UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Au Bon Pain Co., Inc.
(Name of Issuer)
Class A Common Stock
$.0001 Par Value Per Share
(Title of Class of Securities)
050103 10 0
(CUSIP Number)
Michael Zuckert
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Tel. No.: (212) 761-4000
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
July 24, 1996
(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(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with
this statement: [ ].
SCHEDULE 13D
(Amendment No. 1)
______________________________ ________________________________
| | | |
|CUSIP No. 050103 10 0 | | Page 2 of 24 Pages |
|____________________________| |______________________________|
___________________________________________________________________________
| 1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | Morgan Stanley Group Inc. |
| | 13-2838811 |
|____|____________________________________________________________________|
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
| | _ |
| | Inapplicable (a) |_| |
| | _ |
| | (b) |_| |
|____|____________________________________________________________________|
| 3 | SEC USE ONLY |
| | |
|____|____________________________________________________________________|
| 4 | SOURCE OF FUNDS |
| | WC, 00 |
|____|____________________________________________________________________|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED _ |
| | PURSUANT TO ITEMS 2(d) or 2(E) |_| |
| | Inapplicable |
|____|____________________________________________________________________|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | Delaware |
|____|____________________________________________________________________|
| | 7 | SOLE VOTING POWER |
| | | 317 |
| NUMBER OF |____|_______________________________________________|
| SHARES | 8 | SHARED VOTING POWER |
| BENEFICIALLY | | 1,332,068 |
| OWNED BY |____|_______________________________________________|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| REPORTING | | 317 |
| PERSON |____|_______________________________________________|
| WITH | 10 | SHARED DISPOSITIVE POWER |
| | | 1,332,068 |
|____________________|____|_______________________________________________|
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 1,332,385 |
|____|_________________________________________________ __________________|
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES _ |
| | CERTAIN SHARES Inapplicable |_| |
|____|____________________________________________________________________|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | |
|____|____________________________________________________________________|
| 14 | TYPE OF REPORTING PERSON |
| | HC, CO |
|____|____________________________________________________________________|
SCHEDULE 13D
(Amendment No. 1)
______________________________ ________________________________
| | | |
|CUSIP No. 050103 10 0 | | Page 3 of 24 Pages |
|____________________________| |______________________________|
___________________________________________________________________________
| 1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | PG Investors, Inc. |
| | 13-3642657 |
|____|____________________________________________________________________|
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
| | _ |
| | Inapplicable (a) |_| |
| | _ |
| | (b) |_| |
|____|____________________________________________________________________|
| 3 | SEC USE ONLY |
| | |
|____|____________________________________________________________________|
| 4 | SOURCE OF FUNDS |
| | 00 |
|____|____________________________________________________________________|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED _ |
| | PURSUANT TO ITEMS 2(d) or 2(E) |_| |
| | Inapplicable |
|____|____________________________________________________________________|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | Delaware |
|____|____________________________________________________________________|
| | 7 | SOLE VOTING POWER |
| | | 236,867 |
| NUMBER OF |____|_______________________________________________|
| SHARES | 8 | SHARED VOTING POWER |
| BENEFICIALLY | | 1,089,601 |
| OWNED BY |____|_______________________________________________|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| REPORTING | | 236,867 |
| PERSON |____|_______________________________________________|
| WITH | 10 | SHARED DISPOSITIVE POWER |
| | | 1,089,601 |
|____________________|____|_______________________________________________|
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 1,326,468 |
|____|____________________________________________________________________|
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES _ |
| | CERTAIN SHARES Inapplicable |_| |
|____|____________________________________________________________________|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 11.7% |
|____|____________________________________________________________________|
| 14 | TYPE OF REPORTING PERSON |
| | IA, CO |
|____|____________________________________________________________________|
SCHEDULE 13D
(Amendment No. 1)
______________________________ ________________________________
| | | |
|CUSIP No. 050103 10 0 | | Page 4 of 24 Pages |
|____________________________| |______________________________|
___________________________________________________________________________
| 1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | Princes Gate Investors, L.P. |
| | |
|____|____________________________________________________________________|
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
| | _ |
| | Inapplicable (a) |_| |
| | _ |
| | (b) |_| |
|____|____________________________________________________________________|
| 3 | SEC USE ONLY |
| | |
|____|____________________________________________________________________|
| 4 | SOURCE OF FUNDS |
| | 00 |
|____|____________________________________________________________________|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED _ |
| | PURSUANT TO ITEMS 2(d) or 2(E) |_| |
| | Inapplicable |
|____|____________________________________________________________________|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | Delaware |
|____|____________________________________________________________________|
| | 7 | SOLE VOTING POWER |
| | | 993,896 |
| NUMBER OF |____|_______________________________________________|
| SHARES | 8 | SHARED VOTING POWER |
| BENEFICIALLY | | 0 |
| OWNED BY |____|_______________________________________________|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| REPORTING | | 993,896 |
| PERSON |____|_______________________________________________|
| WITH | 10 | SHARED DISPOSITIVE POWER |
| | | 0 |
|____________________|____|_______________________________________________|
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 993,896 |
|____|____________________________________________________________________|
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES _ |
| | CERTAIN SHARES Inapplicable |_| |
|____|____________________________________________________________________|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 8.8% |
|____|____________________________________________________________________|
| 14 | TYPE OF REPORTING PERSON |
| | PN |
|____|____________________________________________________________________|
The following information amends and restates the Schedule 13D
filed on January 4, 1994 (the "Schedule 13D").
Item 1. Security and Company.
The class of equity securities to which this statement relates
is the Class A Common Stock, $.0001 par value per share (the "Shares"), of Au
Bon Pain Co., Inc., a Delaware corporation (the "Company"). On December 22,
1993, the Company issued to several purchasers $30,000,000 in aggregate
principal amount of 4.75% Convertible Subordinated Notes due 2001 (the
"Notes"). The Notes are convertible at any time until the close of business
on January 2, 2001 into fully paid and non-assessable Shares at a conversion
price (subject to adjustment) equal to $25.50 principal amount for each Share,
or currently 1,176,468 Shares in the aggregate.
On July 24, 1996, the Company issued to several purchasers
warrants (the "Warrants") that entitle the holders thereof to purchase in the
aggregate 150,000 Shares. The Warrants are exercisable at any time prior to
the close of business on July 24, 2001; the exercise price (subject to certain
adjustments) is $5.62 per Share.
The principal executive offices of the Company are located at
19 Fid Kennedy Avenue, Boston, MA 02210-2497.
Item 2. Identity and Background.
The names of the persons filing this statement (the "Reporting
Persons") are: (i) Morgan Stanley Group Inc. ("MS Group"), (ii) PG Investors,
Inc. ("PGI Inc.") and (iii) Princes Gate Investors, L.P. ("Princes Gate
L.P.").
The address of the principal business and the principal office
of each of the Reporting Persons is: 1585 Broadway, New York, NY 10036. The
name, business address, present principal occupation or employment, and
citizenship of each director and executive officer of MS Group and PGI Inc.
is set forth on Schedule A.
MS Group is a holding company whose wholly-owned subsidiaries
are engaged in the investment banking, broker-dealer, investment advisory and
real estate businesses. PGI Inc. is a wholly-owned subsidiary of MS Group and
its principal business is to serve (i) as the general partner of Princes Gate
L.P., an investment partnership organized and managed by MS Group and the
principal business of which is the investment of capital provided by its
limited partners, (ii) as the general partner of a separate co-investment
partnership (the "Co-investment Partnership") and (iii) as the investment
manager for certain other investors (the "Investors") that are offered the
opportunity to participate in investments made by Princes Gate L.P. The
control person of Princes Gate L.P. is PGI Inc., its general partner, which
holds a 1% interest in the partnership. Each of MS Group, Princes Gate L.P.
and PGI Inc. is organized under the laws of the State of Delaware.
In the ordinary course of its business, MS Group, through its
wholly-owned broker-dealer subsidiary Morgan Stanley & Co. Incorporated ("MS &
Co."), makes a market in the Shares in the over-the-counter market and holds
on behalf of customers Shares over which it exercises discretionary authority.
A portion of the Shares of which MS Group may be deemed to be the beneficial
owner are 317 Shares held by MS & Co. as of July 24, 1996 in its capacity
as market-maker and 5,600 shares over which MS & Co. exercises discretionary
authority held on behalf of customers. MS Group, through MS & Co.,
possesses the sole power to vote and to dispose of the Shares held by MS &
Co. as market-maker and the shared power to vote and to dispose of the
Shares over which it exercises discretionary authority. The remaining
1,326,468 Shares of which MS Group may be deemed to be the beneficial owner
constitute the Shares obtainable upon conversion of the Notes and exercise
of the Warrants acquired by Princes Gate L.P., the Co-investment
Partnership and the Investors.
Pursuant to the partnership agreements of Princes Gate L.P. and
the Co-investment Partnership, management and control of the partnerships and
their investments are vested exclusively in PGI Inc. as general partner, and
PGI Inc. has the authority to dispose of the Notes and the Warrants held by
Princes Gate L.P. and the Co-investment Partnership and to vote the Shares
obtainable on conversion of the Notes and exercise of the Warrants. Pursuant
to investment management agreements with the Investors on whose behalf PGI
Inc. has also acquired the Notes and the Warrants, these Notes and Warrants
and the Shares obtainable on conversion of the Notes and exercise of the
Warrants may be disposed of only by PGI Inc. or with the consent of PGI Inc.
