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CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
BETWEEN
TAM RESTAURANTS, INC.
AND
LUKE JOHNSON AND PETER SALVATORE
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CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
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THIS CONVERTIBLE DEBENTURE PURCHASE AGREEMENT, between Luke Johnson
and Peter Salvatore (hereinafter individually referred to as a "Investor", and
collectively referred to as the "INVESTORS"), and Tam Restaurants, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"COMPANY", Nasdaq Small Cap Market Symbol "TAMR").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investors,
and the Investors shall purchase an aggregate of $1,000,000 principal amount of
Debentures (as defined below) as set forth in Section 2.3 below; and
WHEREAS, such investments will be made in reliance upon the
provisions of Section 4(2) ("SECTION 4(2)") and Regulation D ("REGULATION D") of
the United States Securities Act of 1933, as amended, and the regulations
promulgated thereunder (the "SECURITIES Act"), and/or upon such other exemption
from the registration requirements of the Securities Act as may be available
with respect to any or all of the investments in Debentures to be made
hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
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CERTAIN DEFINITIONS
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Section 1.1 "BUSINESS DAY" means any day except Saturday, Sunday and
any day which shall be a Federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other
government actions to close.
Section 1.2 "CAPITAL SHARES" shall mean the Common Stock and any
shares of any other class of Common Stock whether now or hereafter authorized,
having the right to participate in the distribution of earnings and assets of
the Company.
Section 1.3 "CAPITAL SHARES EQUIVALENTS" shall mean any securities,
rights, or obligations that are convertible into or exchangeable for, or giving
any right to, subscribe for any Capital Shares of the Company or any warrants,
options or other rights to subscribe for or purchase Capital Shares or any such
convertible or exchangeable securities.
Section 1.4 "CLOSING" shall mean the closing of the purchase and sale
of the Debentures to each of the Investors pursuant to Article II below.
Section 1.5 "CLOSING DATE" shall mean the date the closing of the
purchase and sale of the Debentures to each of the Investors occurs pursuant to
Article II below.
Section 1.6 "COMMON STOCK" shall mean the Company's common stock,
$.0001 par value per share.
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Section 1.7 "CONVERSION SHARES" shall mean the shares of Common Stock
issuable upon conversion of the Debentures as per the terms of the Debentures.
Section 1.8 "DAMAGES" shall mean any loss, claim, damage, liability,
costs and expenses which shall include, but not be limited to, reasonable
attorney's fees, disbursements, costs and expenses of expert witnesses and
investigation.
Section 1.9 "DEBENTURES" shall mean the Company' convertible
debentures being offered hereby in the form of Exhibit A annexed hereto.
Section 1.10 "ESCROW AGENT" shall mean the law firm of The Goldstein
Law Group, P.C., pursuant to the terms of the Escrow Agreement annexed hereto as
Exhibit B.
Section 1.11 "ESCROW AGREEMENT" shall mean the agreement regarding
the escrow of the Purchase Price and Debentures entered into between the
Company, the Escrow Agent and the Investors on the Subscription Date annexed
hereto as Exhibit A.
Section 1.12 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
Section 1.13 "LEGEND" shall have the meaning set forth in Article VII
below.
Section 1.14 "MATERIAL ADVERSE EFFECT" shall mean any effect on the
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise in any material respect interfere with the
ability of the Company to enter into and perform any of its obligations under
this Purchase Agreement (or any Exhibit annexed hereto) in any material respect.
Section 1.15 "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.16 "OUTSTANDING" when used with reference to shares of
Common Stock, or Capital Shares (collectively the "SHARES"), shall mean, at any
date as of which the number of such Shares is to be determined, all issued and
outstanding Shares, and shall include all such Shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in such
Shares; PROVIDED, HOWEVER, that Outstanding shall not mean any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.17 "PERSON" shall mean an individual, a corporation, a
partnership, an association, a limited liability company, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
Section 1.18 "PRINCIPAL MARKET" shall mean the OTC Bulletin Board,
Nasdaq National Market, the Nasdaq Small Cap Market, the American Stock
Exchange, or the New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock.
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Section 1.19 "PURCHASE AGREEMENT" shall refer to this Common Stock
Purchase Agreement and include all Exhibits annexed hereto.
Section 1.20 "PURCHASE PRICE" shall mean $1,000,000, or the price
which each Investor is to pay for that principal amount of Debenture being
purchased pursuant to the terms of this Agreement.
Section 1.21 "REGULATION D" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.22 "SEC" shall mean the Securities and Exchange Commission.
Section 1.23 "SECTION 4(2)" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.24 "SECURITIES ACT" shall have the meaning set forth in the
recitals of this Purchase Agreement.
Section 1.25 "SEC DOCUMENTS" shall mean the Company's latest Form
10-KSB and Form 10-QSB's (and all amendments thereto), all Form 8-Ks, and the
Proxy Statement for its latest fiscal year as of the time in question.
Section 1.26 "SUBSCRIPTION DATE" shall mean the date on which this
Purchase Agreement is executed and delivered by the parties hereto and all of
the conditions relating to the issuance of the Debentures shall have been
fulfilled.
Section 1.27 "TRADING DAY" shall mean any day during which the then
Principal Market shall be open for business.
ARTICLE II
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PURCHASE AND SALE OF THE DEBENTURES
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Section 2.1 TRANSACTION. The Company will sell, and the Investors
will buy, on the Closing Date, the Debentures in exchange for the Purchase Price
(the exact principal amount to be purchased by each Investor is set forth on
Schedule A annexed hereto), provided each of the conditions set forth in Section
2.3 below have been satisfied or waived in writing.
Section 2.2 FORM OF PAYMENT. The Investors shall pay each pay their
portion of the Purchase Price by delivering good funds in United States Dollars
by wire transfer to the Escrow Agent, against delivery of the original shares of
Common Stock as per the terms of the Escrow Agreement.
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Section 2.3 CLOSING. On the Closing Date, the Company will sell and
the Investors will buy the Debentures, in reliance upon the representations and
warranties contained in this Purchase Agreement, and upon the terms and
satisfaction of each of the conditions set forth below.
The conditions precedent to the sale of the Debentures are as
follows:
(A) Acceptance by the Investors of this Purchase
Agreement and the Escrow Agreement, and due execution by all parties
of this Purchase Agreement;
(B) Delivery into escrow by the Company of the original
Debentures as more fully set forth in the Escrow Agreement;
(C) All representations and warranties of the Company
and the Investors contained herein shall remain true and correct in
all material respects as of the Closing Date;
(D) The Investors shall have received an opinion of
counsel substantially in the form of Exhibit B annexed hereto; and
(E) At the Closing Date, the sale and issuance of the
Debentures shall be legally permitted by all laws and regulations to
which the Company and the Investors are subject.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
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Each of the Investors, severally, and not jointly, represents and
warrants to the Company that:
Section 3.1 INTENT. Without limiting its ability to resell the
Conversion Shares pursuant to an effective registration statement or an
exemption from registration, each Investor is entering into this Purchase
Agreement for its own account and has no present arrangement (whether or not
legally binding) at any time to sell the Debentures to or through any person or
entity; provided, however, that by making the representations herein, each
Investor reserves the right to dispose of the Debentures and/or Underlying
Shares at any time in accordance with federal and state securities laws
applicable to such disposition. Without limiting its ability to resell the
Debentures and/or Underlying Shares, each Investor represents that the
Debentures are being purchased for such Investor's own account, for investment
purposes only and not for distribution or resale to others. Each Investor agrees
that it will not sell the Underlying Shares unless they are registered under the
Securities Act or unless an exemption from such registration is available.
