
Holder in connection with such statements or omissions, as well as any other
relevant equitable considerations. The relative benefits received by the Issuer
and the Selling Holders on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Issuer and the Selling Holders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the prospectus. The relative fault of
the Issuer and the Selling Holders on the one hand and of the Underwriters on
the other shall be determined by
-9-
10
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuer and the Selling Holders or by the
Underwriters. The relative fault of the Issuer on the one hand and of each
Selling Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Issuer and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.4, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Selling Holder were
offered to the public exceeds the amount of any damages which such Selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section ll(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Selling Holder's obligations to contribute
pursuant to this Section 4.4 are several in proportion to the proceeds of the
offering received by such Selling Holder bears to the total proceeds of the
offering received by all the Selling Holders and not Joint.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
Registration Rights.
SECTION 5.2. RULE 144. The Issuer covenants that it will use its best
efforts to file any reports required to be filed by it under the Securities Act
and the Exchange Act and that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
Holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Holder, the Issuer will deliver to such Holder a written statement as to
whether it has complied with such requirements.
-10-
11
SECTION 5.3. HOLDBACK AGREEMENTS. (a) RESTRICTIONS ON PUBLIC SALE BY HOLDER
OF REGISTRABLE SECURITIES. To the extent not inconsistent with applicable law,
each Holder whose securities are included in a registration statement agrees not
to effect any public sale or distribution of the issue being registered or a
similar security of the Issuer, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to
Rule 144 under the Securities Act, during the 14 days prior to, and during the
90-day period beginning on, the effective date of such registration statement
(except as part of such registration), if and to the extent requested by the
managing Underwriter or Underwriters in the case of an underwritten public
offering.
(b) RESTRICTIONS ON PUBLIC SALE BY THE ISSUER AND OTHERS. The Issuer and
its Affiliates agree (i) not to effect any public sale or distribution of any
securities similar to those being registered in accordance with Section 2.1 or
Section 2.2 hereof, or any securities convertible into or exchangeable or
exercisable for such securities, during the 14 days prior to, and during the
90-day period beginning on, the effective date of any registration statement
(except as part of such registration statement where the Majority Holders of the
Registrable Securities to be included in such registration statement consent) or
the commencement of a public distribution of Registrable Securities; and (ii)
that any agreement entered into after the date of the Agreement pursuant to
which the Issuer issues or agrees to issue any privately placed securities shall
contain a provision under which holders of such securities agree not to effect
any public sale or distribution of any such securities during the periods
described in (i) above, in each case including a public sale or distribution
pursuant to Rule 144 under the Securities Act (except as part of any such
registration, if permitted); provided, however, that the provisions of this
paragraph (b) shall not prevent the conversion or exchange of any securities
pursuant to their terms into or for other securities.
SECTION 5.4. EXISTING REGISTRATION AGREEMENTS. Issuer represents that it is
not obligated under any agreement other than this Agreement to register any of
its securities on behalf of third parties. Issuer covenants and agrees it will
not, in the absence of a written agreement with each of the PG Majority Holders
and the Allied Majority Holders, on and after the date hereof grant any
registration rights to any third party except on terms which subordinates those
registration rights to the rights granted under this Agreement.
SECTION 5.5. NOTICES. All notices or communications under this agreement or
the Debentures shall be mailed, postage prepaid, delivered by facsimile, or
delivered by courier to the following addresses (or to such other address as
shall at any time be designated by any party in writing to the other parties):
To ACC and ACC II: Allied Capital Corporation
and
Allied Capital Corporation II
c/o Allied Capital Corporation
1666 K Street, N.W., Ninth Floor
Washington, DC 20006
Attention: Gay S. Truscott, Vice President
Facsimile: (202) 659-2053
With a copy to: Piper & Marbury L.L.P.
