SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 1, 1999
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Big City Bagels, Inc.
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(Exact Name of Registrant as Specified in Charter)
New York 0-28058 11-3137508
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
99 Woodbury Road, Hicksville, New York 11801
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (516) 932-5050
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
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Item 1. Changes in Control of Registrant
See discussion under Item 2 below and the information set forth in the
Information Statement, dated June 18, 1999 and filed with the Securities and
Exchange Commission on June 18, 1999, pursuant to Section 14(F) of the
Securities Exchange Act of 1934 and SEC Rule 14F-1, which is incorporated herein
by reference thereto.
Item 2. Acquisition or Disposition of Assets
General
On July 1, 1999, Big City Bagels, Inc. ("Company"), BCB Acquisition
Corp. I ("BCB I") and BCB Acquisition Corp. II ("BCB II" and, together with the
Company and BCB I, the "Big City Parties") consummated the transactions
contemplated by the Agreement and Plan of Reorganization and Merger with
Intelligent Computer Solutions, Inc. ("ICS"), VillageNet, Inc. ("VillageNet")
and each of the shareholders of ICS and VillageNet (collectively, the
"Shareholders" and, together with ICS and VillageNet, the "Target Corporation
Parties"), dated May 21, 1999 and as amended on June 28, 1999 (the "Merger
Agreement"). The Merger Agreement provided for the merger (the "Merger") of BCB
I and BCB II with and into ICS and VillageNet, respectively, for the separate
corporate existence of BCB I and BCB II to cease and for ICS and VillageNet to
be the surviving corporations of the Merger, continuing after the Merger as
wholly-owned subsidiaries of the Company.
Merger Consideration
Under the terms of the Merger Agreement, all 100 shares of common stock
of each of BCB I and BCB II outstanding immediately prior to the time that the
Merger became effective ("Effective Time") were converted into and exchanged for
100 shares of common stock of each of ICS and VillageNet, respectively, which
now represent all of the issued and outstanding shares of capital stock of each
of ICS and VillageNet.
At the Effective Time, (i) the 1,400 shares of the common stock,
representing all the outstanding capital stock of ICS, were converted into the
right to receive 4,309,733 shares of the Company's common stock ("Big City
Common Stock") and 254,076 shares of Class B Preferred Stock ("Big City
Preferred Stock" and, together with the Big City Common Stock, the "ICS Merger
Consideration") and (ii) the 1,000 shares of common stock of VillageNet,
representing all the outstanding capital stock of VillageNet, will be converted
into the right to receive 4,309,733 shares of Big City Common Stock and 254,076
shares of Big City Preferred Stock ("VillageNet Merger Consideration"). The
holders of Big City Preferred Stock will have the right to convert all 508,152
shares of Big City Preferred Stock into an aggregate of 70,124,976 shares of Big
City Common Stock at a conversion rate of 138 shares of Big City Common Stock
for each share of Big City Preferred Stock. The holders may convert the Big City
Preferred Stock, in whole or in part, at any time after the Effective Time,
provided that the Company is then authorized to issue a sufficient number of
shares of Big City Common Stock. The Certificate of Incorporation of the Company
currently authorizes the Company to issue 25,000,000 shares of Big City Common
Stock. As of July 1, 1999, the Company had outstanding 16,643,691 shares of Big
City Common Stock (excluding 65,279 shares of treasury stock) and had reserved
for issuance upon the exercise of outstanding options and warrants or pursuant
to the Company's outstanding stock plans, 1,412,262 shares of Big City Common
Stock. Accordingly, at July 1, 1999, the Big City Preferred Stock could only be
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converted into a maximum of 6,944,047 shares of Big City Common Stock. The
Certificate of Incorporation of Big City is anticipated to be amended to
increase the number of shares of Big City Common Stock that the Company is
authorized to issue at some time subsequent to the closing of the Merger. The
Big City Preferred Stock will be transferrable, subject to compliance with
applicable securities laws. The holders of Big City Preferred Stock also will
have voting rights equal to the number of shares of Big City Common Stock into
which each share of Big City Preferred Stock is then convertible. Assuming the
conversion of all of the shares of Big City Preferred Stock, the ICS Merger
Consideration and VillageNet Merger Consideration together would represent
approximately 90% of the Big City Common Stock outstanding after the Effective
Time, calculated on a fully diluted basis assuming the exercise of the Company's
outstanding options and warrants that have an exercise price of $1.00 or less.