Section 3.2 ACCREDITED INVESTOR/INVESTMENT EXPERIENCE. Each Investor
is an accredited investor (as defined in Rule 501 of Regulation D), and has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Company. As of the Closing Date,
each Investor (i) has adequate means of providing for its current needs and
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possible personal contingencies, (ii) has no need for liquidity in this
investment, (iii) is able to bear the substantial economic risk of an investment
in the Debentures for an indefinite period, and (iv) can afford the complete
loss of its investment. Each Investor recognizes the highly speculative nature
of this investment. Each Investor acknowledges that it has carefully read the
SEC Documents and the terms and conditions herein and fully understands the
contents thereof.
Section 3.3 AUTHORITY. This Purchase Agreement has been duly
authorized and validly executed and delivered by each Investor, and the board of
directors of such Investor, if applicable. The decision to invest and the
execution and delivery of this Purchase Agreement by each Investor, the
performance by each Investor of its obligations hereunder and the consummation
by each Investor of the transactions contemplated hereby have been duly
authorized and requires no other proceedings on the part of each Investor. This
Purchase Agreement has been duly executed and delivered by each Investor and,
assuming the due execution and delivery hereof and acceptance thereof by the
Company, will constitute the legal, valid and binding obligations of each
Investor, enforceable against each Investor in accordance with its terms,
subject to applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
Section 3.4 DISCLOSURE; ACCESS TO INFORMATION. The Investors have
each received all documents, records, books and other information pertaining to
each Investor's investment in the Company that has been requested by each
Investor. Each Investor has had the opportunity to ask questions of, and receive
answers from, the Company, and has not relied on any material or representations
of the Company except as contained in this Purchase Agreement.
Section 3.5 MANNER OF SALE. At no time was any Investor presented
with or solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation or
advertising in connection with the offer and sale of the Debentures.
Section 3.6 NO LEGAL, TAX OR INVESTMENT ADVICE. Each Investor
understands that nothing in this Purchase Agreement or any other materials
presented to each Investor in connection with the purchase and sale of the
Debentures constitutes legal, tax or investment advice. Each Investor has relied
on, and has consulted with, such legal, tax and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Debentures.
Section 3.7 NO ADVERTISEMENTS. The Investors are not purchasing the
Debentures as a result of, or subsequent to, any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting.
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ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company represents and warrants that:
Section 4.1 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted except as described in the SEC
Documents. The Company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those (individually or in the aggregate) in which the failure so to
qualify would not reasonably be expected to have a Material Adverse Effect. The
Company is not in violation of any material term of its Certificate of
Incorporation (as defined below) or Bylaws (as defined below).
Section 4.2 AUTHORITY. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Purchase Agreement, and all Exhibits annexed hereto, and to issue the
Debentures, (ii) the execution, issuance and delivery of this Purchase Agreement
by the Company, the consummation by it of the transactions contemplated hereby
and thereby, and the performance of its obligations hereunder have been duly
authorized by all necessary corporate action and no further consent or
authorization of the Company, its shareholders, or its Board of Directors is
necessary, and (iii) this Purchase Agreement has been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
Upon their issuance and delivery pursuant to this Purchase Agreement, the
Debentures will be validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances other than those created hereunder or by the
actions of the Investors; PROVIDED, HOWEVER, that the Debentures are subject to
restrictions on transfer under state and/or federal securities laws.
Section 4.3 CAPITALIZATION. As of July 31, 2000, the authorized
capital stock of the Company consists of 19,000,000 shares of Common Stock,
$.0001 par value, of which 4,503,000 shares are outstanding, and 1,000,000
shares of preferred stock, $.0001 par value, of which 144,081 shares are
outstanding. All of the outstanding shares of the Company's capital stock have
been duly and validly authorized and issued and are fully paid and
nonassessable. No shares of Common Stock or preferred stock of the Company are
entitled to preemptive or similar rights. Except as disclosed in the SEC
Documents and as contemplated by this Agreement, to the knowledge of the
Company, no Person or group of Persons beneficially owns (as determined pursuant
to Rule 13d-3 promulgated under the Exchange Act) or has the right to acquire by
agreement with or by obligation binding upon the Company beneficial ownership of
in excess of five percent of the Common Stock.
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Section 4.4 COMMON STOCK. The Company has registered its Common Stock
pursuant to the Exchange Act, and such Common Stock is currently listed or
quoted, and trades, on the OTC Bulletin Board.
Section 4.5 SEC DOCUMENTS. The Company has delivered or made
available to the Investors true and complete copies of the SEC Documents filed
by the Company with the SEC during the twelve months immediately preceding the
date hereof. The SEC Documents comply in all material respects with the
requirements of the Securities Act and/or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements).
Section 4.6 VALID ISSUANCES. Neither the issuance of the Debentures,
nor the Company's performance of its obligations under this Purchase Agreement
will (i) result in the creation or imposition by the Company of any liens,
charges, claims or other encumbrances upon the Debentures, or any of the assets
of the Company, or (ii) entitle the holders of Outstanding Capital Shares to
preemptive or other rights to subscribe to or acquire any Capital Shares or
other securities of the Company.
Section 4.7 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates, nor any distributor
or any person acting on its or their behalf (i) has conducted or will conduct
any general solicitation (as that term is used in Rule 502(c) of Regulation D)
or general advertising in connection with the offer and sale of the Debentures,
or (ii) has made any offers or sales of any security or solicited any offers to
buy any security under any circumstances that would require registration of the
Underlying Shares under the Securities Act, except as contemplated by this
Purchase Agreement.
Section 4.8 NO CONFLICTS. The execution, delivery and performance of
this Purchase Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby, including without limitation
the issuance of the Debentures, do not and will not (i) result in a violation of
the Company's Certificate of Incorporation or ByLaws or (ii) conflict with, or
constitute a material default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, patent, patent
license, indenture, instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party, or (iii)
result in a violation of any federal, state or local law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected, nor is the Company otherwise in violation of, in
conflict with, or in default under, any of the foregoing except as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
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Section 4.9 COMPLIANCE. The Company is in compliance, to the extent
applicable, with all reporting obligations under either Section 12(b), 12(g) or
15(d) of the Exchange Act. The Company has complied in all material respects and
to the extent applicable with all reporting obligations, under either Section
13(a) or 15(d) of the Exchange Act for a period of at least twelve (12) months
immediately preceding the Subscription Date.
