<PAGE> 1
SCHEDULE 13D
(RULE 13d-101)
Information to be Included in Statements Filed Pursuant to Rule 13d-1(a) and
Amendments Thereto Filed Pursuant to Rule 13d-2(a)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Big Buck Brewery & Steakhouse, Inc.
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(Name of Issuer)
Common Shares, par value $0.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
089072 10 2
- --------------------------------------------------------------------------------
(CUSIP Number)
William Rolinski
Big Buck Brewery & Steakhouse, Inc.
550 South Wisconsin
P.O. Box 1430
Gaylord, Michigan 49734-5430
(517) 731-0401
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 8, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule
13d-7(b) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
CUSIP NO. 089072 10 2 13D PAGE OF PAGES
--------------------- -- --
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1 NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(ENTITIES ONLY)
Wayne County Employees' Retirement System
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
OO
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Michigan
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7 SOLE VOTING POWER
NUMBER OF
3,299,173.56
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
3,299,173.56
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,299,173.56
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.9%
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14 TYPE OF REPORTING PERSON (See Instructions)
EP
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<PAGE> 3
ITEM 1. SECURITY AND ISSUER.
The title of the class of equity securities to which this statement
relates is Common Shares, par value $0.01 per share ("Common Shares"), of Big
Buck Brewery & Steakhouse, Inc., a Michigan corporation (the "Company"). The
address of the Company's principal executive offices is 550 South Wisconsin
Street, Gaylord, Michigan 49734-5430.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being filed by the Wayne County Employees'
Retirement System ("WCERS"), a body politic of the State of Michigan. The
principal business and office address of WCERS is 400 Monroe Street, Suite 320,
Detroit, Michigan 48226.
WCERS has not, during the last five years, been convicted in a
criminal proceeding. WCERS has not, during the last five years, been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
This statement is being filed to report (1) that, on February 8, 2000,
WCERS acquired two promissory notes (collectively, the "Notes") from the Company
convertible into 3,099,173.56 Common Shares for an aggregate amount of
$7,500,000, and (2) that, on February 8, 2000, as part of the same transaction,
WCERS acquired a warrant (the "Warrant") to purchase from the Company 200,000
Common Shares. The source of the funds used in making the purchase were pension
funds held and administered by WCERS.
ITEM 4. PURPOSE OF TRANSACTION.
WCERS acquired the interests in the Company Common Shares as partial
consideration for its investment in and provision of financing to the Company.
WCERS may, from time to time, acquire Common Shares (1) by the
exercise of its conversion rights under the Notes or rights under the Warrant,
(2) from time to time for investment purposes if market conditions are
favorable, or (3) any combination of the foregoing. WCERS may also dispose of
some or all of the Company Common Shares that it beneficially owns,
periodically, by public or private sale (registered or unregistered and with or
without the simultaneous sale of newly-issued Common Shares by the Company),
gift, pledge, expiration of options or otherwise, including, without limitation,
sales of Common Shares by WCERS pursuant to Rule 144 under the Securities Act of
1933, as amended, or otherwise. WCERS reserves the right not to acquire Common
Shares or not to dispose of all or part of such Common Shares if it determines
such acquisition or disposal is not in its best interests at that time.
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Other than as described above, WCERS does not have any current plans
or proposals which relate to, or would result in, (a) any acquisition or
disposition of securities of the Company, (b) any extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries, (c) any sale or transfer of a material
amount of assets of the Company or any of its subsidiaries, (d) any change in
the present board of directors or management of the Company, including any plans
or proposals to change the number or term of directors or to fill any existing
vacancies on the Board, except that, from time to time, the Company might add
additional directors if it finds qualified candidates willing to serve, (e) any
material change in the Company's present capitalization or dividend policy,
except that, from time to time, the Company might raise additional capital based
on its needs, (f) any other material change in the Company's business or
corporate structure, (g) causing a class of securities of the Company to be
delisted from a national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national securities
association, (h) a class of the Company's equity securities becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended, or (i) any action similar to those enumerated
above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The number and percentage of Common Shares beneficially owned by WCERS
as of February 8, 2000 are as follows:
<TABLE>
<CAPTION>
Number Percent
------ -------
<S> <C> <C>
WCERS 3,299,173.56 (1) 37.90% (2)
</TABLE>
(1) The shares shown above as beneficially owned by WCERS consist of
3,299,173.56 shares that WCERS has had the right to acquire as of February 8,
2000 pursuant to the exercise of conversion rights granted to WCERS under the
convertible notes executed by the Company in favor if WCERS, and the purchase
rights granted to WCERS under the Common Stock Purchase Warrant.
(2) Based on the 5,405,481 Common Shares reported as outstanding as of
May 19, 1999 in the Company's Quarterly Report on Form 10-Q for the quarter
ended April 4, 1999.
Subject to applicable state law regulating the investment and holding
of pension funds by WCERS, WCERS has sole voting and investment power over the
Common Shares listed above as owned by WCERS.
No person is known to have the right to receive, or the power to
direct the receipt of, dividends from, or the proceeds from the sale of, the
Common Shares beneficially owned by WCERS.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
In connection with the investment by WCERS in the Company and the
provision of financing to the Company, the Company has agreed to amend its
Articles of Incorporation such that prior approval by the Michigan Liquor
Control Commission by an acquirer of ten percent (10%) or more of the Company's
outstanding stock is not required.
The conversion rights granted to WCERS are described in Item 5 and are
subject to the terms of each of (1) the 10% Convertible Secured Promissory Note,
dated February 4, 2000, in the principal amount of $5,876,114.74, executed by
the Company in favor of WCERS (the "$5,876,114.74 Convertible Note"), and (2)
the Amended, Restated and Consolidated Convertible Note, dated February 4, 2000
in the principal amount of $1,623,885.26, executed by the Company in favor of
WCERS (the "$1,623,885.26 Convertible Note"). The right to purchase Common Stock
granted to WCERS is described in Item 5 and is subject to the terms of the
Common Stock Purchase Warrant dated February 4, 2000 for the purchase of 200,000
shares of Company Common Stock (the "Warrant"). The rights of WCERS under the
Notes and the Warrants are further subject to the terms of the Subscription and
Investment Representation Agreement dated February 4, 2000 by and between WCERS
and the Company (the "Subscription Agreement").
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. 10% Convertible Secured Promissory Note, dated February 4, 2000,
in the principal amount of $5,876,114.74.
2. Amended, Restated and Consolidated Convertible Note, dated
February 4, 2000 in the principal amount of $1,623,885.26.
3. Common Stock Purchase Warrant dated February 4, 2000.
4. Subscription and Investment Representation Agreement dated
February 4, 2000.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
WAYNE COUNTY EMPLOYEES'
RETIREMENT SYSTEM
Dated: February 15, 2000 By: /s/ RONALD YEE
-------------------------
Name: Ronald Yee
Title: Director
<PAGE> 6
EXHIBIT INDEX
1. 10% Convertible Secured Promissory Note, dated February 4, 2000,
in the principal amount of $5,876,114.74.
2. Amended, Restated and Consolidated Convertible Note, dated
February 4, 2000 in the principal amount of $1,623,885.26.
3. Common Stock Purchase Warrant dated February 4, 2000.
4. Subscription and Investment Representation Agreement dated
February 4, 2000.
<PAGE> 1
EXHIBIT 1
THIS CONVERTIBLE SECURED PROMISSORY NOTE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES
LAWS, AND ARE SUBJECT TO A SUBSCRIPTION AND INVESTMENT REPRESENTATION AGREEMENT.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, PLEDGED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF EITHER AN EFFECTIVE REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER THE APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO BIG BUCK
BREWERY & STEAKHOUSE, INC. THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER APPLICABLE STATE
SECURITIES LAWS.
BIG BUCK BREWERY & STEAKHOUSE, INC.
10% CONVERTIBLE SECURED PROMISSORY NOTE DUE FEBRUARY 2003
$5,876,114.74 GAYLORD, MICHIGAN
February 4, 2000
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, the undersigned, Big Buck Brewery & Steakhouse, Inc., a
Michigan corporation (the "Maker" or "Company"), promises to pay to the order of
Wayne County Employees' Retirement System, a body politic of the State of
Michigan (the "Payee"), the principal sum of Five Million, Eight Hundred Seventy
Six Thousand, One Hundred Fourteen and 74/100 Dollars ($5,876,114.74) plus
interest at the rate specified below. The unpaid principal from time to time
outstanding shall bear interest prior to maturity at an annual rate of interest
equal to ten percent (10%) per annum, and all interest accrued on the unpaid
principal balance of this Promissory Note shall be due and payable in arrears as
provided below.
On March 1, 2000, Maker will pay interest only from the date of this Note
through February 29, 2000. Thereafter, the Maker agrees to pay principal and
interest hereunder to Payee in equal monthly installments in an amount which
would fully amortize the principal and interest due hereunder over a period of
300 months, beginning April 1, 2000, until February 1, 2003, on which date the
entire amount due hereunder, including all unpaid principal and interest shall
be due and payable in full.
All interest shall be payable in arrears. Interest hereon shall be
calculated on the basis of a 360-day year applied to the actual number of days
elapsed until all accrued and unpaid interest is paid in full. All interest due
and payable hereunder that is not paid when due for any reason shall be
cumulated, added to the principal and accrue interest at the highest lawful rate
per annum on that delinquent amount until paid, to the extent permitted by law.
All payments of interest and principal shall be payable in lawful currency of
the United States of America ("Currency"), unless and to the extent Payee
exercises Payee's option hereunder to convert all or part of the unpaid
principal balance of this Promissory Note into shares of common stock, par value
$0.01 per share (the "Shares"), of the Maker.
At any time prior to payment in full of this Note, Payee shall have the
option to convert all or part of the unpaid principal balance of this Promissory
Note into that number of Shares of the Maker (the "Option") equal to (i) all or
such part of the unpaid principal balance of the Promissory Note being converted
divided by (ii) $2.42 which is the average of the closing sale price of one
Share as quoted by The NASDAQ Stock Market for the five (5) trading days
immediately prior to the Maker's execution of this Promissory Note (the
"Conversion Price"), subject to the antidilution adjustments presented in the
following Sections, any fractional Shares to be paid in Currency. To exercise
the Option, Payee shall surrender this Promissory Note to the Maker, accompanied
by written notice of Payee's intention to exercise the Option, which notice
shall set forth the principal amount of this Promissory Note and such portion of
the unpaid principal balance of the Promissory Note, if not the entire unpaid
principal balance, to be converted into Shares (the "Notice of Conversion").
Within ten (10) business days after Maker's receipt of the Notice of Conversion
and Payee's surrender of this Promissory Note, Maker shall deliver or cause to
be delivered to the Payee, the Shares in the name of the Payee and a duly
executed, new promissory note in the principal amount of the balance thereof, if
any.
<PAGE> 2
If the Maker shall at any time hereafter subdivide or combine its
outstanding Shares, or declare a dividend payable in its Shares, the Conversion
Price in effect immediately prior to the subdivision, combination, or record
date for such dividend payable in Shares shall forthwith be proportionately
increased, in the case of combination, or proportionately decreased, in the case
of subdivision or declaration of a dividend payable in Shares, and the number of
Shares into which the unpaid principal balance of the Promissory Note may be
converted upon exercise of the Option immediately preceding such event, shall be
changed to the number determined by dividing the then current Conversion Price
by the Conversion Price as adjusted after such subdivision, combination, or
dividend payable in Shares and multiplying the result of such division against
the number of Shares to be acquired upon the exercise of the Option immediately
preceding such event, so as to achieve an Conversion Price and number of Shares
purchasable after such event proportional to such Conversion Price and number of
Shares purchasable immediately preceding such event. All calculations hereunder
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be. In case of any capital reorganization or any reclassification
of the Shares, or in the case of any consolidation with or merger of the Maker
into or with another corporation, or the sale of all or substantially all of its
assets to another corporation, which is effected in such a manner that the
holders of Shares shall be entitled to receive stock, securities, or assets with
respect to or in exchange for Shares, then, as a part of such reorganization,
reclassification, consolidation, merger, or sale, as the case may be, lawful
provision shall be made so that the holder of this Promissory Note shall have
the right thereafter to receive, upon the exercise hereof, the kind and amount
of shares of stock or other securities or property which the holder would have
been entitled to receive if, immediately prior to such reorganization,
reclassification, consolidation, merger, or sale, the holder had held the number
of Shares into which the unpaid principal balance of the Promissory Note could
have been converted upon exercise of the Option. In any such case, appropriate
adjustment (as determined in good faith by the Board of Directors of the
Company) shall be made in the application of the provisions set forth herein
with respect to the rights and interest thereafter of the holder of the
Promissory Note, to the end that the provisions set forth herein (including
provisions with respect to adjustments of the exercise price) shall thereafter
be applicable, as nearly as reasonably may be, in relation to any shares of
stock or other property thereafter deliverable upon the exercise of the Option.
In the event the Maker shall at any time or from time to time, issue
Shares, options, warrants or rights to subscribe for Shares, or issue any
securities convertible into or exchangeable for Shares, for a consideration per
share (determined by dividing the Net Aggregate Consideration (as determined
below) by the aggregate number of Shares that would be issued if all such
Shares, options, warrants, rights or convertible securities were exercised or
converted to the fullest extent permitted by their terms) less than the
Conversion Price in effect immediately prior to the issuance of such options or
rights or convertible or exchangeable securities, the Conversion Price in effect
immediately prior to the issuance of such options, warrants or rights or
securities shall be reduced to an amount determined by multiplying such
Conversion Price by a fraction:
a. the numerator of which shall be (X) the number of shares of
Company's Common Stock of all classes outstanding immediately prior to
the issuance of such options, rights or convertible securities
(excluding authorized but unissued shares held by the Corporation but
including all shares of Common Stock issuable upon conversion or
exercise of any outstanding Convertible Preferred Stock, options,
warrants, rights or convertible securities), plus (Y) the number of
shares of Company's Common Stock which the total amount of
consideration received by the Company for the issuance of such options,
warrants, rights or convertible securities plus the minimum amount set
forth in the terms of such security as payable to the Company upon the
exercise or conversion thereof (the "Net Aggregate Consideration")
would purchase at the Conversion Price prior to adjustment, and
b. the denominator of which shall be (X) the number of shares of
Company's Common Stock of all classes outstanding immediately prior to
the issuance of such options, warrants, rights or convertible
securities (excluding authorized but unissued shares held by the
Company but including all shares of Common Stock issuable upon
conversion or exercise of any outstanding Convertible Preferred Stock,
options, warrants, rights or convertible securities), plus (Y) the
aggregate number of
<PAGE> 3
shares of Company's Common Stock that would be issued if all such
options, warrants, rights or convertible securities were exercised or
converted.