Modified Severance Arrangement
Concurrently with the consummation of transactions contemplated by the
Merger Agreement, the Company and its Chairman and Chief Executive Officer, Mark
Weinreb, terminated Mr. Weinreb's employment with the Company. At the closing,
the Company issued to Mr. Weinreb 125,000 shares of Big City Common Stock
pursuant to Big City's 1998 Performance Equity Plan in lieu of a previously
agreed cash severance payment. These shares are subject to strict volume
limitations on resale until June 15, 2000. For a period of four months after the
closing, the Company will continue to provide certain perquisites provided under
his former employment agreement. Mr. Weinreb will make himself available to
provide consulting services to the Company relating to transition activities and
the Company's reporting obligations under the Securities Exchange Act of 1934,
as amended ("Exchange Act"). Mr. Weinreb will provide these services for up to
16 consecutive seven-day periods, but for not more than 25 hours per period. The
Company will pay Mr. Weinreb $1,250 for each of the first 12 periods and $1,875
for the last four periods.
ICS and VillageNet
VillageNet, founded in June 1995, is a community-oriented Internet
service provider specializing in educational and family-based Internet services
with a local emphasis on business advertising and shopping, chat rooms and
parent / student / teacher interaction.
ICS, founded in October 1994, is a systems-integration firm
specializing in network design, implementation and maintenance and providing
Internet / intranet messaging and security products.
For the fiscal years ended December 31, 1998 and 1997, VillageNet
recorded revenues of $418,712 and $425,074, respectively, and net income (loss)
of $70,418 and ($6,618), respectively. At December 31, 1998, VillageNet had
stockholders' equity of ($117,273).
For the fiscal years ended December 31, 1998 and 1997, ICS recorded
revenues of $6,066,355 and $5,840,175, respectively, and net income of $246,759
and $51,588, respectively. At December 31, 1998, ICS had stockholders' equity of
$185,077.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(a) Financial Statements
The Company will file the required financial statements
within 60 days (September 14, 1999) of the last date on which its report on
Form 8-K is required to be filed.
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(b) Pro Forma Financial Statements
The Company will file the required pro forma financial statements
within 60 days (September 14, 1999) of the last date on which its report on Form
8-K is required to be filed.
(c) Exhibits
Exhibit Number Description
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2.1(a) Amendment, dated as of June 28, 1999, to Agreement and
Plan of Reorganization and Merger, dated as of May 21, 1999,
among the Company, BCB I, BCB II, ICS, VillageNet and the
Shareholders
3.1(a) Revised Form of Certificate of Amendment of the Company's
Certificate of Incorporation
10.1(a) Amendment, dated as of June 28, 1999, to Severance and
Consulting Agreement, dated as of May 21, 1999, between the
Company and Mark Weinreb
23(a) Consent of Independent Auditors of VillageNet (to be filed
by amendment)
23(b) Consent of Independent Auditors of ICS (to be filed by
amendment)
99.1 Press Release dated July 1, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: July 1, 1999 BIG CITY BAGELS, INC.
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(Registrant)
/s/ Peter Keenan
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Peter Keenan
President
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EXHIBIT INDEX
Exhibit Number Description
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2.1(a) Amendment, dated as of June 28, 1999, to Agreement and
Plan of Reorganization and Merger, dated as of May 21, 1999,
among the Company, BCB I, BCB II, ICS, VillageNet and the
Shareholders
3.1(a) Revised Form of Certificate of Amendment of the Company's
Certificate of Incorporation
10.1(a) Amendment, dated as of June 28, 1999, to Severance and
Consulting Agreement, dated as of May 21, 1999, between the
Company and Mark Weinreb
23(a) Consent of Independent Auditors of VillageNet (to be filed
by amendment)
23(b) Consent of Independent Auditors of ICS (to be filed by
amendment)
99.1 Press Release dated July 1, 1999
FIRST AMENDMENT TO MERGER AGREEMENT
This First Amendment dated June 28, 1999 ("Amendment") to that certain
Agreement and plan of Reorganization and Merger, dated as of May 21, 1999
("Merger Agreement"), among Big City bagels, Inc., a New York corporation ("Big
city"), BCB Acquisition Corp. I ("BCB I") and BCB Acquisition Corp. II (BCB
II"), Intelligent Computer Solutions, Inc. ("ICS") and VillageNet, Inc.,
("VillageNet") and each of the stockholders of ICS and VillageNet, all of whom
are listed in Schedule 2.1 to the Merger Agreement. Terms not otherwise defined
in this Amendment will be deemed to have the definitions assigned to them in the
Merger Agreement.