Section 4.10 GOVERNMENTAL AND CONTRACTUAL CONSENT, ETC. No consent,
approval or authorization of, or designation, declaration or filing with any
governmental authority or any contract counterpart on the part of the Company is
required in connection with the valid execution and delivery of this Purchase
Agreement, or the offer, sale or issuance of the Debentures, or the consummation
of any other transaction contemplated hereby.
ARTICLE V
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COVENANTS OF THE COMPANY
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Section 5.1 The Company warrants that it has not received any notice,
oral or written, affecting it's continued listing on the OTC Bulletin Board. The
Company will use its best efforts to comply with the listing and trading
requirements of its Common Stock on the Principal Market and will use its best
efforts to comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market. If the Company
receives notification stating that the Company is not in compliance with the
listing qualifications of such Principal Market, the Company will use its best
efforts to take all reasonable action to bring the Company into compliance with
all applicable listing standards of the Principal Market.
Section 5.2 EXCHANGE ACT REGISTRATION. The Company will use its best
efforts to maintain the registration of its Common Stock under the Exchange Act,
will use its best efforts to comply in all respects with its reporting and
filing obligations under the Exchange Act.
Section 5.3 LEGENDS. The securities to be sold by the Company
pursuant to this Purchase Agreement shall be free of restrictive legends, except
as set forth in Article VI.
Section 5.4 LEGAL OPINION. The Company's counsel shall deliver to the
Investors upon execution of this Purchase Agreement, an opinion in the form of
Exhibit B annexed hereto.
Section 5.5 NOTICES. The Company agrees to provide the Investors with
copies of all notices and information, including without limitation notices and
proxy statements in connection with any meetings that are provided to the
holders of shares of Common Stock, contemporaneously with the delivery of such
notices or information to such Common Stock holders.
Section 5.6 RULE 144 COMPLIANCE. The Company will take all action as
may be required as a condition to the availability of Rule 144, and the Company
will upon request supply written confirmation that it is in compliance with the
reporting requirements of Rule 144. The Company agrees to use its best efforts
to facilitate and expedite transfers of the Underlying Shares pursuant to Rule
144, which efforts shall include, but not be limited to, timely notice to its
transfer agent to expedite such transfers. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Underlying Shares to the public without registration, the
Company agrees to use its reasonable best efforts to:
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(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities
Act;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934
Act; and
(iii) not take any action or file any document (whether or not
permitted by Exchange Act or the rules thereunder) to
terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under said Act.
ARTICLE VI
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LEGENDS
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Section 6.1 LEGENDS. The Investors agree to the imprinting, so long as
is required by this Section, of the following legend (or such substantially
similar legend as is acceptable to the Investors and their respective counsel,
the parties agreeing that any unacceptable legended securities shall be replaced
promptly by and at the Company's cost) on the Debentures and/or Underlying
Shares:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
of transfer set forth in this Section.
Section 6.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend
other than the one specified in this Article has been or shall be placed on the
share certificates representing the Common Stock, and no instructions or "stop
transfer orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article.
Section 6.3 INVESTOR'S COMPLIANCE. Nothing in this Article shall
affect in any way each Investor's obligations to comply with all applicable
securities laws upon the resale of the Common Stock.
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ARTICLE VII
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CHOICE OF LAW
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Section 7.1 CHOICE OF LAW; VENUE; JURISDICTION. This Purchase
Agreement will be exclusively construed and enforced in accordance with and
exclusively governed by the laws of the State of New York, except for matters
arising under the Securities Act and Exchange Act, without reference to
principles of conflicts of law. Each of the parties consents to the exclusive
jurisdiction of the U.S. District Court sitting in the Southern District of the
State of New York sitting in Manhattan in connection with any dispute arising
under this Purchase Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on FORUM NON CONVENIENS, to
the bringing of any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Purchase Agreement obtains a judgment
against it in such a proceeding, the party which obtained such judgment may
enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Purchase Agreement
irrevocably consents to the service of process in any such proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party at its address set forth herein. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law. Each
party waives its right to a trial by jury.
ARTICLE VIII
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ASSIGNMENT; TERMINATION
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Section 8.1 ASSIGNMENT. Each Investor's interest in this Purchase
Agreement and its ownership of the Debentures may be assigned or transferred at
any time, in whole or in part, to any other person or entity (including any
affiliate of each Investor) provided that the Company must consent to such
assignment or transfer (which consent shall not be unreasonably withheld), and
such assignee or transferee must agree to, and truthfully, make the
representations and warranties contained in Article III. The provisions of this
Purchase Agreement shall inure to the benefit of, and be enforceable by, any
transferee of any of the Debentures purchased or acquired by the Investors
hereunder with respect to the Common Stock held by such person. In the event any
Investor transfers or assigns any of the Debentures as set forth herein, such
Investor shall remain liable under this Purchase Agreement up until the time
such transfer or assignment is completed, and shall remain liable after the
transfer or assignment is completed for its actions taken prior to such
assignment or transfer.
Section 8.2 TERMINATION. This Purchase Agreement shall terminate upon
the earliest of (i) the date that all the Debentures have been sold by the
Investors; (ii) the date that all of the Underlying Shares may be sold by the
Investors under the provisions of Rule 144, without volume limitation; or (iii)
two years after the expiration of the Closing Date.
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ARTICLE IX
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NOTICES
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Section 9.1 NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a Business Day during normal business hours where such notice is to
be received), or the first Business Day following such delivery (if delivered
other than on a Business Day during normal business hours where such notice is
to be received), or (b) on the second Business Day following the date of mailing
by reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company:
Tam Restaurants, Inc.
1163 Forest Avenue
Staten Island, NY 10310
Attention: Anthony Golio
Facsimile: (718) 720-5959
Telephone: (718) 448-3872
with a copy to:
The Goldstein Law Group, P.C.
65 Broadway, 10th Floor
New York, NY 10006
Attention: Jeffrey M. Stein, Esq.
Telephone: (212) 809-4220
Facsimile: (212) 809-4228
If to the Investors:
Luke Johnson
32 Clarendon Gardens
London W9 1AZ, UK
Peter Salvatore
35 Seagate Road
Staten Island, NY 10305
Either party hereto may from time to time change its address or
facsimile number for notices under this Section 9.1 by giving at least ten
calendar days' prior written notice of such changed address or facsimile number
to the other party hereto.
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Section 9.2 INDEMNIFICATION. The Company on the one hand, and each
Investor on the other, agrees to indemnify and hold harmless the other and each
officer, and director of the other or person, if any, who controls such entity
within the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several (which shall, for all purposes of this Purchase
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees), to which such party may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
the breach of any term of this Purchase Agreement by such other party. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that the fees and expenses of
such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party, or (ii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying party
and the indemnified party shall have been advised by such counsel that there may
be one or more legal defenses available to the indemnifying party in conflict
with any legal defenses which may be available to the indemnified party (in
which case the indemnifying party shall not have the right to assume the defense
of such action on behalf of the indemnified party, it being understood, however,
that the indemnifying party shall, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable only for
the reasonable fees and expenses of one separate firm of attorneys for the
indemnified party, which firm shall be designated in writing by the indemnified
party). No settlement of any action against an indemnified party shall be made
without the prior written consent of the indemnified party, which consent shall
not be unreasonably withheld.