When delivered, all Shares shall be duly authorized, validly issued, fully
paid, and nonassessable. Maker shall take any and all action necessary to
maintain the required authority to issue the Shares to Payee in the event Payee
converts, or is required to convert, the unpaid principal balance of this
Promissory Note into Shares.
Prepayment of the principal of this Promissory Note is permitted, in whole
or in part, without premium or penalty of any kind; provided Maker provides
Payee with forty-five (45) days' prior written notice of its intention to prepay
the principal of this Promissory Note, in whole or in part, during which time
Payee may exercise the Option by delivering to the Maker Payee's Notice of
Conversion within forty-five (45) days following Payee's receipt of such notice
from the Maker. All partial prepayments of principal shall reduce the principal
balance hereunder in reverse order of maturity.
This Promissory Note is given in consideration of a loan by Payee to Maker
in the principal amount of this Promissory Note. This Promissory Note may not be
changed orally, but only by an agreement in writing signed by the parties
against whom enforcement of any waiver, change, modification, or discharge is
sought.
This Promissory Note and the payment due hereunder are secured by the
following documents executed simultaneously herewith: (a) a Security Agreement;
(b) a Stock Pledge and Security Agreement; (c) Limited Partnership Interest
Pledge and Security Agreement; (d) a Reassignment Agreement; and (e) any and all
other Security Documents as defined in the Agreement executed by the Maker in
favor of the Payee pursuant to the Agreement.
The holder of this Promissory Note and all successors thereof shall have
all of the rights of a holder in due course under the Uniform Commercial Code as
in effect in the State of Michigan and the other laws of the State of Michigan.
Maker hereby waives demand, presentment, protest, notice of protest and/or
dishonor, and all other notices or requirements that might otherwise be required
by law. The Maker promises to pay on demand all costs of collection, including
reasonable attorneys' fees and court costs, paid or incurred by Payee to enforce
this Promissory Note upon an Event of Default (as defined below) hereunder.
The occurrence of any of the following shall constitute an "Event of
Default" (or, if the giving of notice or the lapse of time or both is required,
then, prior to such notice or lapse of time, a "Default"):
a. the Maker shall fail to pay any principal of or interest on this
Promissory Note when the same shall become due and payable, whether at
the stated date of maturity or any accelerated date of maturity or at
any other date fixed for payment; provided however, such failure shall
not constitute a default if the required payment is made within five
days after the date it first became due and payable and such failure
has not occurred more than two times in the preceding 12 months; or
b. any Event of Default shall occur in the Subscription and
Investment Representation Agreement for 10% Convertible Secured
Promissory Note Due January 2003 between Maker and Payee of even date
herewith after the passage of any notice and cure period set forth
herein;
c. the Company shall make an assignment for the benefit of
creditors, or admit in writing its inability to pay or generally fail
to pay its debts as they mature or become due, or shall petition or
apply for the appointment of a trustee or other custodian, liquidator
or receiver of the Company or of any substantial part of its assets, or
shall commence any case or other proceeding relating to the Company
under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other
proceeding shall be commenced against the Company and the
<PAGE> 4
Company shall indicate its approval thereof, consent thereto or
acquiescence therein or shall fail to contest the same in a timely
manner;
d. an involuntary petition shall be filed or an involuntary proceeding
shall be commenced seeking liquidation, reorganization or other
relief in respect of the Company or of its debts or any substantial
part of its assets, under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in
effect, and in any such case, such proceeding or petition shall
continue undismissed for sixty (60) days or an order or decree
approving or ordering any of the foregoing shall be entered;
then, and in any such event, (A) if such event is an Event of Default specified
in Section (c) or (d) above with respect to the Maker, automatically all amounts
owing with respect to the Agreement, this Promissory Note and the other
documents executed in connection herewith shall become immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Maker and (B) if such event is any
other Event of Default the Payee shall by notice in writing to the Maker,
declare all amounts owing with respect to the Agreement, this Promissory Note
and the other documents executed in connection herewith to be, and they shall
thereupon forthwith become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Maker.
This Promissory Note, the Agreement and all security and other
documents signed by both parties in connection with the transactions
contemplated herein and therein constitute the parties' entire understanding
with respect to the subject matter hereof and the Agreement and each such
security and other documents is incorporated herein by this reference.
IN WITNESS WHEREOF, the Maker has caused this Promissory Note to be
executed in its corporate name by the signature of its duly authorized officer.
BIG BUCK BREWERY & STEAKHOUSE, INC.
By: /s/ WILLIAM F. ROLINSKI
---------------------------------------
William F. Rolinski
President and Chief Executive Officer
<PAGE> 1
EXHIBIT 2
THIS AMENDED, RESTATED AND CONSOLIDATED CONVERTIBLE NOTE AND THE SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, HAVE NOT BEEN REGISTERED UNDER ANY STATE
SECURITIES LAWS, AND ARE SUBJECT TO A SUBSCRIPTION AND INVESTMENT REPRESENTATION
AGREEMENT. THEY MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED,
PLEDGED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF EITHER AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER THE
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE
TO BIG BUCK BREWERY & STEAKHOUSE, INC. THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER APPLICABLE
STATE SECURITIES LAWS.
AMENDED, RESTATED AND CONSOLIDATED CONVERTIBLE NOTE
$1,623,885.26 Detroit, Michigan
Maturity Date: October 1, 2000 Date of Note: February 4, 2000
INDEBTEDNESS
FOR VALUE RECEIVED, the undersigned, BIG BUCK BREWERY & STEAKHOUSE,
INC., a Michigan corporation, f/k/a Michigan Brewery, Inc. ("Borrower"),
promises to pay to the order of WAYNE COUNTY EMPLOYEES' RETIREMENT SYSTEM, a
body politic of the State of Michigan or any successors and assigns ("Holder"),
at its offices at 400 Monroe Street, Suite 320, Detroit, Michigan 48226, or at
such other place as the Holder hereof may designate in writing from time to
time, the principal sum of One Million, Six Hundred Twenty Three Thousand, Eight
Hundred Eighty Five and 26/100 Dollars ($1,623,885.26) Dollars, together with
interest as hereinafter provided, in lawful money of the United States, which
shall be legal tender in payment of all debts and dues, public and private, at
the time of payment, in the manner hereinafter provided.
AMENDMENT, RESTATEMENT AND CONSOLIDATION OF NOTES
This Amended, Restated and Consolidated Convertible Note ("Note")
amends and restates and consolidates and makes one note the following
(i) Installment Business Loan Note dated July 28, 1995 in the original principal
amount of One Million Eight Hundred Seventy-Five Thousand ($1,875,000) Dollars
given by Borrower in favor of Bank One, Michigan, formerly known as NBD Bank
("Bank One"), (ii) Installment Business Loan Note dated July 28, 1995 in the
original principal amount of Eight Hundred Thousand ($800,000) Dollars given by
Borrower in favor of Bank One; and (iii) Master Demand Business Loan Note
(Replacement) dated July 28, 1995 in the original principal amount of Three
Hundred Twenty-Five Thousand ($325,000) Dollars given by Borrower in favor of
Bank One (Collectively, the "Bank One Notes"), which Bank One Notes were
endorsed to Holder and the Bank One Notes are hereby amended and restated in
their entirety and consolidated by this Note.
RATE OF INTEREST
So long as there is no Event of Default or default hereunder or under
the Security Instruments (as defined below), the principal balance of this Note
shall bear interest at the
<PAGE> 2
rate of ten percent (10%) simple interest per annum ("Contract Rate") during the
term of this Note.
If Borrower does not make timely payments as provided in the Note, a
late payment fee in the amount equal to three (3%) percent of the past due
amount shall be payable in connection with any amount due under this Note that
is not received by Holder within ten (10) days of when due. In the Event of
Default or default hereunder or under the Security Instruments, as hereinafter
defined, Holder shall have the right and option to charge interest on the then
outstanding principal balance of this Note at a default of 4% in excess of the
Contract Rate.
LIMITATIONS ON INTEREST RATE
It is the intention of Borrower and Holder that the rates of interest
from time to time applicable hereunder, including all sums and charges that may
properly be deemed to constitute interest, shall not exceed the maximum lawful
rate of interest applicable to each such rate. To that end, it is agreed that
any rate of interest applicable hereunder shall not at any time exceed the rates
or amount of interest then permitted to be charged by stipulation in writing
between Borrower and Holder hereunder (the "Interest Rate Limitation").
In the event that any rate of interest otherwise applicable hereunder
(including any sums paid independent of this Note and properly determined under
applicable law to be interest) shall exceed the Interest Rate Limitation, the
interest rate applicable to this Note shall automatically be reduced to the
applicable maximum interest rate which does not exceed the applicable Interest
Rate Limitation, and sums paid as interest which would cause any effective rate
of interest hereunder to exceed the applicable Interest Rate Limitation shall be
applied to reduce the principal balance of this Note.
MANNER OF PAYMENT
The principal and interest due under this Note shall be amortized on a
basis of a 25 year amortization schedule with a lump sum of balloon payment
required on the Maturity Date (as defined below). Borrower shall make an
interest only payment on March 1, 2000. Thereafter, Borrower shall make payments
of principal and interest in the amount of $14,756.26 commencing on the first
day of April, 2000 and continuing on the first day of each and every month
thereafter until October 1, 2000 (the "Maturity Date"). Payments hereunder shall
be applied in the following order of priority: late charges, costs, expenses,
accrued interest and thereafter to the reduction of principal. This Note will
not be self amortizing and instead of a substantial lump sum balloon installment
of principal and interest will be due on the Maturity Date.
All interest shall be payable in arrears. Interest hereon shall be
calculated on the basis of a 360-day year applied to the actual number of days
elapsed. All payments of interest and principal shall be payable in lawful
currency of the United States of America ("Currency"), unless and to the extent
Holder exercises Holder's option hereunder to convert all or part of the unpaid
principal balance of this Note into shares of common stock, par value $0.01 per
share (the "Shares"), of the Borrower.
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<PAGE> 3
CONVERTIBLE NOTE
At any time prior to payment in full of this Promissory Note, Holder shall
have the option to convert all or part of the unpaid principal balance of this
Note into that number of Shares of the Borrower (the "Option") equal to (i) all
or such part of the unpaid principal balance of the Note being converted divided
by (ii) $2.42, which is the average of the closing sale price of one Share as
quoted by The NASDAQ Stock Market for the five trading days immediately prior to
the Borrower's execution of this Promissory Note (the "Conversion Price"),
subject to the antidilution adjustments presented in the following paragraph,
any fractional Shares to be paid in Currency. To exercise the Option, Holder
shall surrender this Note to the Borrower, accompanied by written notice of
Holder's intention to exercise the Option, which notice shall set forth the
principal amount of this Note and such portion of the unpaid principal balance
of the Note, if not the entire unpaid principal balance, to be converted into
Shares (the "Notice of Conversion"). Within ten (10) business days after
Borrower's receipt of the Notice of Conversion and Holder's surrender of this
Note, Borrower shall deliver or cause to be delivered to the Holder, the Shares
in the name of the Holder and a duly executed, new note in the principal amount
of the balance thereof, if any.
If the Borrower shall at any time hereafter subdivide or combine its
outstanding Shares, or declare a dividend payable in its Shares, the Conversion
Price in effect immediately prior to the subdivision, combination, or record
date for such dividend payable in Shares shall forthwith be proportionately
increased, in the case of combination, or proportionately decreased, in the case
of subdivision or declaration of a dividend payable in Shares, and the number of
Shares into which the unpaid principal balance of this Note may be converted
upon exercise of the Option immediately preceding such event, shall be changed
to the number determined by dividing the then current Conversion Price by the
Conversion Price as adjusted after such subdivision, combination, or dividend
payable in Shares and multiplying the result of such division against the number
of Shares to be acquired upon the exercise of the Option immediately preceding
such event, so as to achieve an Conversion Price and number of Shares
purchasable after such event proportional to such Conversion Price and number of
Shares purchasable immediately preceding such event. All calculations hereunder
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be. In case of any capital reorganization or any reclassification
of the Shares, or in the case of any consolidation with or merger of the
Borrower into or with another corporation, or the sale of all or substantially
all of its assets to another corporation, which is effected in such a manner
that the Holders of Shares shall be entitled to receive stock, securities, or
assets with respect to or in exchange for Shares, then, as a part of such
reorganization, reclassification, consolidation, merger, or sale, as the case
may be, lawful provision shall be made so that the Holder of this Note shall
have the right thereafter to receive, upon the exercise hereof, the kind and
amount of shares of stock or other securities or property which the Holder would
have been entitled to receive if, immediately prior to such reorganization,
reclassification, consolidation, merger, or sale, the Holder had held the number
of Shares into which the unpaid principal balance of this Note could have been
converted upon exercise of the Option. In any such case, appropriate adjustment
(as determined in good faith by the Board of Directors of the Borrower) shall be
made in the
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<PAGE> 4
application of the provisions set forth herein with respect to the rights and
interest thereafter of the Holder of this Note, to the end that the provisions
set forth herein (including provisions with respect to adjustments of the
exercise price) shall thereafter be applicable, as nearly as reasonably may be,
in relation to any shares of stock or other property thereafter deliverable upon
the exercise of the Option.