It is agreed that:
ARTICLE I
Section 1.1. The Section 2.1 of the Merger Agreement is amended and
restated as follows:
"Conversion of the Stock of the Target Corporations. At the
Effective Time, (i) the 1,000 shares of the common stock, no par value
and the 40 shares of the preferred stock, no par value of ICS ("ICS
Stock"), representing all the outstanding capital stock of ICS, shall
be converted into the right to receive, at the Closing in accordance
with the BCL, 4,309,733 shares of the common stock, $.001 par value of
Big City ("Big City Common Stock") and 254,076 shares of the Class B
Preferred Stock, $.001 par value ("Big City Preferred Stock") ("ICS
Merger Consideration") and (ii) the 1,000 shares of the common stock,
no par value, of VillageNet ("VillageNet Stock"), representing all the
outstanding capital stock of VillageNet, shall be converted into the
right to receive, at the Closing in accordance with the BCL, 4,309,733
shares of Big City Common Stock and 254,076 shares of Big City
Preferred Stock ("VillageNet Merger Consideration"). The ICS Merger
Consideration and VillageNet Merger Consideration will collectively be
referred to herein as "Merger Consideration". At the Closing, the ICS
Merger Consideration and the VillageNet Merger Consideration,
respectively, will be issued to the Stockholders listed on Schedule 2.1
hereto, in the amounts to be provided to Big City prior to Closing upon
delivery by the Stockholders to Big City of the certificates
representing the ICS Stock and VillageNet Stock together with executed
stock powers. At the Effective Time, all of the 100 shares of common
stock, no par value, of each of BCB I and BCB II outstanding
immediately prior to the Effective Time shall be converted into and
exchanged for 100 shares of the common stock, no par value, of ICS and
VillageNet, respectively, as the surviving corporations of the Merger,
which shall represent all of the issued and outstanding shares of
capital stock of each of ICS and VillageNet, respectively, as the
surviving corporations of the Merger. At the Closing, each of ICS and
VillageNet, as the surviving corporations of the Merger, shall issue to
Big City a stock certificate representing such 100 shares in exchange
for the certificate which formerly represented the 100 shares of common
stock, no par value, of each of BCB I and BCB II."
Section 1.2. The Section 4.24 of the Merger Agreement is amended and
restated as follows:
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"Collateral Agreements. (a) Big City has executed the
Severance Agreement and Option Agreement for Mark Weinreb in the form
of Exhibit C-1 and Exhibit C-2 to the Merger Agreement and the
Amendment to the Severance and Consulting Agreement in the form of
Exhibit A to this Amendment and (b) Big City has executed the Warrants
granting to Perrin, Holden & Davenport Capital Corp. the right to
purchase up to 500,000 shares of the Common Stock of Big City in the
form of Exhibit F to the Merger Agreement."
Section 1.3. The Section 4.4 of the Merger Agreement is amended to add
the following sentence at the end of the Section:
"As of the date of the Closing, the only awards made under the 1998
Plan are an option to purchase 100,000 shares of Big City Stock, the
option to Mark Weinreb referred to in Section 4.24 of the Merger
Agreement and the award of shares of Big City Stock under the Amendment
to Severance and Consulting Agreement as provided in Exhibit A to this
Amendment."
Section 1.4. The Section 7.16 of the Merger Agreement is amended and
restated as follows:
"Amendment to Certificate of Incorporation. Prior to the
Closing Date, the board of directors of Big City will approve the
Amendment to the Certificate of Incorporation to fix the terms of the
Big City Preferred Stock, as set forth in Exhibit B to this Amendment,
and file the amendment with the Secretary of State of New York."
Section 1.5. The Section 7.1(d) of the Merger Agreement is amended to
add the following at the end thereof:
"notwithstanding the foregoing, Big City may issue up to 125,000
shares of Big City Stock under the 1998 Plan in connection with the
Amendment to Severance and Consulting Agreement as set forth in Exhibit
A to this Amendment."
Section 1.6. The Section 9.1(c) of the Merger Agreement is amended and
restated as follows:
"Amendment to Big City certificate of Incorporation. The board
of directors of Big City will have approved the Certificate of
Amendment to the Certificate of Incorporation establishing the Big City
Preferred Stock in the form of Exhibit B to this Amendment, and the
Certificate of Amendment will have been filed with the Secretary of
State of the State of New York."