Such consent may be withheld or granted in PGI Inc.'s discretion, and each
Investor has granted PGI Inc. an irrevocable proxy giving PGI Inc. exclusive
authority to vote such Shares. As a result of these arrangements, PGI Inc.
may be deemed to be the beneficial owner of all the Notes and the Warrants
acquired on behalf of Princes Gate L.P., the Co-investment Partnership and the
Investors and of the Shares obtainable on conversion of the Notes and exercise
of the Warrants.
During the last five years, none of the Reporting Persons nor
any person controlling the Reporting Persons nor, to the best of their
knowledge, any of the persons listed on Schedule A attached hereto, has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has 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.
The source of funds for the purchases made by MS Group through
its broker-dealer subsidiary MS & Co. acting in its market-making capacity was
working capital of MS & Co. The source of funds for the purchases made by PGI
Inc. on behalf of its clients was (i) funds of the limited partners of Princes
Gate L.P., (ii) Investor funds that are managed by PGI Inc. pursuant to the
investment management agreements with each Investor and (iii) funds of a
limited partner in the Co-investment Partnership. The source of funds for the
purchases made by Princes Gate L.P. was funds of the limited partners.
Item 4. Purpose of Transaction.
MS Group has acquired 317 Shares through its wholly-owned
broker-dealer subsidiary MS & Co. acting in its capacity as market-maker in
the Shares and not for the purpose of the acquiring control of the Company.
MS & Co. currently intends to continue to make a market in the Shares in
the ordinary course of its business. MS & Co. holds on behalf of its
customers 5,600 Shares over which it exercises discretionary authority. MS
& Co. holds such Shares in the ordinary course of its business and not for
the purpose of acquiring control of the Company. Princes Gate L.P. and PGI
Inc. have acquired the Notes and the Warrants on behalf of the limited
partners in the partnerships and on behalf of the Investors for investment
purposes in the ordinary course of business as investment manager for these
clients and not for the purpose of acquiring control of the Company. The
Reporting Persons intend to review from time to time the Company's business
affairs and financial position. Based on such evaluation and review, as
well as general economic and industry conditions existing at the time, the
Reporting Persons may consider from time to time various alternative
courses of action. Such actions may include the acquisition of additional
Shares through open market purchases, privately negotiated transactions,
tender offer, exchange offer or otherwise. Alternatively, such actions may
involve the sale of all or a portion of the Shares in the open market, in
privately negotiated transactions, through a public offering or otherwise.
Except as set forth above, the Reporting Persons have no plan or proposals
which relate to or would result in any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Company.
(a) MS Group has acquired, and for the purpose of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), beneficially owns 1,332,385 Shares, representing
approximately 11.7% of the outstanding Shares (based on the sum of (i)
10,019,856 Shares reported by the Company as outstanding on May 30, 1996 in
its report on Form 10-Q for the quarter ended April 20, 1996, (ii)
1,176,468 Shares obtainable upon conversion of the Notes and (iii) 150,000
Shares issuable upon exercise of the Warrants).
PGI Inc. has acquired, and for the purpose of Rule 13d-3
promulgated under the Exchange Act, beneficially owns 1,326,468 Shares,
representing approximately 11.7% of the outstanding Shares (calculated as
described above).
Princes Gate L.P. has acquired, and for the purpose of Rule
13d-3 promulgated under the Exchange Act, beneficially owns 993,896 Shares,
representing approximately 8.8% of the outstanding Shares (calculated as
described above).
Except as set forth in this Item 5(a), neither the Reporting
Persons, nor any other person controlling the Reporting Persons, nor, to the
best of their knowledge, any persons named in Schedule A hereto beneficially
owns any Shares.
(b) MS Group has sole power to vote and to dispose of 317
Shares acquired in market-making activities; shared power to vote and to
dispose of 1,326,468 Shares obtainable upon conversion of the Notes and
exercise of the Warrants as a result of its ownership of PGI Inc. and shared
power to vote and to dispose of 5,600 Shares held on behalf of customers in
discretionary accounts.
PGI Inc. has sole power to vote and to dispose of 236,867
Shares held on behalf of the Investors and shared voting and dispositive power
with respect to 1,089,601 Shares obtainable upon conversion of the Notes and
exercise of the Warrants held by Princes Gate L.P. and the Co-investment
Partnership.
Princes Gate L.P., acting through its general partner PGI Inc.,
has sole power to vote and to dispose of 993,896 Shares obtainable upon
conversion of the Notes and exercise of the Warrants.
(c) On December 22, 1993 (i) MS Group and PGI Inc. acquired
beneficial ownership of 1,176,468 Shares obtainable upon conversion of the
Notes at a conversion price of $25.50 per Share, and (ii) Princes Gate L.P.
acquired beneficial ownership of 881,504 Shares obtainable upon conversion of
the Notes at a conversion price of $25.50 per Share.
On July 24, 1996, (i) MS Group and PGI Inc. acquired beneficial
ownership of 150,000 Shares obtainable upon exercise of the Warrants at an
exercise price of $5.62 per Share, and (ii) Princes Gate L.P. acquired
beneficial ownership of 112,392 Shares obtainable upon exercise of a Warrant
at an exercise price of $5.62 per Share.
During the 60 days prior to July 24, 1996, in connection with
its over-the-counter market-making activities in the Shares, MS Group made
purchases aggregating 104,700 Shares and sales aggregating 104,600 Shares.
These transactions were effected at prices ranging from $6.88 to $8.88 per
Share. Other transactions effected by MS & Co. during the 60 days prior to
July 26, 1996 are set forth on Schedule B attached thereto.
(d) Inapplicable.
(e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Company.
On December 17, 1993, the Company and several purchasers (the
"Purchasers") entered into a Securities Purchase Agreement (the "Agreement")
with respect to the Notes. The summary of certain of the terms of the
Agreement set forth herein is qualified in its entirety by reference to the
copy of the Agreement attached as Exhibit I to the Schedule 13D and
incorporated herein by reference.
Pursuant to the Agreement, upon the basis of certain
representations and warranties, but subject to certain terms and conditions,
the Company agreed to sell to each Purchaser and each Purchaser agreed,
severally but not jointly, to purchase from the Company the Notes in the
principal amount set forth below the name of such Purchaser on the signature
pages thereof at 100% of their principal amount.
Pursuant to the Agreement, the Company agreed to indemnify and
hold harmless each Purchaser against all losses, claims, damages or
liabilities resulting from any breaches by the Company of its representations,
warranties or covenants made under the Agreement or resulting from any action,
claim or proceeding arising out of the matters or transactions subject to or
contemplated by the Agreement or any instrument referred to in the Agreement.
Also pursuant to the Agreement, each Purchaser agreed to indemnify and hold
harmless the Company and its affiliates against all losses, claims, damages
or liabilities resulting from any breaches by any such Purchaser of its
representations, warranties or covenants made under the Agreement.
On July 24, 1996, the Company, its wholly-owned subsidiary
Saint Louis Bread Company, Inc. ("SLB") entered into an Agreement and Waiver
(the "Waiver"), and the Company entered into the Modification Agreement (the
"Modification Agreement"), in each case, with the Purchasers. The summary of
certain of the terms of the Waiver and the Modification Agreement set forth
herein is qualified in its entirety by reference to the copies of the Waiver
attached hereto as Exhibit II and the Modification Agreement attached hereto as
Exhibit III, each of which is incorporated herein by reference.
Pursuant to the Waiver, the Company issued Warrants to purchase
in the aggregate 150,000 Shares to Purchasers.
In addition, under the terms of the Waiver, if prior to the
second anniversary of the date of the Waiver, SLB or the Company or any of its
affiliates receives or otherwise negotiates any offer to purchase any equity
securities of SLB in a transaction not involving a public offering registered
under the Securities Act of 1933, as amended (the "Securities Act"), and SLB,
the Company or any of its affiliates intends to pursue such offer, then the
Purchasers will have the right of first refusal to purchase such equity
securities on the same terms as offered to or negotiated by SLB, the Company or
any of its affiliates, except that the Purchasers may, in certain
circumstances, substitute cash for any non-cash consideration offered.
The Purchasers were also granted the right to receive certain
types of information from the Company and the right to attend board meetings.
Additionally, certain provisions of the Notes were amended pursuant to the
Waiver and the Modification Agreement.
The registration rights granted by the Company to the
Purchasers and set forth in Exhibit D to the Agreement have been superseded by
the Registration Rights Agreement (the "Registration Rights Agreement")
entered into among Allied Capital Corporation, Allied Capital Corporation II,
Capital Trust Investments, Ltd., the Purchasers and the Company on July 24,
1996. The summary of certain of the terms of the Registration Rights
Agreement set forth herein is qualified in its entirety by reference to the
copy of the Registration Rights Agreement attached hereto as Exhibit IV which
is incorporated herein by reference. Holders of Registrable Securities (as
defined in the Registration Rights Agreement) will be entitled to require the
Company to register under the Securities Act (a "Demand Registration") all or
part of their Registrable Securities. "Registrable Securities" means Shares
issued upon conversion of the Notes or upon exercise of the Warrants until (i)
a registration statement covering such Shares has been declared effective by
the Securities and Exchange Commission and such Shares have been disposed of
pursuant to such effective registration statement, (ii) such Shares are sold
under circumstances in which all of the applicable conditions of Rule 144
under the Securities Act are met, or (iii) such Shares have been otherwise
transferred and the Company has delivered a new certificate not bearing the
legend referring to the restrictions on transfer under the Securities Act,
such that the Shares may be resold without subsequent registration under the
Securities Act.