Section 9.3 CONTRIBUTION. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 9.2 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
12
<PAGE>
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 9.2 hereof
provide for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any indemnified party, then each
party shall contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (which shall, for all purposes of this Purchase
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees), in either such case (after contribution
from others) on the basis of relative fault as well as any other relevant
equitable considerations. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in Section 9.2 shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contributions from any person who was not
guilty of such fraudulent misrepresentation.
ARTICLE X
---------
MISCELLANEOUS
-------------
Section 10.1 COUNTERPARTS; FACSIMILE; AMENDMENTS. This Purchase
Agreement may be executed in multiple counterparts, each of which may be
executed by less than all of the parties and shall be deemed to be an original
instrument which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one and the same
instrument. Except as otherwise stated herein, in lieu of the original
documents, a facsimile transmission or copy of the original documents shall be
as effective and enforceable as the original. This Purchase Agreement may be
amended only by a writing executed by the Company on the one hand, and the
Investors, on the other hand.
Section 10.2 ENTIRE AGREEMENT. This Purchase Agreement sets forth the
entire agreement and understanding of the parties relating to the subject matter
hereof and supersedes all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written relating to the
subject matter hereof.
Section 10.3 SURVIVAL; SEVERABILITY. The representations, warranties,
covenants and agreements of the parties hereto shall survive the Closing
hereunder. In the event that any provision of this Purchase Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Purchase Agreement shall continue in full force and effect without
said provision; provided that such severability shall be ineffective if it
materially changes the economic benefit of this Purchase Agreement to any party.
Section 10.4 TITLE AND SUBTITLES. The titles and subtitles used in
this Purchase Agreement are used for convenience only and are not to be
considered in construing or interpreting this Purchase Agreement.
Section 10.5 REPLACEMENT OF CERTIFICATES. Upon (i) receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of a certificate representing the Debentures and/or Underlying
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Shares, and (ii) in the case of any such loss, theft or destruction of such
certificate, upon delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company, or (iii) in the case of any such
mutilation, on surrender and cancellation of such certificate, the Company at
its expense will execute and deliver, in lieu thereof, a new certificate of like
tenor.
Section 10.6 PUBLICITY. The Company and the Investors shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and no party
shall issue any such press release or otherwise make any such public statement
without the prior written consent of the other parties, which consent shall not
be unreasonably withheld or delayed, except that no prior consent shall be
required if such disclosure is required by law, in which such case the
disclosing party shall provide the other parties with prior notice of such
public statement. Notwithstanding the foregoing, the Company shall not publicly
disclose the names of the Investors without the prior written consent of the
Investors, except to the extent required by law or in response to a written SEC
request, in which case the Company shall provide the Investors with prior
written notice of such public disclosure.
Section 10.7 CURRENCY. All references to currency in this Purchase
Agreement and all Exhibits annexed hereto shall be in United States currency.
Section 10.8 FEES AND EXPENSES. Each of the parties shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby, .
Section 10.9 BOARD OF DIRECTORS. Each of the parties acknowledge that
both of the Investors are Directors of the Company and are fully familiar with
all of the facts and circumstances surrounding the Company including but not
limited to the financial condition of the Company, and are aware of the risks in
an investment in the Company. Each of the Investors acknowledges that they have
reviewed such materials as they deem necessary to make an informed investment
decision.
EXHIBITS
A: Debenture
B: Escrow Agreement
C: Legal Opinion
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SCHEDULE A
NAME OF INVESTOR AMT INVESTED $ AMT. OF DEBENTURE
-----------------------------------------------------------------
Luke Johnson $500,000 $500,000
Peter Salvatore $500,000 $500,000
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Convertible
Debenture Purchase Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date set forth below.
Tam Restaurants, Inc.
By: ___________________________
Name: Anthony Golio
Title: President
Dated:____________
LUKE JOHNSON
_______________________ Dated:_________
PETER SALVATORE
_______________________ Dated:_________
<PAGE>
EXHIBIT A
<PAGE>
No. 2000-1 $500,000.00 USD
------
TAM RESTAURANTS, INC.
10% CONVERTIBLE DEBENTURE DUE OCTOBER 21, 2003
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THERE IS AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
This Convertible Debenture is duly authorized issue of Convertible
Debentures of TAM Restaurants, Inc., a Delaware corporation (the "ISSUER"),
issued on October 21, 2000 (the "ISSUANCE DATE"), and designated as its 10%
Convertible Debenture due October 21, 2003 (the "DEBENTURE").
FOR VALUE RECEIVED, the Issuer promises to pay to
PETER SALVATORE
the registered holder hereof or its registered assigns, if any (the "HOLDER"),
the principal sum of:
FIVE HUNDRED THOUSAND ($500,000)
United States Dollars,
on or prior to October 21, 2003 (the "MATURITY DATE") or such earlier date this
Debenture is required to be repaid by the Issuer pursuant to the terms of
Sections 4 and 8 herein, and to pay simple interest on the Maturity Date or as
set forth in Section 8 below, at the rate of ten (10%) percent per annum for
such principal amount of this Debenture outstanding on the Maturity Date
(subject to the qualifications set forth below). Accrual of interest shall
commence as of the Issuance Date. In the event the Holder elects to convert the
principal amount of this Debenture into shares of Common Stock pursuant to the
procedures set forth herein, the Holder shall not be entitled to any interest in
the repayment of such principal. This Debenture has been issued under the terms
and provisions of the Convertible Debenture Purchase Agreement dated as of
October 21, 2000 between the Issuer and Holder (the "AGREEMENT") and shall be
subject to all of the terms and conditions and entitled to all of the benefits
thereof. In the event the principal amount of this Debenture has not been repaid
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<PAGE>
by the Issuer to the Holder as of the close of business on the Maturity Date,
then at such time the Holder shall have the option of (i) receiving repayment of
the principal amount then outstanding to the Holder in cash or cash equivalent,
plus accrued and unpaid interest for this Debenture then outstanding, or (ii)
issue Conversion Shares (as defined below) for the then remaining principal
amount outstanding (with out the inclusion of any interest). Unless otherwise
agreed in writing by both parties hereto, the interest so payable will be paid
to the person in whose name this Debenture (or one or more predecessor
Debentures) is registered on the records of the Issuer regarding registration
and transfers of the Debenture (the "DEBENTURE REGISTER"), provided, however,
that the Issuer's obligation to a transferee of this Debenture arises only if
such transfer, sale or other disposition is made in accordance with the terms
and conditions contained in the Agreement and this Debenture.
The Debenture is subject to the following additional provisions:
1. The Debenture is exchangeable for like Debentures in equal
aggregate principal amount of authorized denominations, as requested by the
Holder surrendering the same, but shall not be issuable in denominations of less
than $50,000 (unless such amount represents the remaining principal balance
outstanding). No service charge will be made for such registration or transfer
or exchange.