Section 1.7. The Section 9.2(b) of the Merger Agreement is amended and
restated as follows:
"Certain Employment and Option Matters. Big City shall have
entered into the Severance Agreement and the Option Agreement with Mark
Weinreb, each in the form of Exhibit C-1 and Exhibit C-2 hereof,
respectively and the Amendment to the Severance and Consulting
Agreement in the form of Exhibit A to this Amendment."
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ARTICLE II
Section 2.1. This Amendment may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed will be deemed to be an original but all of which when taken
together will constitute one and the same agreement.
Section 2.2. The Merger Agreement, as amended by this Amendment, will
continue in full force and effect. In the event of any inconsistency between the
Merger Agreement and the Exhibits and Schedules thereto and this Amendment, the
provisions of this Amendment will prevail.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the date first written above.
BCB ACQUISITION CORP. I INTELLIGENT COMPUTER SOLUTIONS, INC.
By:__________________________________ By:_________________________________
BCB ACQUISITION CORP. II
By:__________________________________
BIG CITY BAGELS, INC. VILLAGENET, INC.
By:__________________________________ By:_________________________________
_____________________________________ ____________________________________
Peter Keenan, Stockholder Steven Levi, Stockholder
_____________________________________ ____________________________________
David Levi, Stockholder Susan Levi, Stockholder
Eli Levi Living Trust, Stockholder
____________________________________ By:_________________________________
Roberta Levi, custodian for Shari Levi, Eli Levi, Trustee
Stockholder
Roberta Levi Living Trust, Stockholder
By:_________________________________ ____________________________________
Roberta Levi, Trustee Hector P. Gavilla, Stockholder
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____________________________________ ____________________________________
Hector M. Gavilla, Stockholder Hector M. Gavilla, custodian for
Alexander F. Gavilla, Stockholder
____________________________________
____________________________________ Debi E. Pasceri, Stockholder
Vincent J. Pasceri, Stockholder
____________________________________ ____________________________________
Jennifer N. Pasceri, Stockholder Vincent A. Pasceri, custodian for
Marisa A. Pasceri, Stockholder
____________________________________ ____________________________________
Debi E. Pasceri, custodian for Vincent A. Pasceri, Stockholder
Nicole K. Pasceri, Stockholder
CERTIFICATE OF AMENDMENT OF THE
CERTIFICATE OF INCORPORATION
OF
BIG CITY BAGELS, INC.
Pursuant to Section 805 of the
New York Business Corporation Law
We, the undersigned, being, respectively, the Chairman of the Board and
Assistant Secretary of Big City Bagels, Inc. ("Corporation"), a corporation
organized and existing under the Business Corporation Law of the State of New
York hereby certify:
1. The name of the Corporation is Big City Bagels, Inc.
2. The Certificate of Incorporation of the Corporation was filed with
the Department of State of the State of New York on December 14, 1992.
3. Article FOURTH of the Certificate of Incorporation of the
Corporation relating to the number of shares the Corporation is authorized to
issue is hereby amended by the addition of a provision stating the number,
designation, relative rights, preferences and limitations of a series of
Preferred Stock, par value $.001 per share, to be designated Class B Preferred
Stock. Accordingly, Article FOURTH is hereby amended by the addition of a new
subsection, subsection (d), to read as follows:
(d) Class B Preferred Stock
(i) Designations and Amount. 564,562 shares of the Preferred
Stock of the Corporation, par value $ .001 per share, shall
constitute a class of Preferred Stock designated as "Class B
Preferred Stock" ("Class B Preferred Stock").
(ii)Liquidation Rights. If the Corporation shall be voluntarily
or involuntarily liquidated, dissolved or wound up at any time
when any of the Class B Preferred Stock shall be outstanding, the
assets of the Corporation legally available for distribution
shall be distributed ratably to the holders of Class B Preferred
Stock (on the basis of the number of full shares of Common Stock
into which such shares are then convertible pursuant to
Section(d)(v)(B) hereof) and the holders of Common Stock.