The Company will not be required to effect more than one Demand
Registration in any 12-month period and no more than a total of two Demand
Registrations at the request of the Purchasers. The minimum size of a Demand
Registration will be Registrable Securities having a market value of $3
million or, if less, will constitute all Registrable Securities held by the
Purchasers.
Holders of Registrable Securities will also be entitled to
include such Registrable Securities in registrations by the Company or the
other parties to the Registration Rights Agreement (a "Piggyback
Registration"), subject to certain limitations.
The Company will pay substantially all of the costs and
expenses incurred in connection with any Demand Registration or Piggyback
Registration, except for underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities.
Except for the agreements as described above, to the best
knowledge of the Reporting Persons, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) between the persons
enumerated in Item 2, and any other person, with respect to any securities of
the Company, including, but not limited to, transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements, puts
or calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 99.1: Securities Purchase Agreement dated as of December
17, 1993 among the Company and the Purchasers listed
on the signature pages thereof (filed on January 4,
1994).
Exhibit 99.2: Agreement and Waiver dated as of July 24, 1996 among
the Company, SLB and the Purchasers.
Exhibit 99.3: Modification Agreement among the Company and the
Purchasers dated as of July 24, 1996.
Exhibit 99.4: Registration Rights Agreement dated as of July 24,
1996 among Allied Capital Corporation, Allied Capital
Corporation II, Capital Trust Investments, Ltd., the
Purchasers and the Company.
SIGNATURES
After reasonable inquiry and to the best knowledge and belief
of the undersigned, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Date: August 5, 1996
Morgan Stanley Group Inc.
By: /s/ Philip N. Duff
----------------------------
Name: Philip N. Duff
Title: Chief Financial Officer
and Managing Director
PG Investors, Inc.
By: /s/ Hartley R. Rogers
----------------------------
Name: Hartley R. Rogers
Title: President
Princes Gate Investors, L.P.
By: PG Investors, Inc., as
General Partner
By: /s/ Hartley R. Rogers
----------------------------
Name: Hartley R. Rogers
Title: President
Schedule A
DIRECTORS AND EXECUTIVE OFFICERS OF
MORGAN STANLEY GROUP INC.
The name, business address and title with Morgan Stanley Group
Inc., and present principal occupation or employment and the name, principal
business and address of employer, of each of the directors and executive
officers of Morgan Stanley Group Inc. are set forth below. If no business
address is given, the director's or officer's business address is 1585
Broadway, New York, N.Y. 10036. The address of Morgan Stanley Group Inc. is
1585 Broadway, New York, N.Y. 10036. Each person listed below is a citizen of
the United States of America, except Mr. Walker, who is a citizen of Great
Britain.
Name, Title and
Business Address Present Principal Occupation
----------------- ----------------------------
Richard B. Fisher Chairman of the Board of Directors,
(Chairman of the Board of Managing Director and Director,
Directors, Managing Director Morgan Stanley Group Inc.
and Director) and Morgan Stanley & Co.
Incorporated
John J. Mack President, Managing Director and
(President, Managing Director Director, Morgan Stanley Group Inc.
and Director) and Morgan Stanley & Co.
Incorporated
Philip N. Duff Chief Financial Officer and Managing
(Chief Financial Officer and Director, Morgan Stanley Group Inc.
Managing Director) and Chief Financial Officer and
Managing Director, Morgan Stanley &
Co. Incorporated
Jonathan M. Clark Secretary and General Counsel, Morgan
(Secretary and General Counsel) Stanley Group Inc. and Secretary,
General Counsel, Managing Director
and Director, Morgan Stanley & Co.
Incorporated
Eileen K. Murray Treasurer, Morgan Stanley Group Inc.
(Treasurer) and Treasurer and Managing Director,
Morgan Stanley & Co. Incorporated
Barton M. Biggs Managing Director and Director, Morgan
(Managing Director and Director) Stanley Group Inc. and Morgan
Stanley & Co. Incorporated
Robert P. Bauman Director, Morgan Stanley Group Inc.
(Director)
Daniel B. Burke Retired
(Director)
Capital Cities/ABC, Inc.
77 W. 66th Street, Tenth Floor
New York, NY 10023-6298
S. Parker Gilbert Retired
(Director)
Peter F. Karches Managing Director and Director, Morgan
(Managing Director and Director) Stanley Group Inc. and Morgan
Stanley & Co. Incorporated
Allen E. Murray Retired
(Director)
3225 Gallows Road
Fairfax, VA 22037
Sir David Alan Walker Managing Director and Director, Morgan
(Managing Director and Director) Stanley Group Inc. and Morgan
Stanley & Co. Incorporated
Paul J. Rizzo Retired
(Director)
Charlene R. Herzer Assistant Secretary, Morgan Stanley
(Assistant Secretary) Group Inc. and Assistant Secretary
and Vice President, Morgan Stanley &
Co. Incorporated
Patricia A. Kurtz Assistant Secretary, Morgan Stanley
(Assistant Secretary) Group Inc. and Assistant Secretary
and Principal, Morgan Stanley & Co.
Incorporated
Ralph L. Pellechio Assistant Secretary, Morgan Stanley
(Assistant Secretary) Group Inc. and Assistant Secretary
and Managing Director, Morgan
Stanley & Co. Incorporated
DIRECTORS AND EXECUTIVE OFFICERS
OF PG INVESTORS, INC.
The name, business address and title with PG Investors, Inc., and
present principal occupation or employment and the name, principal business
and address of employer, of each of the directors and executive officers of
PG Investors, Inc. are set forth below. If no business address is given, the
director's or officer's business address is 1585 Broadway, New York, N.Y.
10036. The address of PG Investors, Inc. is c/o Morgan Stanley & Co.
Incorporated, 1585 Broadway, New York, N.Y. 10036. Each person listed below
is a citizen of the United States of America.
Name, Title and
Business Address Present Principal Occupation
---------------- ----------------------------
Directors
- ---------
Hartley R. Rogers President, PG Investors, Inc.; Managing
Director, Morgan Stanley & Co.
Incorporated
Tarek Abdel Meguid Managing Director, Morgan Stanley & Co.
Incorporated
Bruce Fiedorek Managing Director, Morgan Stanley & Co.
Incorporated
Joseph G. Fogg Managing Director, Morgan Stanley & Co.
Incorporated
Executive Officers
(Who Are Not Directors)
- -------------------------
Debra M. Aaron Vice President, PG Investors, Inc.;
Principal, Morgan Stanley & Co.
Incorporated
Bruce R. Sandberg Vice President, PG Investors, Inc.;
Principal, Morgan Stanley & Co.
Incorporated
James M. Wilmott Vice President, PG Investors, Inc.;
Vice President, Morgan Stanley & Co.
Incorporated
Patricia A. Kurtz Secretary, PG Investors, Inc.;
Principal, Morgan Stanley & Co.
Incorporated
Charlene R. Herzer Assistant Secretary, PG Investors, Inc.;
Vice President, Morgan Stanley & Co.
Incorporated
Laura A. Chenoweth Assistant Secretary, PG Investors,
Inc.; Attorney, Morgan Stanley & Co.
Incorporated
David R. Powers Vice President, PG Investors, Inc.
Frank V. Saracino Vice President and Treasurer, PG
Investors, Inc.
Schedule B
Purchases of Class A Common Stock
(all transactions effected on NASDAQ)
(all prices exclude commissions)
Date Number of Shares Price Per Share
---- ---------------- ---------------
5/31/96 900 9.00
5/31/96 500 9.00
5/31/96 100 9.00
5/31/96 500 9.00
6/3/96 1,600 8.88
6/21/96 2,000 7.63
6/21/96 100 7.75
6/28/96 1,400 7.50
-----
7,100
Sales of Class A Common Stock
(all transactions effected on NASDAQ)
(all prices exclude commissions)
Date Number of Shares Price Per Share
---- ---------------- ---------------
5/31/96 12,000 8.55
6/5/96 20,000 8.75
6/6/96 15,000 8.44
6/6/96 5,000 8.63
6/11/96 100 8.50
6/19/96 300 7.56
6/20/96 200 7.63
6/21/96 200 7.63
6/21/96 2,000 7.63
6/24/96 100 7.75
6/24/96 500 7.75
6/25/96 100 7.63
6/27/96 500 7.50
6/28/96 200 7.50
7/3/96 100 7.25
7/9/96 100 7.00
7/22/96 900 7.00
7/22/96 1,000 7.00
------
58,300
CONFORMED COPY
AGREEMENT AND WAIVER
AGREEMENT AND WAIVER dated as of July 24, 1996 among Au Bon
Pain Co., Inc., a Delaware corporation (the "Company"); Saint Louis Bread
Company, Inc., a Delaware corporation and a wholly owned subsidiary of the
Company ("SLB") (for the purposes of Sections 2 and 17 hereof); Princes Gate
Investors, L.P. ("PGI"); Acorn Partnership I, L.P. ("Acorn"); PGI Investments
Limited ("PGI Investments"); PGI Sweden AB ("PGI Sweden"); and Gregor Von Opel
(PGI, Acorn, PGI Investments, PGI Sweden and Mr. Von Opel referred to herein
collectively as the "Holders").