In the event the Borrower shall at any time or from time to time, issue
Shares, options, warrants or rights to subscribe for Shares, or issue any
securities convertible into or exchangeable for Shares, for a consideration per
share (determined by dividing the Net Aggregate Consideration (as determined
below) by the aggregate number of Shares that would be issued if all such
Shares, options, warrants, rights or convertible securities were exercised or
converted to the fullest extent permitted by their terms) less than the
Conversion Price in effect immediately prior to the issuance of such options or
rights or convertible or exchangeable securities, the Conversion Price in effect
immediately prior to the issuance of such options, warrants or rights or
securities shall be reduced to an amount determined by multiplying such
Conversion Price by a fraction:
a. the numerator of which shall be (X) the number of shares of
Borrower's Common Stock of all classes outstanding immediately prior to
the issuance of such options, rights or convertible securities
(excluding authorized but unissued shares held by the Corporation but
including all shares of Common Stock issuable upon conversion or
exercise of any outstanding Convertible Preferred Stock, options,
warrants, rights or convertible securities), plus (Y) the number of
shares of Borrower's Common Stock which the total amount of
consideration received by the Borrower for the issuance of such
options, warrants, rights or convertible securities plus the minimum
amount set forth in the terms of such security as payable to the
Borrower upon the exercise or conversion thereof (the "Net Aggregate
Consideration") would purchase at the Conversion Price prior to
adjustment, and
b. the denominator of which shall be (X) the number of shares of
Borrower's Common Stock of all classes outstanding immediately prior to
the issuance of such options, warrants, rights or convertible
securities (excluding authorized but unissued shares held by the
Borrower but including all shares of Common Stock issuable upon
conversion or exercise of any outstanding Convertible Preferred Stock,
options, warrants, rights or convertible securities), plus (Y) the
aggregate number of shares of Borrower's Common Stock that would be
issued if all such options, warrants, rights or convertible securities
were exercised or converted.
When delivered, all Shares shall be duly authorized, validly issued, fully
paid, and nonassessable. Borrower shall take any and all action necessary to
maintain the required authority to issue the Shares to Holder in the event
Holder converts, or is required to convert, the unpaid principal balance of this
Note into Shares.
PREPAYMENT
Prepayment of the principal of this Note is permitted, in whole or in
part, without premium or penalty of any kind; provided Borrower provides Holder
with forty-five (45) business days' prior written notice of its intention to
prepay the principal of this Promissory
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<PAGE> 5
Note, in whole or in part, during which time Holder may exercise the Option by
delivering to the Borrower Holder's Notice of Conversion within forty-five (45)
days following Holder's receipt of such notice from the Borrower. All partial
prepayments of principal shall reduce the principal balance hereunder in reverse
order of maturity.
SECURITY
This Note is secured by a Mortgage dated April 25, 1995 which is a
Future Advance Mortgage, as amended by that certain Amendment to Mortgage dated
July 28, 1995, and as further amended by that certain Second Amendment to
Mortgage of even date herewith (as amended, "Mortgage"), made by Borrower to NBD
Bank, a Michigan banking corporation, now known as Bank One, Michigan, and as
assigned to Holder, which Mortgage encumbers certain real property located in
the City of Gaylord, Otsego County, Michigan ("Project"), together with
improvements, personal property, collateral and rights with respect thereto, as
more particularly described therein, as well as a separate Assignment of Real
Estate Leases and Rentals with respect thereto, a mortgage dated of even date
herewith given by Borrower to Holder encumbering Borrower's leasehold interest
in certain real property located in the City of Auburn Hills, Oakland County,
Michigan ("Leasehold Mortgage") a Subscription and Investment Representation
Agreement, a Continuing Security Agreement, a Security Agreement, Pledge
Agreements, UCC Financing Statements, Guarantees and other loan and security
documents delivered in connection therewith (hereinafter, all such loan and
security documents and agreements are sometimes collectively referred to as the
"Security Instruments"). Any Event of Default or default in any of the
conditions, covenants, obligations or agreements contained in any of the
Security Instruments or any other instrument securing and/or evidencing the
indebtedness of Borrower to Holder shall constitute an event default under this
Note and under that certain 10% Convertible Subordinated Promissory Note due
February 4, 2003 in the principal amount of $5,876,114.74 given by Borrower in
favor of Holder ("Subordinated Note") and shall entitle the Holder hereof to
accelerate the entire indebtedness and amounts due hereunder, under the
Subordinated Note and under the Security Instruments and to take such other
action as may be provided for in the Security Instruments, at law or in equity.
Any Event of Default or default under this Note or the Subordinated Note shall
be an Event of Default or default under each of the Security Instruments.
DEFAULT
The unpaid principal balance, all accrued and unpaid interest due under
this Note and all other amounts due hereunder or under the Security Instruments
shall become immediately due and payable at the option of Holder upon the
occurrence of any of the following (collectively, "Events of Default"):
a. the Borrower shall fail to pay any principal of or interest on
this Promissory Note when the same shall become due and payable,
whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment; provided however, such
failure shall not constitute a default if the required payment is made
within five days after the date it first became due and payable and
such failure has not occurred more than two times in the preceding 12
months; or
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<PAGE> 6
b. any Event of Default shall occur in the Subscription and
Investment Representation Agreement for 10% Convertible Secured
Promissory Note Due January 2003 between Borrower and Holder of even
date herewith after the passage of any notice and cure period set forth
therein;
c. the Borrower shall make an assignment for the benefit of
creditors, or admit in writing its inability to pay or generally fail
to pay its debts as they mature or become due, or shall petition or
apply for the appointment of a trustee or other custodian, liquidator
or receiver of the Borrower or of any substantial part of its assets,
or shall commence any case or other proceeding relating to the Borrower
under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other
proceeding shall be commenced against the Borrower and the Borrower
shall indicate its approval thereof, consent thereto or acquiescence
therein or shall fail to contest the same in a timely manner;
d. an involuntary petition shall be filed or an involuntary
proceeding shall be commenced seeking liquidation, reorganization or
other relief in respect of the Borrower or of its debts or any
substantial part of its assets, under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in
effect, and in any such case, such proceeding or petition shall
continue undismissed for sixty (60) days or an order or decree
approving or ordering any of the foregoing shall be entered;
then, and in any such event, so long as the same may be continuing, (A) if such
event is an Event of Default specified in Section (c) or (d) above with respect
to the Borrower, automatically all amounts owing with respect to the Agreement,
this Note, the Subordinated Note and the other documents executed in connection
herewith shall become immediately due and payable without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower and (B) if such event is any other Event of Default the Holder
shall by notice in writing to the Borrower, declare all amounts owing with
respect to the Agreement, this Note, the Subordinated Note and the other
Security Instruments to be, and they shall thereupon forthwith become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Borrower.
Borrower shall pay all costs and reasonable attorneys' fees incurred in
collecting or enforcing this Note, the Subordinated Note or the other Security
Instruments, whether suit be brought or not. Any failure of Holder to exercise
such option to accelerate shall not constitute a waiver of the right to exercise
such option to accelerate at any future time. Any failure of Holder to exercise
such option to accelerate shall not constitute a waiver of the right to exercise
such option to accelerate at any future time.
Acceptance by Holder of any payment in an amount less than the amount
then due shall be deemed an acceptance on account only, and the failure to pay
the entire amount then due shall be and continue to be an Event of Default or
default. At any time thereafter
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<PAGE> 7
and until the entire amount then due has been paid, Holder shall be entitled to
exercise all rights conferred upon it in this Note, upon the occurrence of an
Event of Default.
Borrower and every person and entity at any time liable for the payment
of the evidenced debt expressly authorize Holder to immediately apply to the
payment of this Note any sum of money or other property belonging to Borrower or
any such person or entity, deposited or otherwise in the hands of Holder;
provided, however, that neither this authority, nor the fact that it may not be
exercised, shall alter or modify in any manner the obligation herein incurred.
WAIVER
Borrower, for itself and its legal representatives, successors and
assigns, and every person and entity at any time liable for the indebtedness
hereunder, or any part thereof, expressly waives presentment, demand, protest,
notice of dishonor, notice of nonpayment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
marshalling rights, subrogation rights, and any exemption under the homestead
exemption laws, if any, or any other exemption or insolvency laws. Borrower
consents that Holder may release, exchange or substitute any real estate and/or
personal property or other collateral security now held, or which may hereafter
be held as security for the payment of this Note, and may extend the time for
payment or otherwise modify the terms of payment of any part or the whole of the
debt evidenced hereby.
GOVERNING LAW, SUCCESSORS AND ASSIGNS AND MISCELLANEOUS
This Note is delivered and accepted in the State of Michigan and shall
be governed and construed in accordance with its laws. If any provision of this
Note is in conflict with any statute or applicable rule of law, or is otherwise
unenforceable for any reason whatsoever, such provision shall be deemed null and
void to the extent of such conflict or unenforceability and shall be deemed
separate from and shall not invalidate any other provision of this Note. Time
shall be of the essence under this Note. This Note may not be amended except by
a writing signed by Borrower and Holder. This Note shall, in accordance with its
terms, be binding upon Borrower, its officers and their respective personal
representatives, heirs and successors and assigns (which shall include, without
limitation, all subsequent owners of any interest in any of the collateral and
security provided by the Mortgage, the Leasehold Mortgage and other Security
Instruments) and shall inure to the benefit of Holder and its successors and
assigns. The paragraph captions provided in this Note are for convenience only
and shall not affect the meaning, interpretation or construction of the
provisions hereof.
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<PAGE> 8
IN WITNESS WHEREOF, Borrower has caused this Note to be executed on the
day and year first written above.
BIG BUCK BREWERY & STEAKHOUSE,
INC., a Michigan corporation,
f/k/a Michigan Brewery, Inc.
By: /s/ William F. Rolinski
----------------------------------
Its: President and Chief Executive Officer
--------------------------------------
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<PAGE> 1
EXHIBIT 3
NO SALE, OFFER TO SELL OR TRANSFER OF THESE SECURITIES SHALL BE MADE WITHOUT (i)
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH SALE,
OFFER, OR TRANSFER MAY BE MADE WITHOUT REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (ii) SUCH REGISTRATION OR
QUALIFICATION.
BIG BUCK BREWERY & STEAKHOUSE, INC.
COMMON STOCK PURCHASE WARRANT
Big Buck Brewery & Steakhouse, Inc., a Michigan corporation (the
"Company"), hereby agrees that, for value received, WAYNE COUNTY EMPLOYEES'
RETIREMENT SYSTEM or its assigns, is entitled, subject to the terms set forth
below, to purchase from the Company at any time or from time to time before 5:00
p.m., Minneapolis, Minnesota time, on February 27, 2004, Two Hundred Thousand
(200,000) shares (the "Warrant Shares") of the $.01 par value common stock of
the Company (the "Common Stock") at an exercise price of Two Dollars and No
Cents ($2.00) per share.
1. Exercise of Warrant; Cashless Exercise.
(a) Exercise of Warrant. The purchase rights granted by
this Warrant shall be exercised by the holder surrendering this
Warrant with the Warrant Exercise Form attached hereto duly executed
by such holder, to the Company at its principal office, accompanied
by payment, in cash, by cashier's check payable to the order of the
Company or by wire transfer to an account specified by the Company,
of the purchase price payable in respect of the Warrant Shares being
purchased. If less than all of the Warrant Shares purchasable
hereunder are purchased, the Company will, upon such exercise,
execute and deliver to the holder hereof a new Warrant evidencing the
number of Warrant Shares not so purchased. As soon as practicable
after the exercise of this Warrant and payment of the purchase price,
the Company will cause to be issued in the name of and delivered to
the holder hereof, or as such holder may direct, a certificate or
certificates representing the Warrant Shares purchased upon such
exercise.
(b) Cashless Exercise. In lieu of payment of cash upon
exercise of this Warrant, the holder may effect a "cashless" exercise
of the Warrant by surrendering this Warrant with the Warrant Exercise
Form attached hereto duly executed by such holder to the Company at
its principal office. The exercise price for the Securities to be
acquired in the exchange shall be paid by the surrender, as indicated
in the Warrant Exercise Form of such additional number of Warrants as
equals the aggregate exercise price of the Warrants desired to be
exercised, divided by the difference obtained by subtracting the per
share exercise price of this Warrant from the Market Price of the
Warrant Shares. The "Market Price" is defined as the average of the
closing bid and ask prices for the Warrant Shares on the last date on
which Warrant Shares were traded prior to the date of the Warrant
Exercise Form which shall not be later than the date the Warrant
Exercise Form is given to the Company.
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<PAGE> 2
(c) Legend. The Company may require that the Warrant Share
certificate or certificates contain on the face thereof a legend
substantially as follows:
No sale, offer to sell or transfer of the shares represented
by this certificate shall be made without (i) the opinion of
counsel reasonably satisfactory to the Company that such sale,
offer, or transfer may be made without registration or
qualification under the Securities Act and applicable state
securities laws or (ii) such registration or qualification.
2. Negotiability and Transfer. This Warrant is issued upon the
following terms, to which each holder hereof consents and agrees:
(a) This Warrant may not be sold, transferred, assigned or
hypothecated without (i) an opinion of counsel reasonably
satisfactory to the Company that such sale, transfer, assignment or
hypothecation may be made without registration or qualification under
the Securities Act and applicable state securities laws or (ii) such
registration or qualification.
(b) Until the Company receives notice of a transfer of
this Warrant, the Company may treat the registered holder of this
Warrant as absolute owner hereof for all purposes without being
affected.
(c) Each successive holder of this Warrant, or of any
portion of the rights represented hereby, shall be bound by and
receive the benefits of the terms, conditions and rights set forth
herein.