(iii)Dividends. No dividend or distribution in cash or other
property on the Corporations Common Stock shall be declared or
paid or set apart for payment, unless, at the same time, an
equivalent dividend or distribution is declared or paid or set
apart, as the case may be, on the Class B Preferred Stock and
payable on the same date, at the rate per share of Class B
Preferred Stock based upon the shares of Common Stock that a
holder of such Class B Preferred Stock would be entitled to
receive if such holder had converted such Class B Preferred Stock
into Common Stock as provided in Section(d)(v) hereof immediately
prior to the record date for such dividend or distribution on the
Common Stock.
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(iv)Voting Rights. Except as otherwise provided herein or by law,
the holders of Class B Preferred Stock shall, by virtue of their
ownership thereof, be entitled to cast the number of votes per
share thereof on each matter submitted to the Corporations
shareholders for voting as is equal to the number of full shares
of Common Stock into which such share is then convertible
pursuant to Section(d)(v)(B) hereof assuming for this purpose
that the Corporation is then authorized to issue a sufficient
number of shares of Common Stock to effect a conversion of all
outstanding Class B Preferred Stock. Such votes shall be cast
together with those cast by the holders of Common Stock as one
class except as otherwise provided herein or by law. The Class B
Preferred Stock shall not have cumulative voting rights
(v) Conversion of Class B Preferred Stock.
(A) For the purposes of conversion, the Class B Preferred
Stock shall be valued at $138.00 per share (Value), and, if
converted, the Class B Preferred Stock, together with the
accrued and unpaid cash dividends thereon to the date of
conversion, shall be converted into Common Stock (the
Conversion Stock) at the conversion price (Conversion Price)
of $1.00 per share of Conversion Stock, subject to
adjustment pursuant to the provisions of this Section
(d)(v).
(B) The holders of Class B Preferred Stock shall have the
right, at their option, to convert such shares into
Conversion Stock at any time that the Corporation has
authorized but unissued a sufficient number of shares of
Common Stock. Each holder of Class B Preferred Stock who
desires to convert its Class B Preferred Stock into shares
of Common Stock shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the
Corporation and shall give written notice to the Corporation
at such office that such holder elects to convert the same.
Such notice shall state the number of shares of Class B
Preferred Stock being converted. Thereupon, the Corporation
shall promptly issue and deliver at such office to such
holder a certificate or certificates for that number of
whole shares of Common Stock as shall be computed by
dividing (1)the product of the aggregate number of Class B
Preferred Stock so surrendered and the sum of the Value and
the accrued and unpaid cash dividends with respect to such
Class B Preferred Stock by (2)the Conversion Price for such
shares of Class B Preferred Stock in effect at the date of
such surrender. In the event of any exercise of the
conversion right of the Class B Preferred Stock granted
herein (i)stock certificates for the shares of Common Stock
purchased by virtue of such exercise shall be delivered to
such holder forthwith, and unless the Class B Preferred
Stock has been fully converted, a new Class B Preferred
Stock certificate, representing the Class B Preferred Stock
not so converted, shall also be delivered to such holder
forthwith, and (ii)stock certificates for the shares of
Common Stock so purchased shall be dated the date of
surrender of the Class B Preferred Stock certificate
converted into such shares, and the holder making such
surrender shall be deemed for all purposes to be the holder
of the shares of Common Stock so purchased as of the date of
such surrender.
(C) Subject to the adjustment provided in Section (d)(v)(D)
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below, all shares of Common Stock which may be issued upon
conversion of Class B Preferred Stock will, upon issuance,
be duly issued, fully paid and non-assessable and free from
all taxes, liens, and charges with respect to the issue
thereof.
(D In the event the Corporation shall, at any time or from
time to time while any of the shares of Class B Preferred
Stock are outstanding, (i) pay a dividend or make a
distribution with respect to Common Stock in shares of
Common Stock, (ii) subdivide or split its outstanding shares
of Common Stock into a larger number of shares, or (iii)
combine its outstanding shares of Common Stock into a
smaller number of shares, in each case whether by
reclassification of shares, recapitalization of the
corporation or otherwise, the Conversion Price shall be
adjusted by multiplying the Conversion Price by a fraction,
the numerator of which is the number of shares of Common
Stock outstanding immediately before such event, and the
denominator of which is the number of shares of Common Stock
outstanding immediately after such event. Such adjustment
shall become effective at the opening of business on the
business day next following the record date for
determination of shareholders entitled to receive such
dividend or distribution in the case of a dividend or
distribution, and shall become effective immediately after
the effective date in case of a subdivision, split,
combination or reclassification; and any shares of Common
Stock issuable in payment of a dividend shall be deemed to
have been issued immediately prior to the close of business
on the record date for such dividend.