W I T N E S S E T H:
WHEREAS, the Holders are the holders of the Company's 4.75%
Convertible Subordinated Notes due January 2, 2001 (the "Notes");
WHEREAS, the Company intends to issue the Senior Subordinated
Debentures to Allied Capital Corporation, Allied Capital Corporation II, and
Capital Trust Investments, Ltd. (collectively, the "Lenders") in an amount not
exceeding $15,000,000 pursuant to an Investment Agreement in the form of
Exhibit A attached hereto (the "Senior Subordinated Debentures");
WHEREAS, the issuance by the Company of the Senior Subordinated
Debentures requires the consent of the Holders pursuant to Section 3.2 of the
Notes; and
WHEREAS, the Holders have agreed to consent to the issuance of
the Senior Subordinated Debentures in consideration of (i) certain covenants
of the Company set forth herein and (ii) the issuance by the Company to the
Holders of warrants for the purchase of 150,000 shares of the Company's Class
A common stock, par value $.0001 per share (the "Class A Common Stock")
substantially in the form of Exhibit B hereto (the "Warrants");
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions.
(a) The following terms, as used herein, have the following
meanings:
"Fully Diluted" means, with respect to any determination of the
number of shares of Common Stock outstanding or held by any Person, such
number of shares shall be calculated by taking into account all outstanding
shares of Common Stock, all shares of Common Stock issuable upon conversion or
exchange of any securities convertible into or exchangeable for Common Stock,
or upon exercise of any options, warrants or other rights to purchase or
subscribe for Common Stock or securities convertible into or exchangeable for
Common Stock.
"Investment Agreement" means the Investment Agreement dated as
of the date hereof among the Company, SLB, ABP Midwest Manufacturing, Inc. and
the Lenders.
"Investment Documents" shall mean, collectively, this
Agreement, the Warrants, the Purchase Agreement, the Notes and all other
instruments and documents executed and delivered in connection therewith.
"Obligations" shall mean, collectively, all of the Company's
indebtedness, liabilities and obligations arising under this Agreement and
each of the other Investment Documents and any renewals, modifications, and
extensions thereof, including, but not limited to, the principal, interest,
late charges and other sums due and owing under the Notes and any other
obligations of the Company to any of the Holders, including such other or
additional financing that any of the Holders may extend to the Company or any
of its Subsidiaries at any time.
"Percentage Ownership" means, with respect to any Holder or
group of Holders, at any time (i) the number of shares of Common Stock that
such Holder beneficially owns (or, without duplication, has the right to
acquire) at such time, divided by (ii) the total number of shares of Common
Stock at such time, in each case calculated on a Fully Diluted basis.
"Period" means each four-week fiscal period of the Company.
"SLB Equity Securities" means any (i) shares of capital stock
of SLB, (ii) any securities convertible into or exchangeable for any shares of
capital stock of SLB; or (iii) options, warrants or other rights to purchase or
subscribe for shares of capital stock of SLB.
"Senior Management" means the Co-Chairmen, Chief Executive
Officer, President, and Chief Financial Officer of the Company and SLB.
(b) Capitalized terms used but not separately defined herein
shall have the meanings ascribed such terms in the Securities Purchase
Agreement dated as of December 17, 1993 among the Company and the Holders (the
"Purchase Agreement").
2. Rights of First Refusal. (a) If prior to the second
anniversary of the date hereof, SLB, the Company or any of the Affiliates of
the Company receives from or otherwise negotiates with any Person an offer to
purchase any SLB Equity Securities in a transaction not involving a public
offering registered under the Securities Act of 1933, as amended (a "Section 2
Offer") and SLB, the Company or any of its Affiliates intends to pursue such
sale of such SLB Equity Securities to such Person (the "Offeror"), SLB shall
give prior written notice thereof (an "Offer Notice") to PGI, on behalf of all
Holders. The Offer Notice shall identify the SLB Equity Securities proposed
to be sold by SLB, the Offeror, a description of the material terms of such
SLB Equity Securities (including, if applicable, maturity and dividend or
interest rate), the form of consideration, the consideration per SLB Equity
Security to be paid for such SLB Equity Securities (the "Sale Price") and all
other material terms and conditions of the Section 2 Offer.
(b) The receipt of an Offer Notice by PGI shall constitute an
offer (the "Offer") by SLB to sell to the Holders on the terms set forth in
the Offer Notice the SLB Equity Securities at the Sale Price. PGI shall have a
period of 20 Business Days following receipt of the Offer Notice (the "Offer
Period") in which to accept such offer on behalf of the Holders as to all of
the SLB Equity Securities so offered by giving a written notice of acceptance
to SLB (together with a copy thereof to the Company) prior to the expiration
of such Offer Period. If PGI fails to notify the Company prior to
the expiration of the Offer Period it will be deemed to have declined the
Offer on behalf of the Holders. In the event the consideration set forth in
the Offer Notice consists in whole or in part of non-cash consideration, PGI
shall have the right to elect, should it accept the Offer, to substitute for
such non-cash consideration an amount of cash equal to the fair market value
of such non-cash consideration (as determined in accordance with Section 2(f)
hereof).
The Company shall, during the Offer Period, provide PGI with
such information regarding SLB as PGI may request and shall permit PGI to
interview members of Senior Management in order to evaluate the Offer.
(c) Each Holder on whose behalf PGI has accepted the Offer
shall purchase at the Sale Price and pay for the SLB Equity Securities as to
which the Offer was accepted by PGI on its behalf, at the election of the
Company or SLB, as the case may be, by wire transfer or bank or certified
check, within 20 Business Days of the date on which notice of such acceptance
was given by PGI; provided that if the purchase and sale of such SLB Equity
Securities is subject to any prior regulatory approval, subject to Section
2(d)(ii), the time period during which such purchase and sale may be
consummated shall be extended until the expiration of five Business Days after
all such approvals shall have been received.
(d) If (i) PGI shall reject all SLB Equity Securities pursuant
to the Offer or (ii) any required consent or regulatory approval for the
purchase of the SLB Equity Securities subject thereto shall not be obtained
within 45 days of acceptance of the Offer, SLB shall have a period of 20
Business Days during which to consummate the sale of any or all of the SLB
Equity Securities subject to such Offer to the Offeror at a price not less
than the Sale Price and on the same terms and conditions as were set forth in
the Offer Notice; provided that if the transfer to the Offeror is subject to
regulatory approval, the period of 20 Business Days in which it may be
consummated shall be extended by 25 Business Days. If SLB does not consummate
the sale of the SLB Equity Securities subject to the Section 2 Offer in
accordance with the foregoing time limitations, SLB may not thereafter sell
any SLB Equity Securities without repeating the foregoing procedures.
(e) For the purposes of this Section 2, PGI shall act as
agent for each of the Holders other than PGI.
(f) For the purposes of this Section 2, in the event any SLB
Equity Securities are proposed to be transferred for consideration in whole or
in part other than cash, the fair market value of any non-cash consideration
shall be determined by an appraisal to be performed by an investment bank, or
other Person engaged primarily in the business of appraising the form of
non-cash consideration in question, of recognized national standing which is
not an Affiliate of the Company or any of the Holders and which is otherwise
mutually acceptable to the Company and PGI.
3. Quarterly Visitation and Board Observation Rights. At
the option of the Holders, the Company shall afford the Holders, for so long
as the aggregate Percentage Ownership of the Holders exceeds 2%, either:
(a) the opportunity to meet, once every three months,
for a period of four hours (or, at the option of the Holders,
any shorter period of time) (each such meeting, a "Quarterly
Meeting"), with Senior Management (or, at the option of the
Holders, such other employees of the Company or SLB as the
Holders and the Company may agree) to review the operating and
financial performance of the Company and its Subsidiaries, the
strategic outlook for the Company, the matters discussed at any
meeting of the Company's (or any Subsidiary's) board of
directors, and any other issues or concerns the Holders may
reasonably raise. The Company and the Holders shall use their
reasonable efforts to schedule each Quarterly Meeting at a
mutually convenient time and place; or
(b) the opportunity to have a representative (an
"Observer") attend as an observer at (but not participate in or
vote at) each meeting, held either in person or by telephone,
of the board of directors of the Company (and any executive
committee thereof). The Company shall give each Holder notice
of all such meetings (x) to be held in person, at least two
weeks prior thereto, and (y) to be held telephonically, 24
hours prior thereto.