2. The Issuer shall be entitled to withhold from all payments of
principal and/or interest of this Debenture any amounts required to be withheld
under the applicable provisions of the U.S. Internal Revenue Code of 1986, as
amended, or other applicable laws at the time of such payments.
3. This Debenture has been issued subject to investment
representations of the original Holder hereof and may be transferred or
exchanged only in compliance with the Securities Act and applicable state
securities laws and in compliance with the restrictions on transfer provided in
the Agreement. Prior to the due presentment for such transfer of this Debenture,
the Issuer and any agent of the Issuer may treat the person in whose name this
Debenture is duly registered on the Issuer's debenture register as the owner
hereof for the purpose of receiving payment as herein provided and all other
purposes, whether or not this Debenture is overdue, and neither the Issuer nor
any such agent shall be affected by notice to the contrary. The transferee shall
be bound, as the original Holder by the same representations and terms described
herein and under the Agreement.
4. The principal amount of this Debenture is only repayable as set
forth in this Section or upon the occurrence of an Event of Default as set forth
in Section 8 below. The interest is only repayable upon and Event of Default as
set forth in Section 8 below or upon repayment of the principal upon the
Maturity Date as set forth above. The Holder of this Debenture is entitled, at
its option, to convert at any time commencing on the date hereof up until the
Maturity Date, the principal amount of this Debenture or any portion thereof,
into shares of fully paid and non assessable Common Stock of the Issuer
("CONVERSION SHARES") at a conversion price for each Conversion Share
("CONVERSION PRICE") equal to $.15. The number of Conversion Shares due to the
Holder is to be derived from dividing the Conversion Amount by the Conversion
Price. For purposes of this Debenture, the "CONVERSION AMOUNT" shall mean the
principal dollar amount of the Debenture being converted. In the event the
4
<PAGE>
principal amount of this Debenture has not been repaid by the Issuer to the
Holder (in the manner set forth in the first sentence of this Section 4) as of
the close of business on the Maturity Date, then at such time the Issuer shall
issue Conversion Shares for the then remaining principal amount outstanding with
no requirement of a Notice of Conversion (as defined below), and the Maturity
Date being deemed a Conversion Date (as defined below). The Holder may exercise
its right to convert the Debenture by telecopying an executed and completed
notice of conversion (the "NOTICE OF CONVERSION") to the Issuer and delivering
the original Notice of Conversion and the original Debenture to the Issuer by
express courier. Each business day on which a Notice of Conversion is telecopied
to and received by the Issuer in accordance with the provisions hereof shall be
deemed a "CONVERSION DATE". The Issuer will transmit the certificates
representing Conversion Shares issuable upon such conversion of the Debenture
(together with the certificates representing the Debenture not so converted) to
the Holder via express courier, by electronic transfer (if applicable) or
otherwise within five Business Days after the Conversion Date, provided, the
Issuer has received the original Notice of Conversion and Debenture being so
converted. If the Company has not received the original Notice of Conversion and
original Debenture being converted within three Business Days after Conversion
Date, then the Issuer shall transmit the certificates representing the
Conversion Shares issuable upon such conversion of the Debenture (together with
the certificates representing the Debenture not so converted) to the Holder via
express courier, by electronic transfer (if applicable) or otherwise within five
business days after receipt of the original Notice of Conversion and original
Debenture being converted.
The Notice of Conversion and Debenture representing the portion of
the Debenture converted shall be delivered as follows:
To the Issuer:
TAM Restaurants, Inc.
1163 Forest Avenue
Staten Island, NY 10310
Attention: Anthony Golio
Facsimile: (718) 448-3872
Telephone: (718) 720-5959
or to such other address as may be communicated by the Issuer to the
Holder in writing.
The principal amount of this Debenture shall be reduced as per that
principal amount indicated on the Notice of Conversion upon the proper receipt
by the Holder of such Conversion Shares due upon such Notice of Conversion.
5. Upon each adjustment of the Conversion Price (as set forth below),
the Holder shall thereafter be entitled to (but not obligated to) receive upon
conversion of this Debenture, at the Conversion Price resulting from such
adjustment, the number of shares of Common Stock obtained by (i) multiplying the
Conversion Price in effect immediately prior to such adjustment by the number of
shares of Common Stock receivable hereunder immediately prior to such adjustment
and (ii) dividing the product thereof by the Conversion Price resulting from
such adjustment. The Conversion Price shall be adjusted as follows:
5
<PAGE>
(i) In the case of any amendment to the Issuer's Articles
of Incorporation to change the designation of the Common Stock or the
rights, privileges, restrictions or conditions in respect to the
Common Stock or division of the Common Stock, this Debenture shall be
adjusted so as to provide that upon exercise thereof, the Holder
shall receive, in lieu of each share of Common Stock theretofore
issuable upon such conversion, the kind and amount of shares, other
securities, money and property receivable upon such designation,
change or division by the Holder issuable upon such conversion had
the conversion occurred immediately prior to such designation, change
or division. This Debenture shall be deemed thereafter to provide for
adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section. The
provisions of this Subsection (i) shall apply in the same manner to
successive reclassifications, changes, consolidations and mergers.
(ii) If the Issuer shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares of
Common Stock, or declare a dividend or make any other distribution
upon the Common Stock payable in shares of Common Stock, the
Conversion Price in effect immediately prior to such subdivision or
dividend or other distribution shall be proportionately reduced, and
conversely, in case the outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the
Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
(iii) If any capital reorganization or reclassification of
the capital stock of the Issuer, or any consolidation or merger of
the Issuer with or into another corporation or other entity, or the
sale of all or substantially all of the Issuer's assets to another
corporation or other entity shall be effected in such a way that
holders of shares of Common Stock shall be entitled to receive stock,
securities, other evidence of equity ownership or assets with respect
to or in exchange for shares of Common Stock, then, the Holder shall
thereafter have the right to receive upon the conversion hereof upon
the basis and upon the terms and conditions specified herein, such
shares of stock, securities, other evidence of equity ownership or
assets as may be issued or payable with respect to or in exchange for
a number of outstanding shares of such Common Stock equal to the
number of shares of Common Stock immediately theretofore receivable
upon the conversion of this Debenture under this Section had such
reorganization, reclassification, consolidation, merger or sale not
taken place, and in any such case appropriate provisions shall be
made with respect to the rights and interests of the holder to the
end that the provisions hereof (including, without limitation,
provisions for adjustments of the Conversion Price and of the number
of shares of Common Stock receivable upon the conversion of this
Debenture) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities, other evidence of equity
ownership or assets thereafter deliverable upon the exercise hereof
including an immediate adjustment, by reason of such consolidation or
merger, of the Conversion Price to the value for the Common Stock
reflected, by the terms of such consolidation or merger if the value
so reflected is less than the Conversion Price in effect immediately
prior to such consolidation or merger. Subject to the terms of this
Debenture, in the event of a merger or consolidation of the Issuer
with or into another corporation or other entity as a result of which
the number of shares of common stock of the surviving corporation or
other entity issuable to investors of Common Stock, is greater or
lesser than the number of shares of Common Stock outstanding
immediately prior to such merger or consolidation, then the
Conversion Price in effect immediately prior to such merger or
consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of Common
Stock. If a purchase, tender or exchange offer is made to and
accepted by the holders of more than fifty (50%) percent of the
outstanding shares of Common Stock, the Issuer shall not effect any
6
<PAGE>
consolidation, merger or sale with the person having made such offer
or with any affiliate of such person, unless prior to the
consummation of such consolidation, merger or sale the Holder shall
have been given a reasonable opportunity to then elect to receive
upon the conversion of this Debenture the amount of stock,
securities, other evidence of equity ownership or assets then
issuable with respect to the number of shares of Common Stock in
accordance with such offer.