3. Antidilution Adjustments. If the Company shall at any time
hereafter subdivide or combine its outstanding shares of Common Stock, or
declare a dividend payable in Common Stock, the exercise price in effect
immediately prior to the subdivision, combination, or record date for such
dividend payable in Common Stock shall forthwith be proportionately increased,
in the case of combination, or proportionately decreased, in the case of
subdivision or declaration of a dividend payable in Common Stock, and the number
of Warrant Shares purchasable upon exercise of this Warrant immediately
preceding such event, shall be changed to the number determined by dividing the
then current exercise price by the exercise price as adjusted after such
subdivision, combination, or dividend payable in Common Stock and multiplying
the result of such division against the number of Warrant Shares purchasable
upon the exercise of this Warrant immediately preceding such event, so as to
achieve an exercise price and number of Warrant Shares purchasable after such
event proportional to such exercise price and number of Warrant Shares
purchasable immediately preceding such event. All calculations hereunder shall
be made to the nearest cent or to the nearest one-hundredth of a share, as the
case may be. No fractional Warrant Shares are to be issued upon the exercise of
this Warrant, but the Company shall pay a cash adjustment in respect of any
fraction of a share which would otherwise be issuable in an amount equal to the
same fraction of the market price per share of Common Stock on the day of
exercise as determined in good faith by the Company. In case of any capital
reorganization or any reclassification of the shares of Common Stock of the
Company, or in the case of any consolidation with or merger of the Company into
or with another corporation, or the sale of all or substantially all of its
assets to another corporation,
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<PAGE> 3
which is effected in such a manner that the holders of Common Stock shall be
entitled to receive stock, securities, or assets with respect to or in exchange
for Common Stock, then, as a part of such reorganization, reclassification,
consolidation, merger, or sale, as the case may be, lawful provision shall be
made so that the holder of the Warrant shall have the right thereafter to
receive, upon the exercise hereof, the kind and amount of shares of stock or
other securities or property which the holder would have been entitled to
receive if, immediately prior to such reorganization, reclassification,
consolidation, merger, or sale, the holder had held the number of Warrant Shares
which were then purchasable upon the exercise of the Warrant. In any such case,
appropriate adjustment (as determined in good faith by the Board of Directors of
the Company) shall be made in the application of the provisions set forth herein
with respect to the rights and interest thereafter of the holder of the Warrant,
to the end that the provisions set forth herein (including provisions with
respect to adjustments of the exercise price) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the exercise of the Warrant.
4. Sale of Options, Rights or Convertible Securities. In the event
the Company shall at any time or from time to time, issue shares of Common
Stock, options, warrants or rights to subscribe for shares of Common Stock, or
issue any securities convertible into or exchangeable for shares of Common
Stock, for a consideration per share (determined by dividing the Net Aggregate
Consideration (as determined below) by the aggregate number of shares of Common
Stock that would be issued if all such shares of Common Stock, options,
warrants, rights or convertible securities were exercised or converted to the
fullest extent permitted by their terms) of less than $2.00, the exercise price
of this Warrant shall be reduced to an amount determined by multiplying such
exercise price by a fraction:
(a) the numerator of which shall be (X) the number of
shares of Common Stock of all classes outstanding immediately prior
to the issuance of such options, rights or convertible securities
(excluding authorized but unissued shares held by the Company but
including all shares of Common Stock issuable upon conversion or
exercise of any outstanding, options, warrants, rights or convertible
securities), plus (Y) the number of shares of Common Stock which the
total amount of consideration received by the Company for the
issuance of such options, warrants, rights or convertible securities
plus the minimum amount set forth in the terms of such security as
payable to the Company upon the exercise or conversion thereof (the
"Net Aggregate Consideration") would purchase at the exercise price
prior to adjustment, and
(b) the denominator of which shall be (X) the number of
shares of Common Stock of all classes outstanding immediately prior
to the issuance of such options, warrants, rights or convertible
securities (excluding authorized but unissued shares held by the
Company but including all shares of Common Stock issuable upon
conversion or exercise of any outstanding options, warrants, rights
or convertible securities), plus (Y) the aggregate number of shares
of Common Stock that would be issued if all such options, warrants,
rights or convertible securities were exercised or converted.
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<PAGE> 4
4. Notice of Corporate Action. If at any time:
(a) The Company shall pay any dividend upon its Common
Stock or make any distribution to the holders of its Common Stock
(including, without limitation, a stock dividend);
(b) The Company shall offer for subscription purposes
to the holders of its Common Stock any additional shares of stock
of any class or any other rights;
(c) There shall be any capital reorganization or
reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale, conveyance,
lease or other transfer of all or substantially all of its assets to,
another corporation;
(d) There shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company; or
(e) The Company shall establish a record date (or in lieu
thereof, the date the transfer books will be closed) for the purpose
of determining the holders of common stock entitled to notice of and
to vote at a meeting of shareholders at which any of the above
actions shall be considered or acted upon;
then, the Company shall give notice to the holder hereof of the date on which
the books of the Company shall close or a record shall be taken for each such
action. Such notice shall also specify the date as of which the holders of the
Common Stock of record shall (i) participate in such dividend, distribution or
subscription rights; (ii) shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding up; or (iii) shall be entitled to consider or vote upon such action, as
the case may be. Such written notice shall be given at least twenty (20) days
prior to the action in question and not less than twenty (20) days prior to the
record date for such action or the date the Company's transfer books are closed
in respect thereto.
5. Notices. All notices and other communications in connection with
this Warrant must be in writing and, except as otherwise provided herein, will
be deemed to have been duly given (i) when mailed by certified or registered
mail, postage prepaid, return receipt requested, (ii) when sent by facsimile,
with written confirmation of receipt, or (iii) when delivered to the addressee
if sent by a nationally recognized overnight delivery service (receipt
requested). Any notice required or permitted to be given to the holder of this
Warrant shall be mailed, sent or delivered to the registered holder of the
Warrant at his or her last known post office address or facsimile number
appearing on the books of the Company.
6. Reservation of Common Stock. The Company will at all times
reserve and keep available such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant.
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7. Miscellaneous. Whenever reference is made herein to the issue or
sale of shares of Common Stock, the term "Common Stock" shall include any stock
of any class of the Company other than preferred stock that has a fixed limit on
dividends or a payment preference in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company. The Company will not, by
amendment of its Articles of Incorporation or through reorganization,
consolidation, merger, dissolution, or sale of assets, or by any other voluntary
act or deed, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations, or conditions to be observed or performed hereunder by
the Company, but will, at all times in good faith, assist, insofar as it is
able, in the carrying out of all provisions hereof and in the taking of all
other action which may be necessary in order to protect the rights of the holder
hereof against dilution. The representations, warranties, and agreements herein
contained shall survive the exercise of this Warrant. References to the "holder
of" include the immediate holder of Warrant Shares purchased on the exercise of
this Warrant, and the word "holder" shall include the plural thereof. This
Common Stock Purchase Warrant shall be interpreted under the laws of the State
of Michigan. All Warrant Shares or other securities issued upon the exercise of
the Warrant shall be validly issued, fully paid and nonassessable.
Notwithstanding anything contained herein to the contrary, the holder of this
Warrant shall not be deemed a shareholder of the Company for any purpose
whatsoever until and unless this Warrant is duly exercised.
IN WITNESS WHEREOF, the undersigned has caused this Warrant to be
signed by its duly authorized officer this 4th day of February, 2000.
BIG BUCK BREWERY & STEAKHOUSE, INC.
By /s/ William F. Rolinski
---------------------------------------
William F. Rolinski
President and Chief Executive Officer
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WARRANT EXERCISE FORM
To be signed only upon exercise of Warrant.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, of the Warrant Shares of Big Buck Brewery &
Steakhouse, Inc. to which such Warrant relates and:
[ ] herewith makes payment of $ therefor in cash, by
cashier's check payable to the order of the Company or by wire transfer to an
account specified by the Company; or
[ ] in lieu of the payment of cash, hereby surrenders the Warrant
with respect to an additional Warrant Shares (the average of the
closing bid and ask prices of the Warrant Shares on the day of ,
20 was $ per share);
and requests that such Warrant Shares be issued and be delivered to the address
for which is set forth below the signature of the undersigned.
Dated:
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(Taxpayer's I.D. Number)
----------------------------------
(Signature)
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(Address)
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ASSIGNMENT FORM
To be signed only upon authorized transfer of Warrant.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the right to purchase Warrant
Shares of Big Buck Brewery & Steakhouse, Inc. to which the within Warrant
relates and appoints , attorney, to transfer said
right on the books of such corporation with full power of substitution in the
premises.
Dated:
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----------------------------------
(Signature)
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(Address)
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EXHIBIT 4
IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING. SIGNIFICANT
REPRESENTATIONS ARE CALLED FOR HEREIN.
BIG BUCK
BREWERY & STEAKHOUSE, INC.
SUBSCRIPTION AND INVESTMENT REPRESENTATION AGREEMENT FOR
10% CONVERTIBLE SECURED PROMISSORY NOTE DUE FEBRUARY 2003
Big Buck Brewery & Steakhouse, Inc.
550 South Wisconsin Street
Gaylord, Michigan 49734
Gentlemen:
THIS AGREEMENT is made effective this 4th day of February, 2000, by and
between Big Buck Brewery & Steakhouse, Inc., f/k/a/ Michigan Brewery, Inc., a
Michigan corporation (the "Company"), and Wayne County Employees' Retirement
System, a body politic of the State of Michigan (the "Subscriber"). In
consideration of the mutual promises contained herein, and other good and
valuable consideration, the parties hereto agree as follows:
1. Agreement of Loan; Purchase of Bank One's Interests; Security Interest.
a. Agreement of Loan. As set forth more fully below, Subscriber agrees to
pay to the Company and to Bank One, Michigan, f/k/a NBD Bank, N.A. ("Bank
One") an aggregate amount of $7,500,000 (the "Aggregate Consideration"), by
wire transfer of immediately available funds. In consideration therefor,
the Subscriber will receive (i) a $5,876,114.74 convertible secured
promissory note in the form of Exhibit A attached hereto (the "Convertible
Note A"), the principal of which is convertible into certain shares of the
common stock of the Company (the "Company's Common Stock") as described in
the Convertible Note A (as defined below); (ii) a Common Stock Purchase
Warrant entitling Subscriber to purchase up to 200,000 shares of the
Company's Common Stock in the form of Exhibit B attached hereto (the
"Warrant"), and (iii) all of the interest which Bank One has in and to all
of the obligations of the Company to Bank One under the loan documents as
more particularly described on Exhibit C as amended, restated and
consolidated as more particularly described on Exhibit D attached hereto.
For purposes of this Agreement, the documents and agreements described on
Exhibits C and D hereof and any other documents, instruments or agreements
executed in connection therewith are referred to collectively as the "Bank
One Loan Documents" and individually as a "Bank One Loan Document".
b. Purchase of Bank One's Interests. In connection with subsection (a)
above, Subscriber will purchase Bank One's interest under the Bank One Loan
Documents, as evidenced by the Amended, Restated and Consolidated
Convertible Note, dated February 4, 2000 executed by the Company in favor
of Subscriber in the principal amount of $1,623,885.26 (the "Convertible
Note B"). In furtherance thereof, $1,623,885.26 of the Aggregate
Consideration will be wire transferred to Bank One to purchase the Bank One
Loan Documents pursuant to instructions provided to Subscriber by Bank One.
Simultaneously with such payment, Bank One will execute the assignment and
transfer documents acceptable to Subscriber and Bank One. In addition, the
Company will execute the amendments, restatements and other documents and
agreements with Subscriber amending and restating the Bank One Loan
Documents as more particularly described on Exhibit D attached hereto.
<PAGE> 2
c. Security Interest. Simultaneously with the execution of this Agreement
the Company grants the following interests to Subscriber, and will enter
into separate agreements (the "Security Agreements") with Subscriber
further evidencing such grants: (i) a pledge of the Company's limited
partnership interest in Buck & Bass, L.P., (ii) a pledge of the Company's
shares of the issued and outstanding common stock of BBBP Management
Company, (iii) a security interest, assignment or mortgage, as applicable,
in the Company's interest in all Assets, ownership interests, licenses, and
permits, including, without limitation, a mortgage encumbering the Gaylord
site and Auburn Hills site. The Company hereby covenants and agrees to
promptly execute any additional documentation or agreements which
Subscriber may reasonably request in furtherance of the foregoing,
including, but not limited to, an assignment of any lease or mortgage which
the Company may enter into in connection with the development of the
Detroit restaurant and/or brewery at Comerica Park, and any and all
financing statements or other filings as Subscriber may require in order to
perfect the interests granted above. All such documents referred to and
executed pursuant to this Section 4(c) are referred to herein collectively
as the "Security Documents" and individually as a "Security Document". For
purposes of this Section 4(c), "Assets" is defined as all of the Company's
accounts, chattel paper, documents, fixtures, equipment, general
intangibles, licenses, contract rights, instruments, inventory, vehicles,
chattels, machinery, furniture, goods and like personal property and
collateral of every kind, now or hereafter owned, bought for use and/or
used by the Company in its business or in which the Company now has or
hereafter obtains rights of any kind and wherever located.
d. For purposes of this Agreement, Convertible Note A and Convertible Note
B are sometimes referred to as the "Convertible Note".
2. Representations and Warranties of the Company. In consideration of
Subscriber's subscription for the Convertible Note, the Company represents and
warrants to Subscriber as follows, as of the date hereof, as of the date of
Subscriber's payment, and at all times any amounts are outstanding hereunder:
a. Organization. The Company is a duly organized and validly existing
corporation under the laws of the State of Michigan.
b. Good Standing. The Company is in good standing under the laws of the
State of Michigan, and there are no proceedings or actions pending to limit
or impair any of its powers, rights and privileges, or to dissolve it. The
Company is duly qualified to do business in every jurisdiction in which
such qualification is required.
c. Corporate Power. The Company has all required corporate power and
authority to carry on its business as presently conducted, to enter into
and perform this Agreement and the agreements contemplated hereby to which
it is a party and to carry out the transactions contemplated hereby and
thereby. The copies of the Restated Articles of Incorporation and by-laws
or other organizational documents of the Company, as amended to date, which
have been furnished to counsel for the Subscriber by the Company, are
correct and complete at the date hereof, and the Company is not in
violation of any term of its Restated Articles of Incorporation or by-laws.
The Company is not in violation of any term or provision of any agreement,
instrument, judgment, decree, order, statute, rule or government regulation
applicable to it or to which it is a party. The Company has the legal power
and authority to own its properties and assets and to carry out its
business as now being conducted and is qualified to do business in the
State of Michigan and in every jurisdiction where the nature of its
business or the property owned or operated by it makes such qualification
necessary; the Company has the legal power and authority to borrow money in
accordance with the terms of this Agreement, to execute and deliver the
loan documents hereby, to grant to Subscriber mortgages and security
interests as provided in such documents, if any, executed in conjunction
with this Agreement and to do any and all other things required of it
hereunder.