4. Warrants. The Company shall issue to each of the Holders
the number of Warrants set forth opposite the name of each Holder below:
Holder No. of Warrants
------ ---------------
PGI 112,392
Acorn 10,823
PGI Investments 10,714
PGI Sweden 10,714
Mr. Von Opel 5,357
5. Information. In addition to any information the Company
has previously agreed to furnish to the Holders, for so long as the aggregate
Percentage Ownership of the Holders exceeds 2%, the Company shall furnish the
Holders with:
(a)(i) all written materials and other information given to the
directors of the Company and the directors of each Subsidiary at the same time
such materials and information are given to such directors, (ii) with respect
to the regular and special meetings of the board of directors of the Company
and of the board of directors of each Subsidiary, written minutes of any such
meeting no later than 30 days following any such meeting, (iii) with respect
to any special meeting of the board of directors of the Company and of the
board of directors of any Subsidiary of the Company, the agenda for any such
meeting prior to such meeting, (iv) the corporate summary (substantially in
the form of Exhibit C hereto) for each Period and the period from the
beginning of the fiscal year to the end of the respective Period, (v) a cash
flow analysis (substantially in the form of Exhibit D hereto) for each Period
and the period from the beginning of the fiscal year to the end of the
respective Period, (vi) a report setting forth, on a per-store basis, total
sales per store for every Au Bon Pain and Saint Louis Bread Company store
owned by the Company for each Period and the period from the beginning of the
fiscal year to the end of the respective Period, (vii) any financial analysis
or presentation prepared for the board of directors of the Company or any
committee thereof by non-employee financial consultants or advisors, promptly
upon delivery of any such analysis or presentation to the board of directors
of the Company and (viii) the management letter from the Company's independent
auditors with respect to the audit of the Company's financial statements, no
later than 10 days following delivery thereof to the Company. The Company
shall provide the information required by Sections 6(a)(iv), 6(a)(v) and
6(a)(vi) hereof, in each case, no later than 21 days following the end of each
Period;
(b) that information which the Company has agreed to furnish to
the Lenders pursuant to Sections 4.01, 4.02, 4.03, 4.04 and 4.19 of the
Investment Agreement at the times and in the manner set for therein;
(c) from time to time any other information any Holder may
reasonably request; and
(d) (i) not less than 48 hours' prior notice of any telephonic
or other meeting with financial analysts regarding quarterly and annual
earnings announcements and other material announcements, and (ii) in
connection with any such meetings, any press releases pertaining to such
meetings, as far in advance of such meeting as practicable.
6. Amendment of the Notes. Each Holder's Note is hereby
amended by:
(a) inserting the following definition to Section 1.1:
"Investment Agreement" means the Investment Agreement among the
Issuer, Saint Louis Bread Company, Inc., ABP Midwest
Manufacturing, Inc., Allied Capital Corporation, Allied Capital
Corporation II, Capital Trust Investments, Ltd. dated as of
July 24, 1996.
"Senior Subordinated Debentures" means the Senior
Subordinated Debentures in the aggregate principal amount of
$15,000,000 issued by the Issuer to Allied Capital Corporation,
Allied Capital Corporation II and Capital Trust Investments,
Ltd. on July 24, 1996.
(b) inserting a new Section 3.8:
Section 3.8. Terms of Certain Notes. The Issuer shall
not amend, waive or modify the terms of its Senior Subordinated
Debentures or the Investment Agreement (i) to change the
maturity date of such Senior Subordinated Debentures to any
date prior to July 24, 2000, (ii) to increase the Basic
Interest Rate or the Default Interest Rate payable on the
Senior Subordinated Debentures (whether or not payable in
cash), (iii) to amend the provisions of Sections 4.08 and
Article VII of the Investment Agreement, or (iv) in any other
manner which adversely affects the rights of the Holders in any
material manner.
(c) inserting a new Section 3.5(a)(iv):
For the purposes of this Section 3.5, all or
substantially all of the Issuer's assets shall have been deemed
to have been sold if the Issuer shall have transferred any
portion of its assets, or of the assets of Saint Louis Bread
Company, Inc. or of ABP Midwest Manufacturing, Inc., either
having a fair market value or for aggregate consideration (in
cash or fair market value of property received) equal to the
greater of (i) 20% or more of the market capitalization of the
Issuer based upon the average price per share of Class A Common
Stock of the Issuer for the five trading days preceding the
asset disposition, or (ii) 20% or more of the net worth of the
Issuer, on a consolidated basis, determined in accordance with
GAAP.
(d) deleting Section 4.1(g)(iii) and replacing it with the with the
following:
"(iii) appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official of the
Issuer) or for 20% or more of the property of the Issuer."
7. Waiver. Subject to its receipt of the Warrants to be
issued to it pursuant to Section 4 hereof, each Holder hereby grants a waiver
to the Company of the provisions of Section 3.2 of such Holder's Note solely
for the purposes of issuing to the Lenders, no later than the date hereof, the
Senior Subordinated Debentures in the form of Exhibit E hereto pursuant to the
terms of the Investment Agreement for aggregate consideration of $15,000,000.
8. Binding Effect; Benefit. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, successors, legal representatives and permitted assigns. Nothing in
this Agreement, expressed or implied, is intended to confer on any Person
other than the parties hereto, and their respective heirs, successors, legal
representatives and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9. Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or any Holder.
10. Amendment; Waiver. No provision of this Agreement may be
waived except by an instrument in writing executed by the party against whom
the waiver is to be effective. No provision of this Agreement may be amended
or otherwise modified except by an instrument in writing executed by all the
parties hereto.
11. Notices. All notices and other communications given or
made pursuant hereto or pursuant to any other agreement among the parties,
unless otherwise specified, shall be given in accordance with Section 7.1 of
the Purchase Agreement except that such notices shall be given to:
Princes Gate Investors, L.P.
Acorn Partnership I, L.P.
PGI Investments Limited
PGI Sweden AB
Gregor Von Opel
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, N.Y. 10036
Attention: Hartley R. Rogers
Telephone: (212) 761-4000
Telecopier: (212) 761-0517
12. Headings. The headings contained in this Agreement are
for convenience only and shall not affect the meaning or interpretation of
this Agreement.
13. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
15. Specific Enforcement. Each party hereto acknowledges
that the remedies at law of the other parties for a breach or threatened
breach of this Agreement would be inadequate and, in recognition of this fact,
any party to this Agreement, without posting any bond, and in addition to all
other remedies which may be available, shall be entitled to obtain equitable
relief in the form of specific performance, a temporary restraining order, a
temporary or permanent injunction or any other equitable remedy which may then
be available.
16. Severability. If one or more provisions of this
Agreement are held to be unenforceable to any extent under applicable law,
such provision shall be interpreted as if it were written so as to be
enforceable to the maximum possible extent so as to effectuate the parties'
intent to the maximum possible extent, and the balance of the Agreement shall
be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms to the maximum extent permitted by law.
17. Expenses. (a) The Company shall reimburse the Holders
for all fees and expenses incurred by the Holders in connection with this
Agreement.
(b) The Company shall pay all expenses of any nature, whether
incurred in or out of court, and whether incurred before or after the Notes
shall become due at their maturity date or otherwise (including, but not
limited to, reasonable attorneys' fees and costs) which the Holders may deem
necessary or proper in connection with the collection of any of the
Obligations. The Holders are authorized to pay at any time and from time to
time any or all of such expenses, to add the amount of such payment to the
amount of principal outstanding under the Notes, and to charge interest
thereon at the rate specified in the Notes.
(c) Without limiting the Holders' entitlements under Sections
18(a) and (b) hereof, or under the terms of any of the other Investment
Documents, each of the Company and SLB, jointly and severally (each, a
"Reimbursing Party"), hereby agrees to reimburse the Holders for any and all
costs and fees, including reasonable attorney's fees and expenses, incurred by
any of the Holders or their Affiliates in connection with: (i) any suit,
action, claim or other activity of the Holders to collect the Obligations or
any portion thereof or to enforce any of the provisions of this Agreement or
any other Investment Document against such Reimbursing Party; and (ii) any
suit, action, claim or other liability asserted against any of the Holders or
their Affiliates by such Reimbursing Party in any case in which such
Reimbursing Party does not prevail with respect to substantially all of its
claim.
18. Entire Agreement. This Agreement, the Notes, the
Registration Rights Agreement dated as of the date hereof among the Company,
the Holders and the Lenders and the Modification Agreement dated as of the
date hereof among the Company and each of the Holders constitute the entire
agreement among the parties and supersede all prior agreements and
understandings, covenants or representations by or among the parties, written
or oral, with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
AU BON PAIN CO., INC.
By: /s/ Louis I. Kane
---------------------------------
Name: Louis I. Kane
Title: Co-Chairman
SAINT LOUIS BREAD COMPANY, INC.
(for the purposes of Sections 2 and 17 hereof only)
By: /s/ Louis I. Kane
---------------------------------
Name: Louis I. Kane
Title: Executive Vice-President
PRINCES GATE INVESTORS, L.P.
By PG INVESTORS, INC.,
its General Partner
By: /s/ David R. Powers
---------------------------------
Name: David R. Powers
Title: Vice President
ACORN PARTNERSHIP I, L.P.
By PG INVESTORS, INC.,
its General Partner
By: /s/ David R. Powers
---------------------------------
Name: David R. Powers
Title: Vice President
PGI INVESTMENTS LIMITED
By PG INVESTORS, INC.,
as Attorney-in-Fact
By: /s/ David R. Powers
---------------------------------
Name: David R. Powers
Title: Vice President
PGI SWEDEN AB
By PG INVESTORS INC.
as Attorney-in-Fact
By: /s/ David R. Powers
---------------------------------
Name: David R. Powers
Title: Vice President
GREGOR VON OPEL
BY PG INVESTORS INC.
as Attorney-In-Fact
By: /s/ David R. Powers
---------------------------------
Name: David R. Powers
Title: Vice President
BOS-BUS:285640
CONFORMED COPY
MODIFICATION AGREEMENT
MODIFICATION AGREEMENT dated as of JULY 24, 1996 among AU
BON PAIN CO., INC. (the "Issuer") and PRINCES GATE INVESTORS, L.P., ACORN
PARTNERSHIP I, L.P., PGI INVESTMENTS LIMITED, PGI SWEDEN AB, and GREGOR VON
OPEL (collectively, the "Investors").