(iv) In case the Issuer shall, at any time prior to
conversion of this Debenture, consolidate or merge with any other
corporation or other entity (where the Issuer is not the surviving
entity) or transfer all or substantially all of its assets to any
other corporation or other entity, then the Issuer shall cause
effective provision to be made so that the Holder upon the conversion
of this Debenture after the effective date of such transaction shall
be entitled to receive the kind and, amount of shares, evidences of
indebtedness and/or other securities or property receivable on such
transaction by the Holder of the number of shares of Common Stock as
to which this Debenture was convertible immediately prior to such
transaction (without giving effect to any restriction upon such
exercise); and, in any such case, appropriate provision shall be made
with respect to the rights and interests of the Holder to the end
that the provisions of this Debenture shall thereafter be applicable
(as nearly as may be practicable) with respect to any shares,
evidences of indebtedness or other securities or assets thereafter
deliverable upon conversion of this Debenture. Upon the occurrence of
any event described in this Subsection (iv), the Holder shall have
the right to (a) convert this Debenture immediately prior to such
event at a Conversion Price equal to the lesser of (1) the Conversion
Price or (2) the price per share of Common Stock paid in such event,
or (b) retain ownership of this Debenture, in which event,
appropriate provisions shall be made so that this Debenture shall be
convertible at the Holder's option into shares of stock, securities
or other equity ownership of the surviving or acquiring entity.
(v) In the case of any (a) consolidation or merger of the
Issuer into any entity (other than a consolidation or merger that
does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Issuer),
(b) sale, transfer, lease or conveyance of all or substantially all
of the assets of the Issuer as an entirety or substantially as an
entirety, or (c) reclassification, capital reorganization or change
of the Common Stock (other than solely a change in par value, or from
par value to no par value), in each case as a result of which shares
7
<PAGE>
of Common Stock shall be converted into the right to receive stock,
securities or other property (including cash or any combination
thereof), the holder of this Debenture then outstanding shall have
the right thereafter to convert such share only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale, transfer, capital reorganization or
reclassification by a holder of the number of shares of Common Stock
of the Issuer into which such Debenture would have been converted
immediately prior to such consolidation, merger, sale, transfer,
capital reorganization or reclassification, assuming such holder of
Common Stock of the Issuer (A) is not an entity with which the Issuer
consolidated or into which such sale or transfer was made, as the
case may be ("constituent entity"), or an affiliate of the
constituent entity, and (B) failed to exercise his or her rights of
election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or
transfer (provided that if the kind or amount of securities, cash or
other property receivable upon such consolidation, merger, sale or
transfer is not the same for each share of Common Stock of the Issuer
held immediately prior to such consolidation, merger, sale or
transfer by other than a constituent entity or an affiliate thereof
and in respect of which the Issuer merged into the Issuer or to which
such rights or election shall not have been exercised ("non-electing
share"), then for the purpose of this paragraph (4)(d) the kind and
amount of securities, cash or other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share
shall be deemed to be the kind and amount so receivable per share by
a majority of the non-electing shares). If necessary, appropriate
adjustment shall be made in the application of the provision set
forth herein with respect to the rights and interest thereafter of
the Holder, to the end that the provisions set forth herein shall
thereafter correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock or other securities
or property thereafter deliverable on the conversion of this
Debenture. The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers, capital reorganizations
and reclassifications. The Issuer shall not effect any such
consolidation, merger, sale or transfer unless prior to or
simultaneously with the consummation thereof the successor issuer or
entity (if other than the Issuer) resulting from such consolidation,
merger, sale or transfer shall assume, by written instrument, the
obligation to deliver to the Holder such shares of Common Stock,
securities or assets as, in accordance with the provisions of this
Debenture, such Holder may be entitled to receive under this
Debenture.
(vi) The Issuer will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or
performed hereunder by the Issuer, but will at all times in good
faith assist in the carrying out of all the provisions of this
Debenture and in taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Holder
against impairment.
(vii) Whenever the Conversion Price shall be adjusted
pursuant to this Section the Issuer shall promptly mail by registered
or certified mail, return receipt requested, to the Holder a
certificate signed by its President setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated
(including a description of the basis on which the Board of Directors
of the Issuer made any determination hereunder), and the Conversion
Price after giving effect to such adjustment, and shall cause copies
8
<PAGE>
of such certificates to be mailed (by first-class mail, postage
prepaid) to the Holder. The Issuer shall make such certificate and
mail it to the Holder immediately after each adjustment.
6. No provision of this Debenture shall alter or impair the
obligation of the Issuer, which is absolute and unconditional, upon an Event of
Default (as defined below), to pay the principal of, and interest on this
Debenture at the place, time, and rate, and in the coin or currency herein
prescribed.
7. The Issuer hereby expressly waives demand and presentment for
payment, notice on nonpayment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereon,
regardless of and without any notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder.
8. If one or more of the following described "EVENTS OF DEFAULT"
shall occur,
(a) Any of the representations, covenants, or warranties
made by the Issuer herein, or in the Agreement (including all
Exhibits annexed thereto) shall have been incorrect when made in any
material respect or shall thereafter be determined to be incorrect;
or
(b) The Issuer shall breach, fail to perform, or fail to
observe in any material respect any material covenant, term,
provision, condition, agreement or obligation of the Issuer under
this Debenture (or any other debenture of the Company held by the
Holder), the Agreement, between the parties of even date herewith,
and such breach or failure has not been cured within ten business
days after receipt of written notice from the Holder setting forth
such breach or failure; or
(c) A trustee, liquidator or receiver shall be appointed
for the Issuer or for a substantial part of its property or business
without its consent and shall not be discharged within thirty (30)
calendar days after such appointment; or
(d) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of the
properties or assets of the Issuer and shall not be dismissed within
thirty (30) calendar days thereafter; or
(e) Bankruptcy reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or
against the Issuer and, if instituted against the Issuer, Issuer
shall by any action or answer approve of, consent to or acquiesce in
any such proceedings or admit the material allegations of, or default
in answering a petition filed in any such proceeding or such
proceedings shall not be dismissed within thirty (30) calendar days
thereafter; or
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<PAGE>
(f) There shall be a material adverse change in the
financial condition of the Issuer; or
(g) The Issuer shall have failed to deliver shares of
Common Stock issuable upon conversion of the Debentures within five
business days of when due under the terms of this Debenture; or
(h) The Issuer, or any other party, shall, at any time
after the Issuance Date, in any way materially adversely alter
Holder's priority interest as set forth below.