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d. Corporate Authorization. The execution and delivery of this Agreement
and all documents executed pursuant hereto, including but not limited to
the Convertible Note and Warrant, and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by proper
corporate action of the Company. The execution of this Agreement, the
Warrant, the Convertible Note, all documents executed pursuant hereto, if
converted, the issuance of the Company's Common Stock in connection with
the Convertible Note and, if exercised, the issuance of the Company's
Common Stock in connection with the Warrant and the performance of any
transaction contemplated hereby will not: (i) violate, conflict with or
result in a default under any material contract or obligation to which the
Company is a party or by which any of its assets are bound, or any
provision of the Restated Articles of Incorporation or by-laws of the
Company, or cause the creation of any encumbrance upon any of the material
assets of the Company except for encumbrances created in favor of the
Subscriber; (ii) violate or result in a violation of, or constitute a
default (whether after the giving of notice, lapse of time or both) under,
any provision of any law, regulation or rule, or any order of, or any
restriction imposed by any court or other governmental agency applicable to
the Company; (iii) except for the filing of a Form D and Form 8-K with the
Commission, a Listing of Additional Shares form with NASDAQ or the
Securities Commission, and state blue sky filings, require from the Company
notice to, declaration or filing with, or consent or approval of any
governmental authority or other third party; or (iv) accelerate any
obligation under, or give rise to a right of termination of, any agreement,
permit, license or authorization to which the Company is a party or by
which the Company is bound.
e. Enforceability. This Agreement and all documents executed pursuant
hereto, including but not limited to the Convertible Note and Warrant,
constitute valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as enforceability may be
limited by the application of bankruptcy, insolvency, moratorium or similar
laws affecting the rights of creditors generally or by judicial limitations
on the right of specific performance. The Company's Common Stock issuable
upon conversion of the Convertible Note and exercise of the Warrant, has
been duly authorized by all necessary corporate action by the Company.
f. No Material Adverse Change. All financial data which has been or shall
hereafter be furnished to Subscriber for the purposes of, or in connection
with, this Agreement has been and/or shall be prepared in accordance with
generally accepted accounting principles consistently applied, and does or
will fairly present the financial condition of the Company as of the dates,
and the results of its operations for the periods, for which the same are
furnished to Subscriber. All financial data furnished to Subscriber in
connection with this Agreement fairly present the financial condition of
the Company as of the dates thereof and there has been no material adverse
change in the business, properties, operations or condition, financial or
otherwise, of the Company since October 3, 1999.
g. Material Liabilities/Indebtedness. There is not pending or, to the best
of the knowledge of the Company, threatened, any litigation, proceeding or
governmental investigation which could materially and adversely affect the
business, properties, operations or condition, financial or otherwise of
the Company or its ability to perform its covenants hereunder. Other than
as contemplated by this Agreement, the Company has not incurred any
material liabilities or indebtedness since October 3, 1999.
h. Current Public Information. Adequate current public information as
defined in Rule 144(c) of the Securities and Exchange Commission (the
"Commission") is available regarding the Company.
i. Good and Marketable Title. The Company has good and marketable title to
its properties given as security hereunder, subject only to following
("Permitted Liens"):
i. liens to secure taxes, assessments and other government charges or
claims for labor, material or supplies in respect of obligations not
overdue;
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ii. deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or
other social security obligations;
iii. liens of carriers, warehousemen, mechanics and materialmen, and
other like liens, in existence less than thirty (30) days from the date
of creation thereof in respect of obligations not overdue;
iv. encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, and other minor liens or
encumbrances none of which interferes with the use of the property
affected thereby in the ordinary conduct of the business of the Company;
v. liens in favor of the Subscriber;
vi. liens on the Company's assets set forth in Schedule 2(i)(vi); and
vii. any leasings or borrowings by Buck & Bass, L.P. as to the Grapevine
site not to exceed $1,5000,000.
j. No Existing Defaults. The Company is not in default in the repayment of
any indebtedness for money borrowed by it nor has there occurred any event
which, with or without notice or the passage of time or both, would
constitute a default by the Company under any agreement or instrument
pertaining to any indebtedness for money borrowed by it following the
acquisition of the Bank One Loan Documents by the Subscriber.
k. Tax Returns Filed. Company has filed all reports and tax returns
required by any governmental authority to be filed by it prior to the date
hereof and Company has received no notice that such reports or returns have
been rejected, declared insufficient, or otherwise challenged by such
governmental authority.
3. Representations and Warranties of Subscriber. In consideration of the
Company's offer to sell the Convertible Note, Subscriber hereby represents and
warrants to the Company as follows:
a. Information About the Company. Subscriber has had the opportunity to ask
questions of, and receive answers from the Company, or an agent or a
representative of the Company, concerning the terms and conditions of the
investment and the business and affairs of the Company and to obtain any
additional information necessary to verify such information, and Subscriber
has received such additional information concerning the Company as
Subscriber considers necessary or advisable in order to form a decision
concerning an investment in the Company, specifically including, but not
limited to, the documents which the Company has publicly filed with the
Commission.
b. High Degree of Risk. Subscriber realizes that the Convertible Note is
highly speculative, and involves a high degree of risk, including the risks
of receiving no payment of principal or interest under the Convertible Note
and/or no return on the investment and of losing the investment in the
Company.
c. Ability to Bear the Risk. Subscriber is able to bear the economic risk
of an investment in the Convertible Note, including the total loss of such
investment.
d. Appropriate Investment. Subscriber believes, in light of the information
provided pursuant to Section 3(a) above, that subscribing for the
Convertible Note pursuant to the terms of this Agreement is an appropriate
and suitable investment for Subscriber.
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e. Business Sophistication. Subscriber is experienced and knowledgeable in
financial and business matters, and capable of evaluating the merits and
risks of purchasing securities of the Company.
f. Residency. Subscriber is a body politic of the State of Michigan.
g. Status as an "Accredited Investor". The undersigned is an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933, as amended (alternatively referred to herein as the
"Act" or the "Securities Act"), because the undersigned is a plan
established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, with total assets in excess of $5,000,000.
4. Affirmative Covenants.
a. From the date of this Agreement through the date the Subscriber and its
successors and assigns no longer hold (i) any shares of the Company's
Common Stock issued upon conversion of the Convertible Note or exercise of
the Warrant, or (ii) any security convertible into the Company's Common
Stock, including without limitation, the Warrant and the Convertible Note:
i. Current Public Information. With a view to making available
registration as contemplated in this Agreement and the benefits of Rule
144 of the Securities Act, the Company will: (i) make available adequate
current public information as defined in Rule 144(c) of the Commission;
(ii) file with the Commission in a timely manner all reports and other
documents and information required of the Company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and take such
other actions as may be necessary to assure the availability of Form S-3
for use in connection with the registration rights provided in this
Agreement; and (iii) furnish to Subscriber upon written request a
written statement as to the Company's compliance with the reporting
requirements of Rule 144 and the Exchange Act, a copy of the Company's
most recent annual and quarterly reports, and such other reports,
documents and other information in the possession of or reasonably
obtainable by the Company as the Subscriber may reasonably request.
ii. Reservation of Shares. The Company will reserve and keep available
for issuance to Subscriber that number of its authorized but unissued
shares of common stock which are issuable upon conversion of the
Convertible Note or upon exercise of the Warrant.
b. From the date of this Agreement through the date the Subscriber and its
successors and assigns no longer hold any securities convertible into the
Company's Common Stock, including without limitation the Warrant and the
Convertible Note:
i. Notice of Corporate Action. If at any time:
(A) The Company shall pay any dividend upon the Company's Common
Stock or make any distribution to the holders of the Company's Common
Stock (including, without limitation, a stock dividend);
(B) The Company shall offer for subscription purposes to the holders
of the Company's Common Stock any additional shares of stock of any
class or any other rights;
(C) There shall be any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the
Company with, or sale, conveyance, lease or other transfer of all or
substantially all of its assets to, another corporation;
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(D) There shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(E) The Company shall establish a record date (or in lieu thereof,
the date the transfer books will be closed) for the purpose of
determining the holders of the Company's Common Stock entitled to
notice of and to vote at a meeting of shareholders at which any of
the above actions shall be considered or acted upon;
then, the Company shall give notice to the Subscriber of the date on which
the books of the Company shall close or a record shall be taken for each
such action. Such notice shall also specify the date as of which the
holders of the Company's Common Stock of record shall (i) participate in
such dividend, distribution or subscription rights; (ii) be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding up; or (iii) be entitled to consider
or vote upon such action, as the case may be. Such written notice shall be
given at least twenty (20) days prior to the action in question and not
less than twenty (20) days prior to the record date for such action or the
date the Company's transfer books are closed in respect thereto.
c. From the date of this Agreement through the date the Subscriber and its
successors and assigns no longer hold the Convertible Note:
i. Ground Lease. The Company will use its best efforts to enter a
ground lease in connection with the development of a free standing
restaurant on Woodward Avenue near Comerica Park in Detroit, Michigan,
and the Company will keep Subscriber apprised of the progress toward
entering such ground lease in accordance with applicable law.
ii. Brewery. The Company will use its best efforts to complete the
brewery at Comerica Park and the Company will keep Subscriber apprised
of the progress towards consummating such transaction in accordance with
applicable law.
iii. Insurance. Company will insure its assets for Subscriber's benefit
against loss or damage by fire, theft, burglary, pilferage, loss in
transit and such other hazards as Subscriber may specify, in amounts and
under policies and by insurers reasonably acceptable to Subscriber, and
all premiums shall be paid by Company when due and the policies or
certified copies of such policies delivered to Subscriber. If Company
fails to do so, Subscriber may procure such insurance and charge the
cost to Company's account. No cancellation of such insurance or material
change in the terms of any policy shall be made without the insurance
carrier giving Subscriber at least 30 days' prior written notice. In the
event of any casualty to Company's assets which is covered by insurance,
Company authorizes Subscriber to settle any claim or proceed to suit and
judgment for all insurance proceeds arising out of the casualty to such
assets, and upon receipt of payment of such proceeds, Subscriber may
apply all payments to the restoration or replacement of the assets so
long as there is no Event of Default as provided herein. If such Event
of Default exists, such proceeds will be applied in any manner elected
by Subscriber.
iv. Notice of Default. Immediately upon the Company's receipt of a
notice from any third party of, or upon the Company's obtaining
knowledge of the occurrence of any Event of Default the Company will
provide the Subscriber with a certified statement setting forth the
details of such Event of Default and the actions which the Company has
taken and proposes to take with respect thereto.
d. Amendment to Articles. The Company shall hold its next annual meeting of
shareholders no later than June 30, 2000. The Company will properly include
on the agenda for such Shareholders meeting the amendment of its Articles
of Incorporation to remove Articles VIII, IX and X. The Company will
include in its proxy a recommendation that the shareholders approve such
amendment. The Subscriber shall have
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the right to review and approve the Company's proxy statement prior to
mailing. In the event the amendment to the Articles of Incorporation is not
approved by the Shareholders, the Subscriber, may at its option declare an
Event of Default under this Agreement and all obligations of the Company to
Subscriber shall become immediately due and payable.
e. Liquor Control Commission Approvals. In the event the Conversion of the
Convertible Note or the exercise of the Warrant, at any time, requires
notice to or the consent or approval of, any person, or is otherwise
subject to any restriction or limitation, including without limitation the
consent or approval of the Michigan Liquor Control Commission, or similar
entities in any other states, the Company shall give such notice, obtain
such consents or approvals, and/or have such restriction or limitation
removed at its sole cost and expense and shall pay all costs and expenses
of Subscriber incurred in giving any such notices, obtaining any such
consents or approvals or removing such restrictions or limitations. In the
event that a required consent is not given, a required approval is not
obtained and/or a restriction or limitation is not removed, the Subscriber
may revoke or amend any election to convert the Convertible Note or
exercise the Warrant and the Subscriber will be immediately put back in its
position as if such election was not made or was originally made as
amended. The Subscriber shall have the right to treat the failure to obtain
any such required consent or approval or remove any such restriction or
limitation as an Event of Default hereunder and all obligations of the
Company to the Subscriber shall become immediately due and payable,
notwithstanding that the Company may have used its best efforts to obtain
such consent or approval or remove such restriction or limitation.
f. Monthly Meetings with Subscriber. The top management of the Company,
including its Chief Executive Officer, shall meet on a monthly basis at
times and locations acceptable to all parties with representatives of the
Subscriber to discuss old business, new developments and any issues between
Subscriber and Company. Each party will comply with securities laws in the
treatment of confidential information disclosed in such monthly meetings.