WHEREAS, the Issuer issued those certain 4.75% Convertible
Subordinated Notes (collectively the "Notes") due January 2, 2001 to the
Investors in the aggregate principal amount of $30,000,000 pursuant to the
terms of that certain Securities Purchase Agreement dated as of December 17,
1993 among the Issuer and each of the Investors;
WHEREAS, the Issuer wishes to issue certain Senior Subordinated
Debentures in the aggregate principal amount of $15,000,000 (collectively, the
"Debentures") to Allied Capital Corporation, Allied Capital Corporation II and
Capital Trust Investments, Ltd. pursuant to the terms of that certain
Investment Agreement dated as of JULY 24, 1996 (the "Investment
Agreement"), by and among the Issuer, certain of its affiliates, Allied
Capital Corporation, Allied Capital Corporation II and Capital Trust
Investments, Ltd. and to have the indebtedness evidenced by such Debentures
treated as "Senior Indebtedness" under the terms of the Notes;
WHEREAS, the Investors have consented to the issuance of such
Debentures and have agreed to treat such Debentures as "Senior Indebtedness"
under the terms of the Notes;
WHEREAS, the Issuer and the Investors have agreed to modify
certain provisions set forth in the Notes as set forth herein;
NOW, THEREFORE, the undersigned hereby agree as follows:
1. Amendment to Section 6.1 and 6.2 of the Notes. Each of the Issuer
and the Investors hereby covenants and agrees that Section 6.1 and
6.2 of the Notes shall be deleted and the following Sections 6A,
6.1 and 6.2 substituted therefor:
Section 6.A. Definitions. For purposes of this Section 6,
the following terms shall have the following meanings:
"Senior Payment Default" means any default in the payment of
any amounts owing with respect to Senior Indebtedness when due and
payable, whether at maturity, upon any redemption, upon
acceleration, declaration or otherwise, and including, without
limitation, any default in the payment of any principal, interest,
fees, costs, enforcement expenses (including legal fees and
disbursements), collateral protection expenses, other
reimbursement or indemnity obligations and other obligations,
whether now or hereafter owing, created or evidenced by or owing
or arising under or in connection with Senior Indebtedness or any
prior, concurrent, or subsequent notes, instruments, agreements or
guaranties of indebtedness, liabilities or obligations of any type
or form whatsoever relating thereto or evidencing Senior
Indebtedness and including any and all interest accruing or out of
pocket costs or expenses incurred after the date of any filing by
or against the Issuer of any petition under the federal Bankruptcy
Code or any other bankruptcy, insolvency or reorganization act
regardless of whether the claim therefor is allowed or allowable
in the case or proceeding relating thereto.
"Subordinated Note Amount" means all principal, interest,
fees, costs, enforcement expenses (including legal fees and
disbursements), collateral protection expenses and other
reimbursement and indemnity obligations, whether now or hereafter
owing, created or evidenced by or outstanding under the Notes or
any prior, concurrent or subsequent notes, debentures, instruments
or agreements of indebtedness, liabilities or obligations of any
type or form whatsoever relating thereto (or issued in replacement
thereof) in favor of any Holder.
Section 6.1. Notes Subordinated to Senior Indebtedness. The
Issuer covenants and agrees and each Holder, by his acceptance
hereof likewise covenants and agrees, that all Notes shall be
subject to the provisions of Section 6 of this Note; and each
person holding any Note, whether upon original issue or upon
transfer, assignment or exchange thereof accepts and agrees that
the payment of the Subordinated Note Amount by the Issuer shall,
to the extent and in the manner herein set forth, be subordinated
and junior in right of payment, to the prior payment in full of
Senior Indebtedness.
Section 6.2. No Payment on Notes in Certain Circumstances.
(a) If any Senior Payment Default occurs and is continuing
with respect to any Senior Indebtedness, no payment shall be made
by the Issuer with respect to any Subordinated Note Amount nor
shall the Notes be acquired by the Issuer for cash, property or
otherwise.
(b) If any event of default (other than a Senior Payment
Default) occurs and is continuing (or if such an event of default
would occur upon any payment with respect to the Notes) with
respect to any Senior Indebtedness, as such event of default is
defined in such Senior Indebtedness, permitting the holders
thereof to accelerate the maturity thereof and if the holder or
holders or a representative of such holder or holders gives
written notice of the event of default to the Issuer (a "Default
Notice"), then, unless and until such event of default has been
cured or waived or has ceased to exist or the Issuer receives
notice from the holder or holders of the relevant Senior
Indebtedness terminating a Blockage Period (as defined below),
during the 180 days after the delivery of such Default Notice (the
"Blockage Period"), the Issuer shall not (x) make any payment of
or with respect to the Subordinated Note Amount or (y) acquire any
of the Notes for cash or property or otherwise. At the expiration
of such Blockage Period, the Issuer shall, subject to Section
6.2(a), promptly pay to the Holders all sums which the Issuer
would have been obligated to pay during such Blockage Period but
for this Section 6.2(b). Only one such Blockage Period may be
commenced within any 360 consecutive days. For all purposes of
this Section 6.2(b), no event of default which existed or was
continuing under the Senior Indebtedness to which the Blockage
Period relates on the date such Blockage Period commenced shall be
or be made the basis for the commencement of any subsequent
Blockage Period by the holder or holders of such Senior
Indebtedness unless such event of default is cured or waived for a
period of not less than 90 consecutive days.
(c) Notwithstanding the foregoing, in the event that any
payment shall be received by any Holder when such payment is
prohibited by Section 6.2(a) or 6.2(b), such payment shall be held
in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, but only to the
extent of the amounts then due and owing on the Senior
Indebtedness, if any.
Further Amendment of Section 6. The following Section 6.9 shall
be inserted at the end of Section 6 of the Note:
6.9. Voided Payments. To the extent that the Issuer or any
guarantor of, or provider of collateral for Senior Indebtedness
makes any payment on Senior Indebtedness that is subsequently
invalidated, declared to be fraudulent or preferential or set
aside or is required to be repaid to a trustee, receiver or any
other party under any bankruptcy, insolvency or reorganization
act, state or federal law, common law or equitable cause (such
payment being hereinafter referred to as a "Voided Payment"), then
to the extent of such Voided Payment, that portion of the Senior
Indebtedness that had been previously satisfied by such Voided
Payment shall be revived and continue in full force and effect as
if such Voided Payment had never been made. In the event that a
Voided Payment is recovered from any holder of Senior
Indebtedness, a Senior Payment Default shall be deemed to have
existed and to be continuing with respect to such Senior
Indebtedness from the date of such holder's initial receipt of
such Voided Payment until the full amount of such Voided Payment is
irrevocably restored to such holder. During any continuance of
any such Senior Payment Default, the terms of Section 6 of the
Notes shall be in full force and effect with respect to the Notes.
To the extent that any Holders have received any payments with
respect to the Notes subsequent to the date of the initial receipt
by a holder of Senior Indebtedness of such Voided Payment and such
payments have not been invalidated, declared to be fraudulent or
preferential or set aside or required to be repaid to a trustee,
receiver, or any other party under any bankruptcy act, state or
federal law, common law or equitable cause, the Holders shall be
obligated and hereby agree that any such payment so made or
received shall be deemed to have been received in trust for the
benefit of the holders of Senior Indebtedness, and the Holders
hereby agree to pay to the holders of Senior Indebtedness, (pro
rata on the basis of each such holders respective amount of Senior
Indebtedness) the full amount so received by the Holders during
such period of time to the extent necessary fully to restore to
the holders of Senior Indebtedness the amount of such Voided
Payment.
Payment in Cash. For purposes of applying the provisions of
Section 6 of the Notes to Senior Indebtedness consisting of
indebtedness evidenced by the Debentures and all indebtedness of
the Issuer owing under or arising in connection with the
agreements and instruments described on Schedule 1 hereto
(together with the Senior Indebtedness evidenced by the
Debentures, the "Scheduled Senior Indebtedness"), all references
in Section 6 to the "payment in full" of Senior Indebtedness or to
such Senior Indebtedness being "paid in full" shall be deemed to
mean with respect to the Scheduled Senior Indebtedness the payment
of the Scheduled Senior Indebtedness in full in cash and the
phrase "or such payment duly provided for" shall be deemed to be
deleted from the first sentence of Section 6.3 of the Note for
purposes of applying such section to Scheduled Senior
Indebtedness. The terms of this Section 3 shall be binding on the
Holders of the Notes for all purposes thereof.
Forbearance. Notwithstanding anything to the contrary set forth
in Section 6 of the Notes, the Investors hereby agree that no
Holder will take or omit to take any action or assert any claim
with respect to the Notes and the Subordinated Note Amount or
otherwise which is inconsistent with the terms of Section 6 of the
Note or this Modification Agreement and no Holder will seek in any
judicial proceeding to enjoin or otherwise prevent the holders of
Scheduled Senior Indebtedness from enforcing their rights
hereunder, or with respect to the subordination provisions of the
Note or under any agreement, instrument or other document
evidencing any Scheduled Senior Indebtedness or entered into in
connection therewith or to void the claims of any holder of
Scheduled Senior Indebtedness with respect to any of the Scheduled
Indebtedness. This paragraph may be relied on by the holders of
Scheduled Senior Indebtedness only and shall not be deemed to
modify generally the terms of Section 6 of the Notes. The terms
of this Section 4 shall be binding on the Holders of the Notes for
all purposes thereof.