1200 Nineteenth Street, N.W.
Washington, DC 20036
Attention: Anthony H. Rickert, Esquire
Facsimile: (202) 223-2085
-11-
12
To CTI: Capital Trust Investments, Ltd.
c/o Capital Trust Limited
49 Mount Street
London, England W1Y5RE
Attention: Bassam Aburdene
Fax: 01144171499 0524
With a copy to: Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: Charles E. Engros, Esquire
Facsimile: (212) 309-6273
To Princes Gate: Princes Gate Investors, L.P.
Acorn Partnership I, L.P.
PGI Investments Limited
PGI Sweden AB
Gregor Von Opel
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Hartley R. Rogers
Telecopier: (212) 761-0517
With a copy to: Davis, Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Paul R. Kingsley
Facsimile: (212) 450-4800
To the Issuer: Au Bon Pain Co., Inc.
19 Fid Kennedy Avenue
Marine Industrial Park
Boston, MA 02210-2497
Attention: Louis I. Kane
Facsimile: (617) 423-7879
With a copy to: Gadsby & Hannah LLP
225 Franklin Street
Boston, MA 02110
Attention: Walter D. Wekstein, Esquire
Marianne Gilleran, Esquire
Facsimile: (617) 345-7050
Rejection or other refusal to accept, or the inability to deliver because of a
changed address of which not notice was given, shall not affect the
effectiveness or the date of delivery for any notice sent in accordance with the
foregoing provisions. Each such notice request or other communication shall be
deemed sufficiently given, served, sent and received for all purposes at such
time as it is delivered to the addressee (with the return receipt, the delivery
receipt, the affidavit of the messenger or the answer back being deemed
conclusive (but not exclusive) evidence of such delivery) or at such time as
delivery is refused by addressee upon presentation.
-12-
13
SECTION 5.6. BINDING AGREEMENT. This Agreement shall bind and inure to the
benefit of each of the Holders, the Borrowers, and except as otherwise expressly
provided to the contrary herein, each of their respective heirs and permitted
successors and assigns. Without limiting the generality of the foregoing
sentence, the rights of the Holders to cause the Issuer to register Registrable
Securities granted pursuant to this Agreement may be transferred or assigned by
any holder to a transferee or assignee; provided, however, that the transferee
or assignee of such rights assumes the obligations of such transferor or
assignor, as the case may be, under this Agreement and that such transferee or
assignee executes and delivers a copy of this Agreement to the Issuer.
SECTION 5.7. ENTIRE AGREEMENT; INTEGRATION CLAUSE. This Agreement sets
forth the entire agreement and understanding of the parties hereto with respect
to the subject matter hereof, and any prior agreements, including, without
limitation, the Original Registration Rights Agreement, are hereby terminated.
SECTION 5.8. NO ORAL MODIFICATION OR WAIVERS. The terms hereof may not be
modified or waived orally, but only by an instrument in writing signed by the
party against which enforcement of the modification or waiver (as the case may
be) is sought.
SECTION 5.9. VENUE; PERSONAL JURISDICTION; FULL FAITH AND CREDIT; PERSONAL
SERVICE.
(a) Venue for the adjudication of any claim or dispute arising out of
this Agreement or any of the other Investment Documents shall be proper only in
the state or federal courts of the City and State of New York, and all parties
to this Agreement and the other Investment Documents hereby consent to such
venue and agree that it shall not be not inconvenient and not subject to review
by any court other than such courts in New York;
(b) The Issuer intends and agrees that the courts of the jurisdictions
in which the Issuer is formed and in which the Issuer conducts its business
should afford full faith and credit to any judgment rendered by a court of the
State of New York against the Issuer under this Agreement, and the Issuer
intends and agrees that such courts should hold that the New York courts have
jurisdiction to enter a valid, in personam judgment against the Issuer;
(c) The Issuer agrees that service of any summons and complaint, and
other process which may be served in any suit, action or other proceeding, may
be made by mailing via U.S. certified or registered mail or by hand-delivering a
copy of such process to the Issuer at its address specified above, with a copy
to its counsel at its address specified above; and
(d) The Issuer expressly acknowledges and agrees that the provisions
of this Section 5.9 are reasonable and made for the express benefit of each of
the Holders.