(E) Any notice required by the provisions of this Section
(v) shall be in writing and shall be deemed effectively
given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed telex or facsimile,
(iii) seven (7) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid,
or (iv) two (2) business days after deposit with a
nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All notices
shall be addressed to the Corporation at its principle
office and to each holder of record at the address of such
holder appearing on the books of the Corporation.
(F) The Corporation shall not be required to issue fractions
of shares of Common Stock upon conversion of the Class B
Preferred Stock or payment of any dividends. If any
fractions of a share would, but for this section (vi)(F), be
issuable upon any conversion of Class B Preferred Stock or
payment of the Class B Preferred Stock, in lieu of such
fractional share the Company shall round up or down to the
nearest whole number of shares.
(G) In order that the Corporation may issue shares of Common
Stock upon conversion of shares of the Class B Preferred
Stock and payment of any preferred dividends, the
Corporation will endeavor to comply with all applicable
Federal and state securities laws and will endeavor to list
such shares of Common Stock to be issued upon conversion on
each securities exchange on which Common Stock is listed at
the time of conversion and endeavor to maintain such listing
for such period of time as either the Class B Preferred
Stock or Common Stock underlying such Class B Preferred
Stock remains outstanding.
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(H) If any of the following shall occur: (i) any
reclassification, subdivision combination or change of
outstanding shares of Common Stock issuable upon conversion
of shares of the Class B Preferred Stock (other than a
change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a
subdivision or combination), or (ii) any consolidation or
merger of the Corporation with or into another corporation
which does not constitute a liquidation under Section
(d)(ii), then in addition to all of the rights granted to
the holders of the Class B Preferred Stock as designated
herein, the Corporation, or such successor or purchasing
corporation, as the case may be, shall, as a condition
precedent to such reclassification, change, consolidation or
merger ("Corporate Change"), provide in its certificate of
incorporation or other charter document that each share of
the Class B Preferred Stock shall be convertible into the
kind and amount of shares of capital stock and other
securities and property (including cash) receivable upon
such Corporate Change by a holder of the number of shares of
Common Stock deliverable upon conversion of such share of
the Class B Preferred Stock and the payment of the Preferred
Dividend thereon immediately prior to the Corporate Change.
If, in the case of any such Corporate Change, the stock or
other securities and property (including cash) receivable
thereupon by a holder of Common Stock includes shares of
capital stock or other securities and property of a
corporation other than the corporation which is the
successor of the Corporation in such Corporate Change, then
the certificate of incorporation or other charter document
of such other corporation shall contain such additional
provisions to protect the interests of the holders of shares
of the Class B Preferred Stock as the Board of Directors
shall reasonably consider necessary by reason of the
foregoing. The provision of this section (vi)(H) shall
similarly apply to successive reclassifications, changes,
consolidations or mergers.
(I) The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in
the carrying out of all the provisions of this section
(v)(I) and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion
rights of the holders of the Class B Preferred Stock against
impairment.
4. This Amendment has been adopted by the Board of Directors of the
Corporation pursuant to authority conferred upon the Board of Directors by
Article FOURTH of the Certificate of Incorporation of the Corporation and
Section 502 of the New York Business Corporation Law.
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IN WITNESS WHEREOF, the undersigned have executed this Certificate this
___ day of ___________, 1999, and affirm the statements contained herein are
true under penalties of perjury.
BIG CITY BAGELS, INC.
By: _______________________
Name: Mark Weinreb
Title: Chairman and Chief Executive Officer
By: ______________________
Name: Nelson Braff
Title: Secretary
AMENDMENT TO SEVERANCE AND CONSULTING AGREEMENT
AMENDMENT dated as of June 28, 1999 to AGREEMENT dated as of May 21,
1999 between BIG CITY BAGELS, INC., a New York corporation with offices at 99
Woodbury Road, Hicksville, New York 11801 ("Company"), and MARK WEINREB,
("Weinreb").