Consent to Debentures. The Investors hereby consent to the
issuance by the Issuer and certain of its Affiliates of the
Debentures in the aggregate principal amount of $15,000,000
pursuant to the terms of the Investment Agreement and agree that
the indebtedness evidenced by the Debentures shall be "Senior
Indebtedness" as defined in the Notes.
Representations and Warranties. The Issuer and the Investors
hereby represent that the undersigned Investors constitute all of
the Holders of the Notes. Each of the Issuer and the Investors
further represent and warrant for itself only that it has the
corporate power and authority and has been duly authorized to
execute and deliver this Modification Agreement.
Transfers of Notes. Each of the Investors agree that they will
not assign, sell or otherwise transfer any of the Notes unless the
assignee, purchaser or transferee thereof agrees in writing to be
bound by the terms of this Modification Agreement and acknowledges
that the Notes and their rights relating thereto are modified
hereby.
No Further Modifications. Except as specifically modified hereby,
the terms of the Notes shall remain in full force and effect.
Parties in Interest; Successors and Assigns. This Modification
Agreement shall bind the parties hereto and their successors and
assigns. The Issuer and the Investors acknowledge that the
holders of the Scheduled Senior Indebtedness are taking certain
actions in reliance on the agreements set forth in this
Modification Agreement and further agree that the holders of the
Scheduled Senior Indebtedness, and any notes, debentures,
instruments or agreements issued to refinance or replace such
Scheduled Senior Indebtedness, including, without limitation, any
future assignees, purchasers or other transferees of such
Scheduled Senior Indebtedness shall be entitled to rely hereon and
enforce the terms hereof as though such holders, assignees,
purchasers and other transferees were a direct party hereto.
Miscellaneous. This Modification Agreement may be executed in one
or more counterparts, each of which shall be deemed an original
but which together shall constitute one and the same instrument.
This Modification Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Modification Agreement as of the date first above written.
AU BON PAIN CO., INC.
By: /s/ Louis I. Kane
----------------------------------
Name: Louis I. Kane
Title: Co-Chairman
PRINCES GATE INVESTORS, L.P.
By: PG Investors, Inc.
its General Partner
By: /s/ David R. Powers
----------------------------------
Name: David R. Powers
Title: Vice President
ACORN PARTNERSHIP I, L.P.
By: PG Investors, Inc.
its General Partner
By: /s/ David R. Powers
----------------------------------
Name: David R. Powers
Title: Vice President
PGI INVESTMENTS LIMITED
By: PG Investors, Inc.
as Attorney-in-Fact
By: /s/ David R. Powers
----------------------------------
Name: David R. Powers
Title: Vice President
PGI SWEDEN AB
By: PG Investors, Inc.
as Attorney-in-Fact
By: /s/ David R. Powers
----------------------------------
Name: David R. Powers
Title: Vice President
GREGOR VON OPEL
By: PG Investors, Inc.
as Attorney-in-Fact
By: /s/ David R. Powers
----------------------------------
Name: David R. Powers
Title: Vice President
Schedule 1 to
Modification
Agreement
1. That certain Amended and Restated Revolving Credit and Term
Loan Agreement dated as of March 17, 1995 by and among (a) Au Bon Pain Co.,
Inc., Saint Louis Bread Company, Inc., and ABP Midwest Manufacturing, Inc.,
and (b) USTrust, The First National Bank of Boston, and Citizens Bank of
Massachusetts (as amended, modified or restated and in effect from time to
time, including any replacement agreement therefor), and the Loan Documents as
defined therein.
2. That certain Unlimited Guaranty dated February 8, 1993 from
ABP Wisconsin, Inc. in favor of USTrust (as amended, modified or restated and
in effect from time to time).
3. That certain Unlimited Guaranty dated December 30, 1994 from
Old Westbury Expressions, Inc. in favor of USTrust (as amended, modified or
restated and in effect from time to time).
4. That certain Revolving Credit Agreement dated as of January
12, 1996 by and between Au Bon Pain Co., Inc. and INAC Corp. (as amended,
modified or restated and in effect from time to time).
5. That certain Letter of Credit Reimbursement Agreement dated
as of July 1, 1995 by and among ABP Midwest Manufacturing, Inc., Au Bon Pain
Co., Inc. and Citizens Trust Company (as amended, modified or restated and in
effect from time to time).
6. That certain Guaranty dated as of July 20, 1995 from Au Bon
Pain Co., Inc. in favor of Citizens Trust Company (as amended, modified or
restated and in effect from time to time, including any replacement guarantees
therefor).
7. That certain Guaranty dated as of July 20, 1995 from Saint
Louis Bread Company, Inc. in favor of Citizens Trust Company (as amended,
modified or restated and in effect from time to time, including any
replacement guarantees therefor).
CONFORMED COPY
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of July 24, 1996 among (a)
ALLIED CAPITAL CORPORATION, a Maryland corporation, ("ACC") ALLIED CAPITAL
CORPORATION II ("ACC II"), a Maryland corporation, CAPITAL TRUST INVESTMENTS,
LTD., a Guernsey corporation ("CTI" and collectively with ACC and ACC II, the
"Allied Holders"), (b) PRINCES GATE INVESTORS, L.P., ("Princes Gate"), ACORN
PARTNERSHIP I, L.P., ("Acorn"), PGI INVESTMENTS LIMITED, ("PGI"), PGI SWEDEN
AB, ("PGI Sweden"), and GREGOR VON OPEL, ("GVO" and collectively with Princes
Gate, Acorn, PGI, and PGI Sweden, the "PG Holders"), and (c) AU BON PAIN CO.,
INC., a Delaware corporation ("ABP" or the "Issuer").
WHEREAS, ACC, ACC II AND CTI have agreed to extend credit to ABP, Saint
Louis Bread Company, Inc. and ABP Midwest Manufacturing, Inc. pursuant to an
Investment Agreement dated as of July 24, 1996 (the "Investment Agreement"),
by and among ACC, ACC II and CTI and ABP, Saint Louis Bread Company, Inc. and
ABP Midwest Manufacturing, Inc.; and
WHEREAS, pursuant to the terms of a certain Securities Purchase
Agreement (the "Securities Purchase Agreement") dated as of December 1993,
Princes Gate, Acorn, PGI, PGI Sweden, GVO and PG Holdings have purchased from
ABP, and are currently the holders of, ABP's 4.75% Convertible Subordinated
Notes due January 2, 2001 in the aggregate principal amount of $30,000,000 (as
amended, modified or restated and in effect from time to time, the "4.75%
Subordinated Convertible Notes") and in connection therewith were granted
certain registration rights by ABP, which rights were granted to the PG
Holders in said Securities Purchase Agreement and Exhibit D thereto
(collectively the "Original Registration Rights Agreements"). The PG Holders
and ABP desire to terminate their respective rights and obligations under the
Original Registration Rights Agreements in consideration of the execution by
ABP and each of the PG Holders of this Agreement; and
WHEREAS, in order to induce Allied Holders to enter into the Investment
Agreement and the other agreements and transactions contemplated thereby, ABP
has agreed to enter into this Agreement with the Allied Holders and the PG
Holders.
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein, have
the following meanings:
"Affiliate" has the meaning provided in Rule 405 promulgated under the
Securities Act.
"Allied Holders" has the meaning provided in the first recital above.
"Allied Majority Holders" means the Holder or Holders of 75% of
Registrable Securities then held by Allied Holders.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Class A Common Stock, par value of $.0001 per
share, of the Issuer.
"Demand Registration" means, unless the context requires another
meaning, a registration request pursuant to Section 2.1(a)(1) or Section
2.1(b)(1) of this Agreement.
"Holder" means the initial purchaser of any Registrable Security or any
permitted assignee or transferee of such Registrable Security.
"Issuer" has the meaning set forth in the introductory paragraph above.
"Majority Holders" means the Holder or Holders of a majority of
Registrable Securities then outstanding.
"PG Holders" has the meaning set forth in the second recital above.
"PG Majority Holders" means the Holder or Holders of a majority of
Registrable Securities then held by PG Holders.
"Piggy-Back Registration" means a Piggy-Back Registration as defined in
Section 2.2.
"Registrable Securities" means the shares of Common Stock issued or
issuable upon conversion of the 4.75% Subordinated Convertible Notes and the
shares of Common Stock issued or issuable upon exercise of the Warrants, and
any securities into which such Common Stock shall have been changed or any
securities resulting from any reclassification of such Common Stock, until (i)
a registration statement covering such shares of Common Stock has been
declared effective by the Commission and such shares have been disposed of
pursuant to such effective registration statement, (ii) such shares are sold
under circumstances in which all of the applicable conditions of Rule 144 (or
any similar provisions then in force) under the Securities Act are met or
(iii) such shares have been otherwise transferred and the Issuer has delivered
a new certificate or other evidence of ownership for such shares not bearing a
legend referring to restrictions on transfer under the Securities Act and such
shares may be resold without subsequent registration under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a registration statement under the Securities Act.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
"Warrants" means the stock purchase warrants issued and sold by the
Issuer to (i) the Allied Holders pursuant to the Subordinated Investment
Agreement and (ii) to the PG Holders pursuant to the Agreement and Waiver
among the Issuer, certain of its subsidiaries and the PG Holders dated as of
the date hereof.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Demand Registration.