SECTION 5.10. WAIVER OF TRIAL BY JURY. Each party to this Agreement agrees
that any suit, action or proceeding, whether claim, defense or counterclaim,
brought or instituted by any party hereto or any successor or assign of any
party on or with respect to this Agreement or which in any way relates, directly
or indirectly, to any event, transaction or occurrence arising out of or in any
way connected with this Agreement or dealings of the parties hereto with respect
to the subject matter hereof, shall be tried only by a court and not by a jury.
EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH
SUIT, ACTION OR PROCEEDING, AND ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL
RIGHT AND THAT IT MAKES THIS
-13-
14
WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR THE OPPORTUNITY TO
CONSULT WITH, COUNSEL OF ITS CHOICE.
SECTION 5.11. HEADINGS. The headings of the paragraphs and sub-paragraphs
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part of this Agreement.
SECTION 5.12. SEVERABILITY. To the extent any provision herein violates any
applicable law, that provision shall be considered void and the balance of this
Agreement shall remain unchanged and in full force and effect.
SECTION 5.13. COUNTERPARTS. This Agreement may be executed in as many
counterpart copies as may be required. It shall not be necessary that the
signature of, or on behalf of, each party appear on each counterpart, but it
shall be sufficient that the signature of, or on behalf of, each party appear on
one or more of the counterparts. All counterparts shall collectively constitute
a single agreement. It shall not be necessary in any proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties.
SECTION 5.14. CONSENT OR APPROVAL OF HOLDERS. To the extent the terms of
this Agreement or any of the other Investment Documents require the Issuer to
obtain the consent, waiver or approval of Holders, or if the Issuer wishes to
amend this Agreement, such consent, waiver, approval, or amendment shall be
effective upon receipt by the Issuer of written consent or approval from the
individuals or entities holding not less than two-thirds (2/3rds) of the
Registrable Securities then held by, in each case, the Allied Holders and the PG
Holders.
SECTION 5.15. GOVERNING LAW. This Agreement shall be governed by, and
interpreted and construed in accordance with, the internal laws of the State of
New York (without regard to its conflicts of law principles).
(Signatures next page)
-14-
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written by their authorized
representatives thereunto duly authorized.
Very truly yours,
AU BON PAIN CO., INC.
By: /s/ LOUIS I. KANE
--------------------------
Name: Louis I. Kane
Title: Co-Chairman
ALLIED CAPITAL CORPORATION
By: /s/ GAY S. TRUSCOTT
--------------------------
Name: Gay S. Truscott
Title: Vice President
ALLIED CAPITAL CORPORATION II
By: /s/ GAY S. TRUSCOTT
--------------------------
Name: Gay S. Truscott
Title: Vice President
CAPITAL TRUST INVESTMENTS, LTD.
By: /s/
--------------------------
Name:
Title: Attorney-in-fact
-15-
16
PRINCESS GATE INVESTORS, L.P.
By PG Investors, Inc.
its General Partner
By: /s/ DAVID POWERS
--------------------------
Name: David Powers
Title: Vice President
ACORN PARTNERSHIP I, L.P.
By PG Investors, Inc.,
its General Partner
By: /s/ DAVID POWERS
--------------------------
Name: David Powers
Title: Vice President
PGI INVESTMENTS LIMITED
By PG Investors, Inc.,
as Attorney-In-Fact
By: /s/ DAVID POWERS
--------------------------
Name: David Powers
Title: Vice President
PGI SWEDEN AB
By PG Investors, Inc.
as Attorney-In-Fact
By: /s/ DAVID POWERS
--------------------------
Name: David Powers
Title: Vice President
-16-
17
GREGOR VON OPEL
By PG Investors, inc.
as Attorney-In-Fact
By: /s/ DAVID POWERS
--------------------------
Name: David Powers
Title: Vice President
-17-