Then, or at any time thereafter, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) or
cured as provided herein, at the option of the Holder, and in the Holder's sole
discretion, the Holder may consider this Debenture (and all interest through
such date) immediately due and payable in cash, without presentment, demand
protest or notice of any kind, all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary
notwithstanding, and Holder may immediately, and without expiration of any
period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law (including but
not limited to consequential damages if any). It is agreed that in the event of
such action, such Holder shall be entitled to receive all reasonable fees, costs
and expenses incurred, including without limitation such reasonable fees and
expenses of attorneys. The parties acknowledge that a change in control of the
Issuer shall not be deemed to be an Event of Default as set forth herein.
9. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
10. The Holder shall have the right to include all of the Conversion
Shares underlying this Debenture (the "REGISTRABLE SECURITIES") as part of any
registration of securities filed by the Issuer (other than in connection with a
transaction contemplated by Rule 145(a) promulgated under the Act or pursuant to
Form S-4 or S-8) and must be notified in writing of such filing as soon as
reasonably practicable; PROVIDED, HOWEVER, that the Holder agrees it shall not
have any piggy-back registration rights pursuant to this Debenture if the
Conversion Shares underlying this Debenture may be sold in the United States
pursuant to the provisions of Rule 144 without any restriction on resale. Holder
shall have five business days after receipt of the aforementioned notice from
the Issuer, to notify the Issuer in writing as to whether the Issuer is to
include Holder or not include Holder as part of such registration; PROVIDED,
HOWEVER, that if any registration pursuant to this paragraph shall be
underwritten, in whole or in part, the Issuer may require that the Registrable
Securities requested for inclusion pursuant to this paragraph be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If in the good faith judgment of the underwriter
evidenced in writing of such offering only a limited number of Registrable
Securities should be included in such offering, or no such shares should be
included, the Holder, and all other selling stockholders, shall be limited to
registering such proportion of their respective shares as shall equal the
proportion that the number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the total number of all
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<PAGE>
shares then held by all selling stockholders desiring to participate in such
offering. All registration expenses incurred by the Issuer in complying with the
terms of this Debenture shall be paid by the Issuer, exclusive of underwriting
discounts, commissions and legal fees and expenses for counsel to the Holder.
11. This Debenture, together with all documents referenced herein,
embodies the full and entire understanding and agreement between the Issuer and
Holder with respect to the subject matter hereof and supersedes all prior oral
or written agreements and understandings relating to the subject matter hereof.
Neither this Debenture nor any terms hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the Issuer and the
Holder. All capitalized terms not otherwise defined herein shall have the same
meaning as given in the Agreement. In the event of any inconsistencies between
this Debenture and the Agreement, the Debenture shall control. No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in this Debenture shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Debenture.
12. This Debenture will be construed and enforced in accordance with
and governed exclusively by the laws of the State of New York, except for
matters arising under the Securities Act, without reference to principles of
conflicts of law. Each of the parties consents to the exclusive jurisdiction of
the U.S. District Court sitting in the Southern District of the State of New
York sitting in Manhattan in connection with any dispute arising under this
Debenture and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on FORUM NON CONVENIENS, to the
bringing of any such proceeding in such jurisdictions. Each party hereby agrees
that if the other party to this Debenture obtains a judgment against it in such
a proceeding, the party which obtained such judgment may enforce same by summary
judgment in the courts of any country having jurisdiction over the party against
whom such judgment was obtained, and each party hereby waives any defenses
available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Debenture irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law. Each party waives its right to a trial by jury.
13. Upon receipt by the Issuer of evidence of the loss, theft,
destruction or mutilation of any Debenture certificate(s), and (in the case of
loss, theft or destruction) of indemnity or security reasonably satisfactory to
the Issuer, and upon the cancellation of the Debenture certificate(s), if
mutilated, the Issuer shall execute and deliver new certificates for
Debenture(s) of like tenure and date.
14. This Debenture does not entitle the Holder hereof to any voting
rights or other rights as a shareholder of the Issuer prior to the conversion
into Common Stock thereof, except as provided by applicable law. If, however, at
the time of the surrender of this Debenture and conversion the Holder hereof
shall be entitled to convert this Debenture, the Conversion Shares so issued
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shall be and be deemed to be issued to such holder as the record owner of such
shares as of the close of business on the Conversion Date.
15. Except as expressly provided herein or as required by law, so
long as this Debenture remains outstanding, the Issuer shall not, without the
approval by vote or written consent by the Holder, take any action that would
adversely affect the rights, preferences or privileges of this Debenture.
16. The Debentures shall only be junior in right of payment to the
Issuer's current debtors in the Issuer's Times Square, New York financing and
any current traditional bank financing and debts owed to the government, and
senior in respect to all other indebtedness of the Issuer outstanding as of the
original Issuance Date. The Issuer agrees that it shall not incur any other debt
or equity that ranks senior to the rights of the holder of this Debenture, so
long as this Debenture remains outstanding, except for traditional bank
financing or the repayment of government related debt, unless the holders of at
least seventy five percent (75%) of the then outstanding principal amount of
these Debentures agrees in writing.
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<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Convertible
Debenture to be duly executed by an officer thereunto duly
authorized.
TAM RESTAURANTS, INC.
By_______________________________
Name: Anthony Golio
Title: President
Date: October 21, 2000
<PAGE>
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $
________________ of the principal amount of the above Debenture No. ___ into
Shares of Common Stock of TAM Restaurants, Inc. according to the conditions
hereof, as of the date written below.
Date of Conversion ____________________________________________________________
Applicable Conversion Price __________________________________________________
Signature______________________________________________________________________
[Name]
Address:_______________________________________________________________________
_______________________________________________________________________
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EXHIBIT B
<PAGE>
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made by and among Tam Restaurants,
Inc., a corporation organized under the laws of the State of Delaware
(hereinafter referred to as the "COMPANY"), Luke Johnson and PETER SALVATORE
(hereinafter collectively referred to as the "INVESTOR"), and The Goldstein Law
Group, P.C. (hereinafter the "ESCROW AGENT").
W I T N E S E T H:
WHEREAS, pursuant to the Convertible Debenture Purchase Agreement
dated as of the date hereof (the "PURCHASE AGREEMENT"), the Investors will be
purchasing convertible debentures of the Company (the "SECURITIES") for the
Purchase Price as set forth in the Purchase Agreement; and
WHEREAS, the Company has requested that the Escrow Agent hold the
funds of the Investors in escrow until the Escrow Agent has received the
original Securities. The Escrow Agent will then immediately wire transfer or
otherwise deliver at the Company's direction immediately available funds to the
Company or the Company's account and arrange for delivery of the Securities to
the Investors as per each Investor's written instructions.