5. Negative Covenants. The Company covenants and agrees that, so long as the
Convertible Note is outstanding:
a. Restrictions on Indebtedness. The Company will not create, incur,
assume, guarantee or be or remain liable, contingently or otherwise, with
respect to any indebtedness, except for indebtedness incurred in the
ordinary course of business not to exceed at any time more than $1,500,000
in the aggregate. Any such indebtedness, not in the ordinary course of
business or in excess of $1,500,000, will require the approval of
Subscriber which approval shall not be unreasonably withheld, except that
Subscriber will approve any indebtedness incurred to repay the Convertible
Note so long as such payment does not materially and adversely affect the
rights of Subscriber under the Convertible Note and Warrant.
b. Restrictions on Liens. The Company will not:
i. create, incur, or suffer to be created or incurred or to exist, any
lien of any kind upon any of its property or assets of any character
whether now owned or hereafter acquired, or upon the income or profits
therefrom except for Permitted Liens;
ii. transfer any property or assets or the income or profits therefrom
for the purpose of subjecting the same to the payment of indebtedness or
performance of any other obligation in priority to payment of its
general creditors;
iii. acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money
security agreement, device or arrangement except in the ordinary course
of business;
iv. suffer to exist for a period of more than thirty (30) days after
the same shall have been incurred, any indebtedness or claim or demand
against it that, if unpaid, might by law or upon
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bankruptcy or insolvency, or otherwise, be given any priority whatsoever
over its general creditors; or
v. sell, assign, pledge or otherwise transfer any accounts, contract
rights, general intangibles, chattel paper or instruments, with or
without recourse.
c. Bankruptcy Events. The Company will not (i) make an assignment for the
benefit of creditors, (ii) admit in writing its inability to pay or
generally fail to pay its debts as they mature or become due, (iii)
petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of the Company or of any substantial part of its
assets (iv) commence any case or other proceeding relating to the company
under any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar law of any jurisdiction, now
or hereafter in effect, (v) take any action to authorizing or in
furtherance of any of the foregoing, or (vi) indicate its approval of,
consent to or acquiescence in or shall fail to contest in a timely manner
any such petition or application filed, or any such case or other
proceeding commenced against the Company, unless the Company has obtained
the prior written consent of the Subscriber, which consent will be given in
the Subscriber's sole and absolute discretion.
d. Restrictions on Use of Funds.
i. The Company covenants and agrees that the proceeds which the
Company receives from the Convertible Note will be first applied to pay
in full the indebtedness of the Company to Crestmark Bank under the Loan
Agreement dated November 20, 1998, by and between the Company and
Crestmark Bank, as amended (the "Crestmark Loan Agreement") and the
purchase of the Bank One Loan Documents. For purposes of this Section
5(d), the balance of the Convertible Note proceeds, less the amount
necessary to (1) purchase the Bank One Loan Documents, (2) pay off
amount due under the Crestmark Loan and (3) pay closing costs for this
transaction, is referred to as the "Net Proceeds".
ii. The Company covenants and agrees that it will not use the Net
Proceeds which the Company receives from the Convertible Note for any
purpose except in connection with the development of a restaurant site
in Grapevine, Texas (the "Grapevine Restaurant").
iii. The Company covenants and agrees that the Net Proceeds which the
Company receives from the Convertible Note will be used for the
Grapevine Restaurant, in accordance with Schedule 5(d) unless otherwise
approved by Subscriber, in Subscriber's sole and absolute discretion
which consent will not be unreasonably withheld.
e. Restrictions on Distributions. Until the first to occur of (a) the
Subscriber exercising its Option (as defined in the Convertible Note) to
convert, or (b) the Company's obligations hereunder and under the
Convertible Note are satisfied in full, the Company will neither declare
nor pay any dividends nor make any other distribution, whether in cash or
in property, on any shares of its capital stock or membership interest, as
the case may be, nor without the prior written consent of Subscriber
purchase, redeem, retire or otherwise acquire for value any shares of its
capital stock or membership interest, as the case may be except for those
existing commitments of the Company described on Schedule 5(e).
f. Restrictions on Issuance. If, at any time, the Company's total
liabilities exceed its total assets, or if the Company is otherwise unable
to meet its obligations as they come due, the Company will not issue
additional convertible debt or equity securities, unless Subscriber
consents thereto in writing.
g. No New Approval Requirements. The Company will take no action which will
subject the exercise of the Subscriber's rights under this Agreement, the
Warrant or the Convertible Note to any restrictions, limitations or
additional third party consent or approval requirements, including without
limitation new liquor licenses which impose any such requirements,
restrictions or limitations without first obtaining the Subscribers prior
written consent, which consent shall not be unreasonably withheld.
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6. Additional Covenants of the Company. All covenants made by the Company to
Bank One pursuant to the Bank One Loan Documents under Article V thereof are
incorporated herein as additional covenants made by the Company to and for the
benefit of Subscriber.
7. Events of Default and Acceleration. If any of the following events (each,
an "Event of Default" or, if the giving of notice or the lapse of time or both
is required, then, prior to such notice or lapse of time, a "Default") shall
occur:
a. the Company shall fail to pay any principal of or interest on the
Convertible Note when the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any other
date fixed for payment; provided however, such failure shall not constitute
a default if the required payment is made within five days after the date
it first became due and payable and such failure has not occurred more than
two times in the preceding 12 months.
b. the Company shall fail to comply in any material respect with any of its
covenants contained in this Agreement, the Convertible Note, the Warrant,
the Bank One Loan Documents, the Security Agreements or any other document,
instrument or agreement entered into in connection with this Agreement;
c. the Company shall fail to perform any term, covenant or agreement
contained herein;
d. any representation or warranty of the Company in this Agreement or in
the Convertible Note or in any other document or instrument delivered
pursuant to or in connection with this Agreement shall prove to have been
false in any material respect upon the date when made or deemed to have
been made or repeated;
e. the Company shall make an assignment for the benefit of creditors, or
admit in writing its inability to pay or generally fail to pay its debts as
they mature or become due, or shall petition or apply for the appointment
of a trustee or other custodian, liquidator or receiver of the Company or
of any substantial part of its assets, or shall commence any case or other
proceeding relating to the Company under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
or similar law of any jurisdiction, now or hereafter in effect, or shall
take any action to authorize or in furtherance of any of the foregoing, or
if any such petition or application shall be filed or any such case or
other proceeding shall be commenced against the Company and the Company
shall indicate its approval thereof, consent thereto or acquiescence
therein or shall fail to contest the same in a timely manner;
f. an involuntary petition shall be filed or an involuntary proceeding
shall be commenced seeking liquidation, reorganization or other relief in
respect of the Company or of its debts or any substantial part of its
assets, under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, and in any such case, such
proceeding or petition shall continue undismissed for sixty (60) days or an
order or decree approving or ordering any of the foregoing shall be
entered;
g. there shall remain in force, undischarged, unsatisfied and unstayed, for
more than sixty (60) days, whether or not consecutive, any uninsured final
judgment against the Company that, alone or with other outstanding
uninsured final judgments, undischarged against the Company, exceeds in the
aggregate $100,000;
h. if this Agreement, the Convertible Note or any of the documents executed
in connection herewith, shall be cancelled, terminated, revoked or
rescinded other than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of the Subscriber, or
any action or suit at law, or in equity or other legal proceeding to
cancel, revoke or rescind any of such documents shall be commenced by or on
behalf of the Company, or any court or any other governmental or regulatory
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<PAGE> 10
authority or agency of competent jurisdiction shall make a determination
that, or issue a judgment, order, decree or ruling to the effect that, any
one or more of such documents is illegal, invalid or unenforceable in any
material respect in accordance with the terms thereof;
i. there shall occur a material and adverse effect as to the properties,
assets, business, condition (financial or otherwise), prospects or results
of operations of the Company; or
j. the Company shall fail to pay any principal of or premium of interest on
any indebtedness (other than that arising hereunder) when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise); or any other event shall occur or
condition shall exist under any agreement or instrument relating to any
such indebtedness, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such
indebtedness; or any such indebtedness shall become or be declared to be
due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), or the Company shall be required to
repurchase or offer to repurchase such indebtedness, prior to the stated
maturity thereof.
then, and in any such event, (A) if such event is an Event of Default specified
in Section (e) or(f) above with respect to the Company, automatically all
amounts owing with respect to this Agreement, the Convertible Note and the other
documents executed in connection herewith shall become immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Company and (B) if such event is any
other Event of Default the Subscriber shall by notice in writing to the Company,
declare all amounts owing with respect to this Agreement, the Convertible Note
and the other documents executed in connection herewith to be, and they shall
thereupon forthwith become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Company. As to any non-monetary default, the Company shall receive
notice and a fifteen (15) day cure period (unless another cure period is
specifically granted, provided that such cure right shall not be extended more
than three (3) times in the preceding twelve (12) months.
8. Investment Purpose in Acquiring the Securities. Subscriber and the Company
acknowledge that the Convertible Note and the Common Stock into which the
Convertible Note may be converted (the "Securities") have not been registered
under the Act or applicable state securities laws, and that such securities will
be issued to Subscriber in reliance on exemptions from the registration
requirements of the Act and applicable state securities laws and in reliance on
Subscriber's representations and agreements contained herein. Subscriber is
subscribing to acquire the Securities for the account of Subscriber for
investment purposes only and not with a view to their resale or distribution.
Subscriber has no present intention to divide his, her, or its participation
with others or to resell or otherwise dispose of all or any part of the
Securities. In making these representations, Subscriber understands that, in the
view of the Commission, exemption of the Securities from the registration
requirements of the Act would not be available if, notwithstanding the
representations of Subscriber, Subscriber has in mind merely acquiring the
Securities for resale upon the occurrence or nonoccurrence of some predetermined
event.
9. Compliance with Securities Act. Subscriber agrees that if the Securities or
any part of any of the Securities are sold or distributed in the future,
Subscriber shall sell or distribute them pursuant to the requirements of the
Securities Act and applicable Blue Sky Laws (defined below). Subscriber agrees
that Subscriber will not transfer any part of the Securities without (i)
obtaining a "no action" letter from the Commission and applicable state
securities commissions, (ii) obtaining an opinion of counsel reasonably
satisfactory in form and substance to the counsel for the Company to the effect
that such transfer is exempt from the registration requirements under the Act
and applicable state securities laws, or (iii) the valid registration of the
Securities under the Act and all applicable state securities laws.
10. Restrictive Legend. Subscriber agrees that Company may place a restrictive
legend on the documents representing the Securities containing substantially the
following language:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, have not been
registered under any state
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<PAGE> 11
securities laws, and are subject to a Subscription and Investment
Representation Agreement. They may not be sold, offered for sale,
assigned, transferred, pledged, or otherwise disposed of in the
absence of either an effective registration under the Securities Act
of 1933, as amended, and under the applicable state securities laws,
or an opinion of counsel reasonably acceptable to the Company that
such transaction is exempt from registration under the Securities Act
of 1933, as amended, and under the applicable state securities laws.
11. Stop Transfer Order. Subscriber agrees that, if Subscriber fails to comply
with its obligations under Section 8 of this Agreement, the Company may place a
stop transfer order with its registrar and stock transfer agent covering all
documents or certificates representing the Securities.
12. Knowledge of Restriction upon Transfer of the Securities. Subscriber
understands that the Securities may not be freely transferable without
registration under or an exemption from registration under the Securities Act of
1933 and may in fact be prohibited from sale for an extended period of time and
that, as a consequence thereof, the undersigned may have to bear the economic
risk of investment in the Securities for an indefinite period of time and may
have extremely limited opportunities to dispose of the Securities. Subscriber
understands that Rule 144 of the Commission permits the transfer of "restricted
securities," such as the Securities, only under certain conditions, including a
minimum one-year holding period, and the availability to the public of certain
information concerning the Company.
13. Right of First Refusal.
a. General. For so long as the Convertible Note is outstanding, or the
Subscriber owns (or may acquire upon exercise of the Warrant) more than 15%
of the Company's Common Stock, the Company shall have the right to issue,
whether publicly or privately, additional debt or equity securities,
including without limitation promissory notes, debentures, preferred or
common stock, securities convertible into common or preferred stock and
secured or unsecured financings (collectively, "Additional Securities")
only if such issuance is made pursuant to and in accordance with the terms
of Sections 13(b) and (c) below, which Sections, among other things, grant
the Subscriber a right of first refusal with regard to any such issuance.
b. Obligations of Parties. The Company will not be permitted to issue any
Additional Securities pursuant to Section 13(a) unless (i) the Company
first notifies the Subscriber in writing of such proposed issuance and
attaches a copy of the terms thereof (including a copy of the offer and all
other pertinent documents) (the "Transfer Notice"), and (ii) the Subscriber
fails to purchase all of such Additional Securities and the Company
complies with Section 13(c). Upon receipt of a Transfer Notice, the
Subscriber shall have the right, exercisable by written notice (the
"Exercise Notice") given to the Company within forty-five (45) days after
the date on which such Transfer Notice was duly given, to purchase any
number of the Additional Securities specified in such Transfer Notice (the
"Offered Shares") as the Subscriber may elect, at the same price per
Offered Share and on the same terms and conditions per Offered Share as are
offered to the proposed purchaser or purchasers (the "Purchasers"). The
Exercise Notice will set forth the number of Offered Shares the Subscriber
wishes to purchase.
c. Failure to Exercise Right. The Subscriber's option to purchase the
Offered Shares will terminate upon Subscriber's failure to timely respond
within such forty-five (45) day period set forth in Section 13(b) above.
Any portion of Offered Shares which are not subscribed for by Subscriber
may be sold pursuant to the Transfer Notice, and the Company will be free
to sell the Offered Shares to the Purchasers. If the Company fails to close
a sale to Purchasers within ninety (90) days from the date the Transfer
Notice is delivered to Subscriber on the terms set forth in the Transfer
Notice, the Subscriber's option to purchase such Offered Shares shall be
reinstated.
14. Demand Registration. Any time after the Company's receipt of a Notice of
Conversion (as defined in the Convertible Note) and through the earlier of (i)
the sale or other disposition by Subscriber of all of the shares of
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<PAGE> 12
common stock issued or issuable upon conversion of the Convertible Note or
exercise of the Warrant (the "Registrable Shares") or (ii) the date upon which
all shares of common stock issued or issuable upon conversion of the Convertible
Note may be disposed of pursuant to Rule 144 of the Act, without restriction,
Subscriber, in addition to its rights under Sections 15 and 16, shall have the
right to demand up to two registrations on Form S-3 (or such other form which
the Company is eligible to use, including, if necessary Form S-1) for the sale
of Registrable Shares intended to be sold or disposed of by the Subscriber. Such
request shall be in writing and shall state the number of shares to be disposed
of and the intended method of disposition of such shares. Upon receipt of such
request, the Company shall register the Registrable Shares in accordance with
the request and the provisions of Section 17. Subscriber may only demand
registration pursuant to this Section 14 two (2) times for each twelve (12)
calendar month period; however, a registration shall not be deemed a
registration under this Section 14 unless such registration is continuously
effective for at least six (6) continuous months.
15. Piggyback Registration. If at any time after the date of this Agreement and
through the earlier of (i) the sale or other disposition by Subscriber of all of
its Registrable Shares or (ii) the date upon which all shares of common stock
issued or issuable upon conversion of the Convertible Note may be disposed of
pursuant to Rule 144 of the Act, without restriction, the Company proposes to
register under the Act (except by Form S-4 or Form S-8 or any successor forms
thereto) any of its equity securities, it will give written notice to the
Subscriber of its intention to do so and, on the written request of the
Subscriber received by the Company within 20 days after the Company's mailing of
any such notice (which written request shall specify the interest in the
Registrable Shares (issued or issuable upon conversion of the Convertible Note)
intended to be sold or disposed of by the Subscriber and describe the nature of
any proposed sale or other disposition thereof), the Company will use its best
efforts to cause all such Registrable Shares, to be included in the registration
statement proposed to be filed by the Company; provided, however, that, if a
greater number of Registrable Shares is offered for participation in the
proposed offering than in the reasonable opinion of the managing underwriter, if
any, of the proposed offering can be accommodated without adversely affecting
the proposed offering, then the amount of Registrable Shares proposed to be
offered by the Subscriber for registration, as well as the number of securities
of any other selling shareholders participating in the registration, shall be
proportionately reduced to a number deemed satisfactory by the managing
underwriter.