WHEREAS, Company has entered into an Agreement and Plan of
Reorganization and Merger, dated as of May 21, 1999, among the Company, Big City
Acquisition Corp. I, and Big City Acquisition Corp. II, and Intelligent Computer
Solutions, Inc. ("ICS"), VillageNet, Inc. ("VillageNet") and the shareholders
set forth in Schedule 2.1 thereto, as amended to date ("Merger Agreement");
WHEREAS, Company and Weinreb have entered into an Amended and Restated
Employment Agreement, dated August 21, 1998, which provided for Weinreb's
employment with Company through December 31, 1999 (the "Employment Agreement");
WHEREAS, Company and Weinreb have entered into an Agreement dated as of
May 21, 1999 ("Severance and Consulting Agreement") providing for the
termination of the Employment Agreement as provided therein simultaneously with
the closing ("Closing") of the transactions contemplated by the Merger Agreement
and providing for the provision of consulting services to company by Weinreb
after the closing;
WHEREAS, on June 21, 1999, the Board of Directors of Company awarded to
Weinreb, pursuant to Section 10 of Company's 1998 Performance Equity Plan, a
grant of 125,000 shares of Common Stock of Company subject to and conditional
upon the execution and delivery of this Amendment and the Closing; and
WHEREAS, Company and Weinreb hereby mutually desire to amend the
Severance and Consulting Agreement as provided therein.
IT IS AGREED:
1. Elimination of Cash Severance.
Clauses (i) and (vi) of Section 1(c) of the Severance and
Consulting Agreement, providing for a certain cash payment and for delivery of a
Promissory Note at the Closing, are hereby deleted.
<PAGE>
2. Stock Grant Award.
On the date of Closing, the Company shall issue and deliver to
Weinreb a certificate registered in the name of Perrin Holden & Davenport
Capital Corp. ("PHD") (see Section 3 below) representing 125,000 fully paid and
non-assessable shares of Common Stock of Company ("Weinreb Shares"), such Common
Stock to have no restrictions on transferability other than restrictions under
applicable securities laws and the following contractual restrictions:
Until 11 1/2 months (50 weeks) from the Closing, except for
transfers by will or by the laws of descent and distribution in
the event of death of Weinreb, without the consent of the
Company, the Weinreb Shares may only be transferred in accordance
with the following schedule:
(i) 40,000 of the Weinreb Shares will be immediately
transferable, subject to the further limitations below.
(ii) 42,500 of the Weinreb Shares will not be transferable
until the earlier of:
(a) three months after Weinreb's consultancy under the
Severance and Consulting Agreement with the Company
has been terminated; or
(b) six months from the date of Closing, in either
case, subject to the further limitations below.
(iii) 42,500 of the Weinreb Shares will not be transferable
until three months after the shares set forth in clause (ii)
above have become transferable, but in any event not earlier
than eight months after the date of Closing and subject to
the further limitations below.
(iv) The transfers permitted by clauses (i), (ii) and (iii)
above will be subject to the following additional
limitations:
(a) no more than 1,000 of the Weinreb Shares
per day can be transferred unless trading
volume for Company's Common Stock for the
day (exclusive of the Weinreb Shares) is at
least 25,000 shares - - if volume (exclusive
of the Weinreb Shares) is greater than
25,000, but less than 300,000, Weinreb can
sell a maximum of 2,500 of the Weinreb
Shares that day;
2
<PAGE>
(b) no more than 5,000 of the Weinreb Shares
can be sold in any one calendar week (with
no carryover from prior periods), however:
(A) if trading volume on any given
day (exclusive of the Weinreb
Shares) equals 300,000 shares or
more, Weinreb may transfer up to
3,000 shares on that day which will
not be counted against the 5,000
share per week limitation;
(B) if trading volume on any given
day (exclusive of the Weinreb
Shares) equals 500,000 shares or
more, Weinreb may transfer up to
5,000 of the Weinreb Shares on that
day which will not be counted
against the 5,000 per week limitation;
(C) if trading volume on any given
day (exclusive of the Weinreb
Shares) equals 1,000,000 shares or
more, Weinreb may transfer up to
10,000 of the Weinreb Shares on that
day which will not be counted
against the 5,000 share per week
limit; and
(D) any "block sales" (at least
20,000 shares) negotiated with and
sold through Perrin, Holden &
Davenport Capital Corp. will not be
counted against the 5,000 per week
limitation nor against any daily
limitation.
(v) Since the Weinreb Shares have been registered on Form
S-8, the certificates will not be legended. However, in
order to monitor compliance with the transfer restrictions
set forth herein, Weinreb agrees to deposit the Weinreb
Shares in a brokerage account established by him at Perrin,
Holden & Davenport Capital Corp. ("PHD") and agrees that the
Weinreb Shares cannot be withdrawn from such account or sold
away from PHD until 11 1/2 months (50 weeks) after the
Closing, at which point all restrictions will lapse.