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE I
---------
TERMS OF THE ESCROW
-------------------
1.1 Upon Escrow Agent's receipt into its attorney trustee
account of the Purchase Price from the Investors for the Securities to be
purchased on the Closing Date pursuant to the terms and conditions set forth in
the Purchase Agreement, it shall notify the Company of the amount of funds it
has received into its account.
1.2 The Company, upon receipt of said notice and acceptance
of the Purchase Agreement (including all Exhibits annexed thereto) by both
parties, as evidenced by the Company, and the Investors' execution thereof,
shall deliver to the Escrow Agent the original Securities being purchased by the
Investors in connection with the Closing Date.
1.3 Once the Escrow Agent receives the original Securities
he shall immediately wire that amount of funds necessary to purchase such
Securities per the written instructions of the Company. Once the funds (as set
forth above) have been received per the Company's instructions, the Escrow Agent
shall then arrange to have the Securities delivered as per instructions from
each Investor.
<PAGE>
ARTICLE 2
---------
MISCELLANEOUS
-------------
2.1 This Agreement may be altered or amended only with the
consent of all of the parties hereto. Should any party attempt to change this
Agreement in a manner that in the Escrow Agent's discretion shall be
undesirable, or at the sole option of the Escrow Agent, the Escrow Agent may
resign as Escrow Agent by notifying all parties in writing in writing. The
Company and the Investors may remove the Escrow Agent as escrow agent by serving
a written notice signed by all of such parties removing Escrow Agent as the
escrow agent in this transaction. In the case of the Escrow Agent's resignation
or removal pursuant to the foregoing, his only duty, until receipt of notice
from the Company and the Investors or its agent that a successor escrow agent
shall have been appointed, shall be to hold and preserve the Securities and/or
funds. Upon receipt by the Escrow Agent of said notice from the Company and the
Investors of the appointment of a successor escrow agent, the name of a
successor escrow account and a direction to transfer the Securities and/or
funds, the Escrow Agent shall promptly thereafter transfer all of the Securities
and/or funds held in escrow to said successor escrow agent. The Escrow Agent is
authorized to disregard any notices, requests, instructions or demands received
by it from the Company or the Investors after notice of resignation or removal
shall have been given, unless the same shall be the aforementioned notice from
the Company and the Investors to transfer the Securities and/or funds to a
successor escrow agent or to return same to the respective parties.
2.2 The Escrow Agent shall be reimbursed by all parties
hereto for any reasonable expenses incurred in the event there is a conflict
between the parties and the Escrow Agent shall deem it necessary to retain
counsel.
2.3 The Escrow Agent shall not be liable for any action
taken or omitted by him in good faith in accordance with the advice of the
Escrow Agent's counsel; and in no event shall the Escrow Agent be liable or
responsible except for the Escrow Agent's own gross negligence or willful
misconduct.
2.4 The Company, and the Investors warrant to and agree
with the Escrow Agent that, unless otherwise expressly set forth in this
Agreement:
(i) there is no security interest in the
Securities or any part thereof;
(ii) no financing statement under the Uniform
Commercial Code is on file in any jurisdiction claiming a security
interest or in describing (whether specifically or generally) the
Securities or any part thereof; and
(iii) the Escrow Agent shall have no
responsibility at any time to ascertain whether or not any security
interest exists in the Securities or any part thereof or to file any
financing statement under the Uniform Commercial Code with respect to
the Securities or any part thereof.
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<PAGE>
2.5 The Escrow Agent has no liability hereunder to either
party other than to hold the Securities and funds and to deliver them under the
terms hereof. Each party hereto agrees to indemnify and hold harmless the Escrow
Agent from and with respect to any suits, claims, actions or liabilities arising
in any way out of this transaction including the obligation to defend any legal
action brought which in any way arises out of or is related to this Escrow
Agreement.
2.6 No waiver or any breach of any covenant or provision
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed any extension of
the time for performance of any other obligation or act.
2.7 All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a Business Day between the hours of 9:00 a.m. and 5:00 p.m. where
such notice is to be received), or the first Business Day following such
delivery (if delivered other than on a Business Day between the hours of 9:00
a.m. and 5:00 p.m. where such notice is to be received), (b) on the second
Business Day following the date of mailing by reputable courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur, or (c) five calendar days after sent by regular
mail. The addresses for such communications shall be:
If to the Company:
Tam Restaurants, Inc.
1163 Forest Avenue
Staten Island, NY 10310
Attention: Anthony Golio
Facsimile: (718) 720-5959
Telephone: (718) 448-3872
with a copy to:
The Goldstein Law Group, P.C.
65 Broadway, 10th Floor
New York, NY 10006
Attention: Jeffrey M. Stein, Esq.
Telephone: (212) 809-4220
Facsimile: (212) 809-4228
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If to the Investors:
Luke Johnson
32 Clarendon Gardens
London W9 1AZ, UK
Peter Salvatore
35 Seagate Road
Staten Island, NY 10305
If to the Escrow Agent:
The Goldstein Law Group, P.C.
65 Broadway, 10th Floor
New York, NY 10006
Attention: Jeffrey M. Stein, Esq.
Telephone: (212) 809-4220
Facsimile: (212) 809-4228
Either party hereto may from time to time change its address or
facsimile number for notices under this Section 2.7 by giving at least ten
calendar days' prior written notice of such changed address or facsimile number
to the other party hereto.
2.8 This Agreement shall be binding upon and shall inure to
the benefit of the permitted successors and assigns of the parties hereto.
2.9 This Agreement is the final expression of, and contains
the entire Agreement between, the parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto. This
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.
2.10 Whenever required by the context of this Agreement,
the singular shall include the plural and masculine shall include the feminine.
This Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Agreement.
2.11 The Investors acknowledge and confirm that they are
not being represented in a legal capacity by The Goldstein Law Group, P.C. and
they each have had the opportunity to consult with its own legal advisors prior
to the signing of this Agreement. Each of the Investors acknowledges that the
Escrow Agent is representing the Company and waives any claim of a conflict of
interest.
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2.12 The parties hereto expressly agree that this Agreement
shall be exclusively governed by, interpreted under and construed and enforced
in accordance with the laws of the State of New York. Each of the parties
consents to the exclusive jurisdiction of the federal courts for the Southern
District of the State of New York, in connection with any dispute arising under
this Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on FORUM NON conveniens, to the
bringing of any such proceeding in such jurisdictions. Each party hereby agrees
that if another party to this Agreement obtains a judgment against it in such a
proceeding, the party which obtained such judgment may enforce same by summary
judgment in the courts of any state or country having jurisdiction over the
party against whom such judgment was obtained, and each party hereby waives any
defenses available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the set forth below.
Tam Restaurants, Inc.
BY: ___________________________
Name: Anthony Golio
Title: President
Dated:____________
LUKE JOHNSON
_______________________ Dated:_________
PETER SALVATORE
_______________________ Dated:_________
THE GOLDSTEIN LAW GROUP, P.C.,
Escrow Agent
By: ____________________ Dated:_________
Jeffrey M. Stein