16. Shelf Registration. At any time after the date of this Agreement and
through the earlier of (i) the sale or other disposition by Subscriber of all of
its Registrable Shares or (ii) the date upon which all shares of common stock
issued or issuable upon conversion of the Convertible Note may be disposed of
pursuant to Rule 144 of the Act, without restriction, the Subscriber may notify
the Company that it desires to register any Registrable Shares pursuant to a
registration statement providing for the sale of Registrable Securities on a
continuous or delayed basis pursuant to Rule 415 of the Act, the Company shall
prepare and file a registration statement of the Company which covers any of the
Registrable Securities pursuant to the provisions of this Agreement, including
all pre-effective amendments and post-effective amendments thereto, the
prospectus and supplements thereto, all exhibits and all material incorporated
by reference in the registration statement providing for the sale of the
Registrable Securities by the Subscriber pursuant to Rule 415 of the Act and/or
any similar rule that may be adopted by the Commission. A registration pursuant
to this Section 16 shall also be treated as a registration under Section 14,
provided it meets the conditions set forth in the last sentence of Section 14.
17. Registration Procedures. In connection with the Company's registration
obligations pursuant to this Agreement, the Company shall as expeditiously as
possible, but no later than 45 days after receipt of a notice delivered pursuant
to Sections 14, 15 or 16:
a. prepare and file with the Commission a registration statement and use
its best efforts to cause such registration statement to become effective;
b. prepare and file with the Commission such amendments and supplements to
such registration statement and any prospectus included in any registration
statement at the time such registration statement becomes effective, as
amended or supplemented by any prospectus supplement, including
post-effective amendments and all material incorporated by reference in the
prospectus (the "Prospectus") used in connection therewith as may be
necessary to keep such registration statement continuously effective for
12
<PAGE> 13
a period expiring on the earlier of (i) the date on which all of the
Registrable Securities covered by the Registration Statement have been sold
thereto, or (ii) the date on which all Registrable Securities may be sold
pursuant to Rule 144 of the Act without restriction;
c. furnish to the Subscriber, without charge, at least one signed copy of
the registration statement and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated by
reference therein and all exhibits (including those incorporated by
reference);
d. deliver to the Subscriber, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as they may reasonably request, but only while the
Company is required to cause the registration statement to remain
effective;
e. use its reasonable efforts to register or qualify such Registrable
Securities for offer and sale under the securities or blue sky laws of such
U.S. States or possessions (the "Blue Sky Laws") as Subscriber may
reasonably request and do any and all other acts or things necessary or
advisable to enable Subscriber to consummate the disposition in such
jurisdictions of Registrable Securities owned by Subscriber; provided
however, that in no event shall the Company be obligated to qualify
generally to do business in any jurisdiction where it is not then qualified
or to take any action which would subject it to the service of process in
suits other than those arising out of the offer or sale of the securities
covered by such registration statement in any jurisdictions where it is not
then so subject;
f. cooperate with the Subscriber to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
free of any and all restrictive legends, which certificates shall be in
such denominations and registered in such names as the Subscriber may
request;
g. use its reasonable efforts to cause all Registrable Securities covered
by the Registration Statement to be listed on The NASDAQ Stock Market
System (or any other market or exchange on which the Company's Common Stock
is then quoted or listed);
h. notify the Subscriber at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the Prospectus included in such Registration
Statement contains an untrue statement of material fact or omits any fact
necessary to make the statements therein not misleading, and, at the
request of any such seller, the Company shall prepare a supplement or
amendment to such Prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not
contain any untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading;
i. advise the Subscriber, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such Registration Statement or the
initiation or threatening of any proceeding for such purpose and promptly
use all reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued; and
j. make available for inspection by the Subscriber and any attorney or
accountant retained by the Subscriber all financial and other records,
pertinent corporate documents and properties of the Company; provided that
such persons shall keep confidential any records, information or documents
of the Company unless a court or administrative agency requires the
disclosure of the records, information or documents or such records,
information or documents (A) become generally available to the public other
than as a result of a disclosure by any such persons, (B) were available to
such persons on a non-confidential basis prior to the disclosure of such
records, information or documents pursuant to this Agreement, or (C) become
available to such persons on a non-confidential basis from a source other
than the Company or its agents, advisors or representatives.
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<PAGE> 14
The Company may require the Subscriber to furnish to the Company
information regarding the Subscriber and the distribution of the Registrable
Securities as the Company may from time to time reasonably request in writing
and as necessary for the registration of the Shares.
The Subscriber agrees that, upon receipt of any notice from the Company of
the happening of any of the following: (i) the Commission's issuance of any stop
order denying or suspending the effectiveness of the Registration Statement or
the initiation or threatening of any proceeding for that purpose, (ii) the
Company's receipt of any stop order denying registration or suspending the
qualification of the Registrable Securities for sale or the initiation or
threatening of any proceeding for such purpose, (iii) the happening of any event
which makes any statement made in the Registration Statement, the Prospectus or
any document incorporated by reference therein untrue or which requires any
change in the Registration Statement, the Prospectus or any document
incorporated by reference therein to make the statements not include an untrue
statement of material fact or not omit any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, the Shareholders shall discontinue the
disposition of Registrable Securities until the Subscriber receives a
supplemented or amended Prospectus from the Company or until the Company advises
the Subscriber in writing that the Subscriber may resume the use of the
Prospectus, and has received copies of any additional or supplemental filings
which are incorporated by reference in the Prospectus. If the Company so
directs, the Subscriber will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in the Subscriber's
possession, of the Prospectus covering the Registrable Securities at the time
the Subscriber received the notice.
18. Registration Expenses. The Company shall bear all expenses incurred in
connection with the registration of shares pursuant to this Agreement. Such
expenses shall include, without limitation, all printing, legal and accounting
expenses incurred by the Company, fees and expenses of compliance with the Blue
Sky Laws, and all registration and filing fees imposed by the Commission, any
state securities commission or The NASDAQ Stock Market. The Subscribers shall be
responsible for any brokerage fees or commissions and taxes of any kind
(including, without limitation, transfer taxes) with respect to any disposition,
sale or transfer of shares and for any legal, accounting and other expenses
incurred by the Subscribers.
19. Indemnification.
a. Indemnification by the Company. The Company agrees to indemnify and hold
harmless, to the full extent permitted by law, the Subscriber against all
losses, claims, damages, liabilities and expenses (including, without
limitation, reasonable attorneys' fees and expenses) to which the
Subscriber may become subject under federal or state securities laws or
otherwise which arise out of, or are caused by, the Company's violation of
any federal or state securities laws, including any untrue or alleged
untrue statement of a material fact contained in any registration
statement, Prospectus or preliminary prospectus or in any application or
other request that the Company files, including any application or request
filed under the Blue Sky Laws or 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 the same are
caused by or contained in any written information furnished to the Company
by Subscriber expressly for use therein or by Subscriber's failure to
deliver a copy of the registration statement or Prospectus after the
Company has furnished the Subscriber with a sufficient number of copies of
the same.
b. Indemnification by Subscriber. In connection with any registration
statement in which any Subscriber's Registrable Securities are registered
and sold, the Subscriber shall furnish to the Company such information and
affidavits as the Company reasonably requests for use in connection with
any registration statement or Prospectus and agree to indemnify and hold
harmless, to the full extent permitted by law, the Company, its officers,
directors and each person who controls the Company (within the meaning of
the Securities Act) against any losses, claims, damages, liabilities and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) resulting from any untrue or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact
required to be stated in the registration statement, Prospectus,
preliminary Prospectus or any application filed under the Blue Sky Laws or
necessary to make the statements therein not misleading, but only to the
extent that the untrue
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<PAGE> 15
statement or omission is contained in any written information or affidavit
so furnished by the Subscriber to the Company expressly for inclusion in
the Registration Statement, Prospectus or application filed under the Blue
Sky Laws; provided, however, that the obligation to indemnify under this
Section 19(b) shall be limited to the net amount of proceeds received by
such holder from the sale of Registrable Securities pursuant to such
registration statement. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the
same extent as provided above with respect to information so furnished by
the persons specifically for inclusion in any Prospectus or registration
statement.
c. Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) promptly notify the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit
such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Any person entitled to
indemnification hereunder shall have the right to employ separate counsel
and to participate in the defense of the claim, but the fees and expenses
of the counsel shall be at the expense of the person unless (A) the
indemnifying party has agreed to pay the fees or expenses, (B) the
indemnifying party shall have failed to assume the defense of the claim and
employ counsel reasonably satisfactory to the person, or (C) in the
reasonable judgment of the person, based upon advice of its counsel, a
conflict of interest may exist between the person and the indemnifying
party with respect to the claims (in which case, if the person notifies the
indemnifying party in writing that the person elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of the claim on behalf of
the person). If the indemnifying party assumes the defense, the
indemnifying party will not be subject to any liability for any settlement
made without its consent. The indemnifying party, however, may not
unreasonably withhold its consent. An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel in any
jurisdiction for all parties indemnified by the indemnifying party with
respect to the claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and
any other of such indemnified parties with respect to the claim, in which
event the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels.
d. Contribution. If for any reason the indemnification provided for in the
preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by the preceding clauses
(a) and (b), then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of the loss, claim,
damage, liability or expense in the proportion as is appropriate to reflect
(i) the relative fault of the indemnified party and the indemnifying party,
and (ii) any other relevant equitable considerations. Notwithstanding the
foregoing, the Subscriber shall not be required to contribute any amount in
excess of the net amount of proceeds received by such holder from the sale
of Registrable Securities giving rise to the loss, claim, damage, liability
or expense.
e. Survival. The indemnities provided in this Section 19 shall survive the
Subscriber's transfer of any Registrable Securities.
20. Conditions Precedent. Subscriber will not make any advances under this
Agreement unless Subscriber has first received (a) fully executed copies of all
consents and waivers required in order to effectuate the transactions under this
Agreement, and (b) a legal opinion by Company's counsel satisfactory in form and
substance to Subscriber's counsel.
21. Costs and Expenses. The Company will pay all costs of collection, including
reasonable attorneys' fees and court costs, paid or incurred by Subscriber to
enforce this Agreement, the Convertible Note and any other Security Document or
other document executed in connection with the transactions described herein,
upon an Event of Default. The Company will pay all costs and expenses, including
reasonable attorneys' fees paid or incurred by the Subscriber in the
negotiation, drafting, closing or ongoing administration of this Agreement not
in excess of $5,000 a year and the transactions contemplated hereby. The costs
and expenses incurred by
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<PAGE> 16
Subscriber through the date of this Agreement will be payable to Subscriber
immediately upon the distribution of the proceeds of the Convertible Note.
22. Entities. If Subscriber is not an individual but an entity, the individual
signing on behalf of the entity and the entity, jointly and severally, agree and
certify that (a) the entity was not organized for the specific purpose of
acquiring the Securities, (b) this Agreement has been duly authorized by all
necessary action on the part of the entity, (c) this Agreement has been duly
executed by an authorized officer or representative of the entity, and (d) this
Agreement is a legal, valid and binding obligation of the entity enforceable in
accordance with its terms.
23. No Inconsistent Agreements. The Company will not, on or after the date of
this Agreement, enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Subscriber in this Agreement or
otherwise conflicts with the provisions of this Agreement. The rights granted to
the Subscriber under this Agreement do not in any way conflict with and are not
inconsistent with any rights granted under any other agreement concerning the
Company's securities.
24. Binding Effect. This Agreement shall not be assignable by the Company, and
shall only be assignable by Subscriber in compliance with applicable state and
Federal securities laws. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto, and their respective heirs,
legal representatives, successors, and assigns.
25. Representations to Survive Delivery. The representations, warranties, and
agreements of the Company and of Subscriber contained in this Agreement will
remain operative and in full force and effect and will survive the payment of
the purchase price pursuant to Section 1 above, the delivery of documents
representing the Securities, and the expiration or termination of the Bank One
Loan Documents.
26. Notices. Any notice, offer, demand, consent or other communication required
or permitted to be given under any provision of this Agreement shall be deemed
to have been sufficiently given for all purposes if it is in writing and it is
(a) delivered personally to the party to whom the same is directed, (b) sent by
first class mail, postage and charges prepaid, addressed to the party to whom
the same is directed, at his address set forth next to his name on the signature
page to this Agreement or (c) sent by facsimile transmission. Any party may
change its address for purposes of this Agreement by giving the other party
notice of such change in the manner hereinabove provided for the giving of
notices. Except as otherwise expressly provided in this Agreement, any such
notice or other communication sent by mail shall be deemed to be given on the
second business day after the date on which the same was deposited in a
regularly maintained receptacle for the deposit of the United States' mail,
addressed as provided above, if delivered personally on the date so delivered
and if sent by facsimile transmission, on the date indicated on the machine
generated receipt therefore.
27. Permitted Transactions. If the Company is solvent as determined by an
independent certified public accountant reasonably acceptable to Subscriber
(notwithstanding anything to the contrary in Sections 5(f) and 13(a) hereof and
the Convertible Note):
a. shares of common stock or options or warrants to purchase common stock
issued or issuable or granted to officers, directors, employees,
consultants, distributors, agents of the Company or other third parties
pursuant to any arrangement, plan or agreement currently in effect as
approved by the Company's Board of Directors (not to exceed as to any one
individual $500,000 in value at the time of such grant or issue); provided,
however, future shares of common stock or options or warrants to purchase
common stock issued or issuable or granted to consultants, distributors,
agents or other third parties of the Company shall require the consent of
the Subscriber which consent shall not be unreasonably withheld;
b. shares of preferred stock (and the common stock issuable upon conversion
thereof) or common stock issued or issuable in connection with an
acquisition approved by the Company's Board of Directors of all or part of
another corporation (an "Acquired Corporation") by merger or other
reorganization of otherwise, or by purchase of all or substantially all of
the assets of or from, such Acquired Corporation so long as such merger or
acquisition has been approved in advance by Subscriber;
c. shares of common stock issuable upon the exercise or conversion of
warrants, options, promissory notes or other rights to acquire common stock
of the Company outstanding on or before the date of this Agreement so long
as disclosed on Schedule 5(e); and
d. common stock or options or warrants issued or issuable or granted in
connection with any transactions approved in writing by the Subscriber,
which approval shall not be unreasonably withheld.
28. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan, exclusive of its conflict of
laws rules.
29. Entire Agreement. This Agreement and the exhibits hereto, the Convertible
Note, the Warrant and all Security Documents and other documents signed by both
parties in connection with the transactions contemplated herein constitute the
parties' entire understanding with respect to the subject matter hereof and each
such document is incorporated herein by reference.
(signatures begin on next page)
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IN WITNESS WHEREOF, the undersigned has hereunto affixed its signature.
WAYNE COUNTY EMPLOYEES' RETIREMENT SYSTEM
By: /s/ Ronald Yee
---------------------------
Name: Ronald Yee
-------------------------
Its: Director
-------------------------
Address: 400 Monroe Street, Suite 320
Detroit, MI 48226
The Company hereby accepts the subscription evidenced by this Subscription and
Investment Representation Agreement.
BIG BUCK BREWERY & STEAKHOUSE, INC.
By: /s/ William F. Rolinski
-------------------------------------
William F. Rolinski
President and Chief Executive Officer
Address: 550 South Wisconsin Street
Gaylord, MI 49734
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SUBSCRIBER INFORMATION
Wayne County Employees' Retirement System
------------------------------------------
(Please print name in which the Securities are to be issued)
--------------------------------------------------------
Taxpayer I.D. No.
Address: 400 Monroe Street, Suite 320
City: Detroit State: Michigan Zip Code 48226
Telephone Number (313) 224-2822
Facsimile Number (313) 224-1917
E-mail Address
------------------------
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EXHIBIT A TO SUBSCRIPTION AGREEMENT
THIS CONVERTIBLE SECURED PROMISSORY NOTE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES
LAWS, AND ARE SUBJECT TO A SUBSCRIPTION AND INVESTMENT REPRESENTATION AGREEMENT.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, PLEDGED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF EITHER AN EFFECTIVE REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER THE APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO BIG BUCK
BREWERY & STEAKHOUSE, INC. THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER APPLICABLE STATE
SECURITIES LAWS.
BIG BUCK BREWERY & STEAKHOUSE, INC.
10% CONVERTIBLE SECURED PROMISSORY NOTE DUE FEBRUARY 2003
$5,876,114.74 GAYLORD, MICHIGAN
February 4, 2000
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, the undersigned, Big Buck Brewery & Steakhouse, Inc., a Michigan
corporation (the "Maker" or "Company"), promises to pay to the order of Wayne
County Employees' Retirement System, a body politic of the State of Michigan
(the "Payee"), the principal sum of Five Million, Eight Hundred Seventy Six
Thousand, One Hundred Fourteen and 74/100 Dollars ($5,876,114.74) plus interest
at the rate specified below. The unpaid principal from time to time outstanding
shall bear interest prior to maturity at an annual rate of interest equal to ten
percent (10%) per annum, and all interest accrued on the unpaid principal
balance of this Promissory Note shall be due and payable in arrears as provided
below.
On March 1, 2000, Maker will pay interest only from the date of this Note
through February 29, 2000. Thereafter, the Maker agrees to pay principal and
interest hereunder to Payee in equal monthly installments in an amount which
would fully amortize the principal and interest due hereunder over a period of
300 months, beginning April 1, 2000, until February 1, 2003, on which date the
entire amount due hereunder, including all unpaid principal and interest shall
be due and payable in full.
All interest shall be payable in arrears. Interest hereon shall be
calculated on the basis of a 360-day year applied to the actual number of days
elapsed until all accrued and unpaid interest is paid in full. All interest due
and payable hereunder that is not paid when due for any reason shall be
cumulated, added to the principal and accrue interest at the highest lawful rate
per annum on that delinquent amount until paid, to the extent permitted by law.
All payments of interest and principal shall be payable in lawful currency of
the United States of America ("Currency"), unless and to the extent Payee
exercises Payee's option hereunder to convert all or part of the unpaid
principal balance of this Promissory Note into shares of common stock, par value
$0.01 per share (the "Shares"), of the Maker.
At any time prior to payment in full of this Note, Payee shall have the
option to convert all or part of the unpaid principal balance of this Promissory
Note into that number of Shares of the Maker (the "Option") equal to (i) all or
such part of the unpaid principal balance of the Promissory Note being converted
divided by (ii) $2.42 which is the average of the closing sale price of one
Share as quoted by The NASDAQ Stock Market for the five (5) trading days
immediately prior to the Maker's execution of this Promissory Note (the
"Conversion Price"), subject to the antidilution adjustments presented in the
following Sections, any fractional Shares to be paid in Currency. To exercise
the Option, Payee shall surrender this Promissory Note to the Maker, accompanied
by written notice of Payee's intention to exercise the Option, which notice
shall set forth the principal amount of this Promissory Note and such portion of
the unpaid principal balance of the Promissory Note, if not the entire unpaid
principal balance, to be converted into Shares (the "Notice of Conversion").
Within ten (10) business days after Maker's receipt of the Notice of Conversion
and Payee's surrender of this Promissory Note, Maker shall deliver
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or cause to be delivered to the Payee, the Shares in the name of the Payee and a
duly executed, new promissory note in the principal amount of the balance
thereof, if any.
If the Maker shall at any time hereafter subdivide or combine its
outstanding Shares, or declare a dividend payable in its Shares, the Conversion
Price in effect immediately prior to the subdivision, combination, or record
date for such dividend payable in Shares shall forthwith be proportionately
increased, in the case of combination, or proportionately decreased, in the case
of subdivision or declaration of a dividend payable in Shares, and the number of
Shares into which the unpaid principal balance of the Promissory Note may be
converted upon exercise of the Option immediately preceding such event, shall be
changed to the number determined by dividing the then current Conversion Price
by the Conversion Price as adjusted after such subdivision, combination, or
dividend payable in Shares and multiplying the result of such division against
the number of Shares to be acquired upon the exercise of the Option immediately
preceding such event, so as to achieve an Conversion Price and number of Shares
purchasable after such event proportional to such Conversion Price and number of
Shares purchasable immediately preceding such event. All calculations hereunder
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be. In case of any capital reorganization or any reclassification
of the Shares, or in the case of any consolidation with or merger of the Maker
into or with another corporation, or the sale of all or substantially all of its
assets to another corporation, which is effected in such a manner that the
holders of Shares shall be entitled to receive stock, securities, or assets with
respect to or in exchange for Shares, then, as a part of such reorganization,
reclassification, consolidation, merger, or sale, as the case may be, lawful
provision shall be made so that the holder of this Promissory Note shall have
the right thereafter to receive, upon the exercise hereof, the kind and amount
of shares of stock or other securities or property which the holder would have
been entitled to receive if, immediately prior to such reorganization,
reclassification, consolidation, merger, or sale, the holder had held the number
of Shares into which the unpaid principal balance of the Promissory Note could
have been converted upon exercise of the Option. In any such case, appropriate
adjustment (as determined in good faith by the Board of Directors of the
Company) shall be made in the application of the provisions set forth herein
with respect to the rights and interest thereafter of the holder of the
Promissory Note, to the end that the provisions set forth herein (including
provisions with respect to adjustments of the exercise price) shall thereafter
be applicable, as nearly as reasonably may be, in relation to any shares of
stock or other property thereafter deliverable upon the exercise of the Option.
In the event the Maker shall at any time or from time to time, issue
Shares, options, warrants or rights to subscribe for Shares, or issue any
securities convertible into or exchangeable for Shares, for a consideration per
share (determined by dividing the Net Aggregate Consideration (as determined
below) by the aggregate number of Shares that would be issued if all such
Shares, options, warrants, rights or convertible securities were exercised or
converted to the fullest extent permitted by their terms) less than the
Conversion Price in effect immediately prior to the issuance of such options or
rights or convertible or exchangeable securities, the Conversion Price in effect
immediately prior to the issuance of such options, warrants or rights or
securities shall be reduced to an amount determined by multiplying such
Conversion Price by a fraction:
a. the numerator of which shall be (X) the number of shares of Company's
Common Stock of all classes outstanding immediately prior to the issuance
of such options, rights or convertible securities (excluding authorized but
unissued shares held by the Corporation but including all shares of Common
Stock issuable upon conversion or exercise of any outstanding Convertible
Preferred Stock, options, warrants, rights or convertible securities), plus
(Y) the number of shares of Company's Common Stock which the total amount
of consideration received by the Company for the issuance of such options,
warrants, rights or convertible securities plus the minimum amount set
forth in the terms of such security as payable to the Company upon the
exercise or conversion thereof (the "Net Aggregate Consideration") would
purchase at the Conversion Price prior to adjustment, and
b. the denominator of which shall be (X) the number of shares of Company's
Common Stock of all classes outstanding immediately prior to the issuance
of such options, warrants, rights or convertible securities (excluding
authorized but unissued shares held by the Company but including all shares
of Common Stock issuable upon conversion or exercise of any outstanding
Convertible Preferred Stock, options, warrants, rights or convertible
securities), plus (Y) the aggregate number of shares of Company's
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Common Stock that would be issued if all such options, warrants, rights or
convertible securities were exercised or converted.
When delivered, all Shares shall be duly authorized, validly issued, fully
paid, and nonassessable. Maker shall take any and all action necessary to
maintain the required authority to issue the Shares to Payee in the event Payee
converts, or is required to convert, the unpaid principal balance of this
Promissory Note into Shares.
Prepayment of the principal of this Promissory Note is permitted, in whole
or in part, without premium or penalty of any kind; provided Maker provides
Payee with forty-five (45) days' prior written notice of its intention to prepay
the principal of this Promissory Note, in whole or in part, during which time
Payee may exercise the Option by delivering to the Maker Payee's Notice of
Conversion within forty-five (45) days following Payee's receipt of such notice
from the Maker. All partial prepayments of principal shall reduce the principal
balance hereunder in reverse order of maturity.
This Promissory Note is given in consideration of a loan by Payee to Maker
in the principal amount of this Promissory Note. This Promissory Note may not be
changed orally, but only by an agreement in writing signed by the parties
against whom enforcement of any waiver, change, modification, or discharge is
sought.
This Promissory Note and the payment due hereunder are secured by the
following documents executed simultaneously herewith: (a) a Security Agreement;
(b) a Stock Pledge and Security Agreement; (c) Limited Partnership Interest
Pledge and Security Agreement; (d) a Reassignment Agreement; and (e) any and all
other Security Documents as defined in the Agreement executed by the Maker in
favor of the Payee pursuant to the Agreement.
The holder of this Promissory Note and all successors thereof shall have
all of the rights of a holder in due course under the Uniform Commercial Code as
in effect in the State of Michigan and the other laws of the State of Michigan.
Maker hereby waives demand, presentment, protest, notice of protest and/or
dishonor, and all other notices or requirements that might otherwise be required
by law. The Maker promises to pay on demand all costs of collection, including
reasonable attorneys' fees and court costs, paid or incurred by Payee to enforce
this Promissory Note upon an Event of Default (as defined below) hereunder.
The occurrence of any of the following shall constitute an "Event of
Default" (or, if the giving of notice or the lapse of time or both is required,
then, prior to such notice or lapse of time, a "Default"):
a. the Maker shall fail to pay any principal of or interest on this
Promissory Note when the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any other
date fixed for payment; provided however, such failure shall not constitute
a default if the required payment is made within five days after the date
it first became due and payable and such failure has not occurred more than
two times in the preceding 12 months; or
b. any Event of Default shall occur in the Subscription and Investment
Representation Agreement for 10% Convertible Secured Promissory Note Due
January 2003 between Maker and Payee of even date herewith after the
passage of any notice and cure period set forth herein;
c. the Company shall make an assignment for the benefit of creditors, or
admit in writing its inability to pay or generally fail to pay its debts as
they mature or become due, or shall petition or apply for the appointment
of a trustee or other custodian, liquidator or receiver of the Company or
of any substantial part of its assets, or shall commence any case or other
proceeding relating to the Company under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
or similar law of any jurisdiction, now or hereafter in effect, or shall
take any action to authorize or in furtherance of any of the foregoing, or
if any such petition or application shall be filed or any such case or
other proceeding shall be commenced against the Company and the Company
shall indicate its approval thereof, consent thereto or acquiescence
therein or shall fail to contest the same in a timely manner;
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d. an involuntary petition shall be filed or an involuntary proceeding
shall be commenced seeking liquidation, reorganization or other relief in
respect of the Company or of its debts or any substantial part of its
assets, under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, and in any such case, such
proceeding or petition shall continue undismissed for sixty (60) days or an
order or decree approving or ordering any of the foregoing shall be
entered;
then, and in any such event, (A) if such event is an Event of Default specified
in Section (c) or (d) above with respect to the Maker, automatically all amounts
owing with respect to the Agreement, this Promissory Note and the other
documents executed in connection herewith shall become immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Maker and (B) if such event is any
other Event of Default the Payee shall by notice in writing to the Maker,
declare all amounts owing with respect to the Agreement, this Promissory Note
and the other documents executed in connection herewith to be, and they shall
thereupon forthwith become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Maker.
This Promissory Note, the Agreement and all security and other documents
signed by both parties in connection with the transactions contemplated herein
and therein constitute the parties' entire understanding with respect to the
subject matter hereof and the Agreement and each such security and other
documents is incorporated herein by this reference.
IN WITNESS WHEREOF, the Maker has caused this Promissory Note to be
executed in its corporate name by the signature of its duly authorized officer.
BIG BUCK BREWERY & STEAKHOUSE, INC.
By:
-----------------------------------------
William F. Rolinski
President and Chief Executive Officer
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