3. Agreement to Monitor Transfers.
By its execution hereof, PHD agrees to accept deposit of the
Weinreb Shares into a brokerage account established by Weinreb at PHD and PHD
shall not permit transfer of the Weinreb Shares except as provided in this
Agreement.
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<PAGE>
4. Full Force and Effect
Except as expressly amended hereby, the Severance and
Consulting Agreement shall continue in full force and effect.
5. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute one instrument.
IN WITNESS WHEREOF, this Amendment has been signed as of the
day and year first above written.
_____________________________________
MARK WEINREB
BIG CITY BAGELS, INC.
By: ____________________________________
Howard Fein, Chief Financial Officer
AS TO SECTION 3 ONLY:
PERRIN, HOLDEN & DAVENPORT CAPITAL CORP.
By: ____________________________________
Nelson Braff, Vice President
FOR: BIG CITY BAGELS, INC.
CONTACT: Peter Keenan, President
ICS and VillageNet
(516) 218-0700
KCSA Jeff Corbin/Joseph A. Mansi
CONTACT: (212) 682-6300, ext 214/205
(212) 697-0910 (fax)
[email protected]/[email protected]
www.kcsa.com
FOR IMMEDIATE RELEASE
BIG CITY BAGELS COMPLETES MERGER
------
Company Acquires VillageNet, Inc. and Intelligent Computer Solutions, Inc.
HICKSVILLE, New York, July 1, 1999 - - BIG CITY BAGELS, INC. (OTC BB: BIGC)
announced today the completion of its acquisition by merger of VillageNet, Inc.
(www.villagenet.com) and Intelligent Computer Solutions, Inc. (www.icsnet.com).
Under the terms of agreement, the stockholders of VillageNet and ICS
receive from the Company 8,619,466 shares of Common Stock and 508,152 shares of
a new class of Preferred Stock, which may be convertible into 70,124,976 shares
of Common Stock. The shares of Common Stock being issued in the merger and upon
conversion of the Preferred Stock will represent approximately 90 percent of the
outstanding shares of Common Stock following the transaction, calculated on a
fully diluted basis assuming the exercise of the Company's outstanding options
and warrants that have an exercise price of $1.00 or less. All former VillageNet
and ICS shareholders are subject to strict volume limitations on resale until
June 30, 2002, and those shareholders who will also be directors are further
restricted from any resale until January 1, 2000.
(more)
<PAGE>
BIG CITY BAGELS/2
Peter Keenan, President of ICS, stated, "The merger of VillageNet and ICS
with Big City Bagels is the beginning of a number of exciting changes and
developments for current and future shareholders of BIGC. As an ISP with a
unique niche, we plan to use the combined strengths of VillageNet and
Intelligent Computer Solutions to aggressively propel the Company to the
forefront of the Internet technology industry."
VillageNet, Inc. ("VillageNet") is a community-oriented Internet service
provider specializing in educational and family-based Internet services with a
local emphasis on business advertising and shopping, chat rooms and
parent/student/teacher interaction.
Intelligent Computer Solutions, Inc. ("ICS") is a systems-integration firm
specializing in network design, implementation and maintenance and providing
Internet/intranet messaging and security products. ICS is a value added
government and commercial reseller for Cisco Systems Inc. (NASDAQ: CSCO) and
FORE Systems (NASDAQ: FORE) and is authorized to sell and install their products
to public entities in New York (e.g. school districts) without public bidding
through those companies' New York State contracts.
Management of the combined companies will be the current officers and
directors of VillageNet and ICS. Peter Keenan will serve as the President,
Edilberto Enriquez will serve as the Treasurer and Chief Financial Officer, and
David Levi will serve as the Secretary. The board of directors will be Messrs.
Eli Levi, Peter Keenan, Hector M. Gavilla and one of the Company's current
directors, Nelson Braff.
The Company, a franchisor and owner of Big City Bagels delis/cafes, has
been orderly disposing of its unprofitable operations since the middle of 1998
while it explored the acquisition or combination with other businesses.
# # #
This press release contains forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
set forth in the forward-looking statements. These risks and uncertainties are
described in the Company's filings with the SEC.
This release and prior releases are available on the KCSA Public Relations
Worldwide website at www.kcsa.com.