(a) By Allied Holders.
(1) Request for Registration. Allied Majority Holders may
make a written request for registration under the Securities Act of all or
part oftheir Registrable Securities (an "Allied Demand Registration");
provided, that (x) the Issuer shall not be obligated to effect more than one
Allied Demand Registration in any 12-month period, and no more than two Allied
Demand Registrations in total and (y) the number of shares requested to be
sold in each such registration shall have an aggregate fair market value
(determined at the time such request is made) of at least Three Million Dollars
($3,000,000) or, if less, shall constitute all Registrable Securities then
held by Allied Holders. Such request will specify the number of shares of
Registrable Securities proposed to be sold and will also specify the intended
method of disposition thereof. Within 5 Business Days after receipt of such
request, the Issuer will give written notice of such registration request to
all other Holders of the Registrable Securities and include in such
registration all such Registrable Securities with respect to which the Issuer
has received written requests for inclusion therein within 10 Business Days
after the receipt by the applicable Holder of the Issuer's notice. Each such
request will also specify the number of shares of Registrable Securities to be
registered and the intended method of disposition thereof.
(2) Additional Demand Registrations. If the Allied
Majority Holders in an Allied Demand Registration so elect, the offering of
such Registrable Securities pursuant to such Allied Demand Registration shall
be in the form of an underwritten offering. The Allied Majority Holders shall
select the book-running managing Underwriter in connection with such offering
and any additional investment bankers and managers to be used in connection
with the offering; provided that such managing Underwriter and additional
investment bankers and managers must be reasonably satisfactory to the Issuer.
To the extent 10% or more of the Registrable Securities so requested to be
registered by the Allied Majority Holders are excluded from the offering in
accordance with Section 2.3, then such demand shall not count for purposes of
the limitations set forth in Section 2.1(a)(1) above.
(b) By PG Holders.
(1) Request for Registration. PG Holders may make a written
request for registration under the Securities Act of all or part of their
Registrable Securities (a "PG Demand Registration"); provided, that (x) the
Issuer shall not be obligated to effect more than one PG Demand Registration
in any 12-month period, and no more than two PG Demand Registrations in total
and (y) the number of shares requested to be sold in each such registration
shall have an aggregate fair market value (determined at the time such request
is made) of at least $3 million or, if less, shall constitute all Registrable
Securities then held by PG Holders. Such request will specify the number of
shares of Registrable Securities proposed to be sold and will also specify the
intended method of disposition thereof. Within 5 Business Days after receipt
of such request, the Issuer will give written notice of such registration
request to all other Holders of the Registrable Securities and include in such
registration all such Registrable Securities with respect to which the Issuer
has received written requests for inclusion therein within 10 Business Days
after the receipt by the applicable Holder of the Issuer's notice. Each such
request will also specify the number of shares of Registrable Securities to be
registered and the intended method of disposition thereof.
(2) Additional Demand Registrations. If the PG Majority
Holders in a PG Demand Registration so elect, the offering of such Registrable
Securities pursuant to such PG Demand Registration shall be in the form of an
underwritten offering. The PG Holders shall select the book-running managing
Underwriter in connection with such offering and any additional investment
bankers and managers to be used in connection with the offering; provided that
such managing Underwriter and additional investment bankers and managers shall
be reasonably satisfactory to the Issuer. To the extent 10% or more of the
Registrable Securities so requested to be registered by the PG Holders are
excluded from the offering in accordance with Section 2.3, then such demand
shall not count for purposes of the limitations set forth in Section 2.1(b)(i)
above.
SECTION 2.2. Piggy-Back Registration. If the Issuer proposes to
file a registration statement under the Securities Act with respect to an
offering by the Issuer for its own account or for the account of any of its
respective security holders of any class of security (other than a
registration statement on Form S-4 or S-8 (or any substitute form that may
be adopted by the Commission), or filed in connection with an exchange
offer or offering of securities solely to the Issuer's existing security
holders), including a registration statement filed in connection with a
Demand Registration, then the Issuer shall give written notice of such
proposed filing to the Holders of Registrable Securities as soon as
practicable (but in no event less than 10 business days before the
anticipated filing date), and such notice shall offer such Holders the
opportunity to register such number of shares of Registrable Securities as
each such Holder may request (a "Piggy-Back Registration"). The Issuer
shall use its best efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be
included on the same terms and conditions as any similar securities of the
Issuer included therein.
SECTION 2.3. Reduction of Offering. Notwithstanding anything
contained herein, if the managing Underwriter or Underwriters of an
offering described in Section 2.1(a)(1), Section 2.1(b)(1) or Section 2.2
deliver a written opinion to the Holders of the Registrable Securities
included in such offering that (i) the size of the offering that the
Holders, the Issuer and such other persons intend to make or (ii) the kind
of securities that the Holders, the Issuer and any other persons or
entities intend to include in such offering are such that the success of
the offering would be materially and adversely affected by inclusion of the
Registrable Securities requested to be included, then if the size of the
offering is the basis of such Underwriter's opinion, the amount of
securities to be offered shall be cut back only to the extent necessary and
the accounts of Holders shall be reduced pro rata (according to the
Registrable Securities proposed for registration) to such extent to reduce
the total amount of securities to be included in such offering to the
amount recommended by such managing Underwriter or Underwriters, which
securities shall be included in the following order of priority:
(1) with respect to an Allied Demand Registration, the Issuer will
include in such registration in the following priority: (x)
first, up to the full amount of Registrable Securities proposed
to be offered and sold by the Allied Holders, reduced pro rata to
the extent necessary, (y) second, up to the full amount of
Registrable Securities proposed to be offered and sold by the PG
Holders, reduced pro rata to the extent necessary, and then (z)
any shares of Common Stock held by other persons that the Issuer
may be obligated to include in such registration;
(2) with respect to a PG Demand Registration, the Issuer will include
in such registration in the following priority: (x) first, up to
the full amount of Registrable Securities proposed to be offered
and sold by the PG Holders, reduced pro rata to the extent
necessary, (y) second, up to the full amount of Registrable
Securities proposed to be offered and sold by the Allied Holders,
reduced pro rata to the extent necessary, and then (z) any shares
of Common Stock held by other persons that the Issuer may be
obligated to include in such registration; and
(3) with respect to a registration initiated by the Issuer for its
own account, (x) first, all shares of Common Stock the Issuer
proposes to offer and sell, (y) second, up to the full amount of
Registrable Securities proposed to be offered and sold by Holders
of Registrable Securities, reduced pro rata to the extent
necessary, and then (z) any shares of Common Stock held by other
persons that the Issuer may be obligated to include in such
registration; and
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1. Filings; Information. Whenever Holders request that any
Registrable Securities be registered pursuant to Section 2.1 hereof, the
Issuer will use its best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with any such
request:
(a) The Issuer will as expeditiously as possible and in any event
within 30 days from the receipt of such request prepare and file with the
Commission a registration statement on any form for which the Issuer then
qualifies or which counsel for the Issuer shall deem appropriate and which
form shall be available for the sale of the Registrable Securities to be
registered thereunder in accordance with the intended method of distribution
thereof, and use its best efforts to cause such filed registration statement to
become and remain effective for a period of not less than 180 days; provided
that if the Issuer shall furnish to the Holders making a request pursuant to
Section 2.1 a certificate signed by its Chairman of the Board (or either
Co-Chairman of the Board) stating that in his good faith judgment it would be
significantly disadvantageous to the Issuer or its shareholders for such a
registration statement to be filed as expeditiously as possible and stating
the reasons for such judgment, the Issuer shall have a period of not more than
90 days within which to file such registration statement measured from the
date of receipt of the request in accordance with Section 2.1.
(b) The Issuer will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to
each Selling Holder and each Underwriter, if any, of the Registrable
Securities covered by such registration statement copies of such registration
statement as proposed to be filed, and thereafter furnish to such Selling
Holder and Underwriter, if any, such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein), the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such Selling Holder or Underwriter may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Selling Holder. Each Selling Holder shall provide
the Issuer with its or his comments to such registration statement, prospectus
and amendments thereto or supplements thereof, as the case may be, within five
(5) business days of its or his receipt of such document(s).
(c) After the filing of the registration statement, the Issuer will
promptly notify each Selling Holder of Registrable Securities covered by such
registration statement of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered.
(d) The Issuer will use its best efforts to (i) register or qualify
the Registrable Securities under such other securities or blue sky laws of
such jurisdictions in the United States as any Selling Holder reasonably (in
light of such Selling Holder's intended plan of distribution) requests and
(ii) cause such Registrable Securities to be registered with or approved by
such other governmental agencies or authorities as may be necessary by virtue
of the business and operations of the Issuer and do any and all other acts and
things that may be reasonably necessary or advisable to enable such Selling
Holder to consummate the disposition of the Registrable Securities owned by
such Selling Holder: provided that the Issuer will not be required to (A)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (B) subject
itself to taxation in any such jurisdiction or (C) consent to general service
of process in any such jurisdiction.
(e) The Issuer will immediately notify each Selling Holder of such
Registrable Securities, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an
event requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
promptly make available to each Selling Holder any such supplement or
amendment.
(f) The Issuer and the Selling Holders will enter into customary
agreements (including an underwriting agreement in customary form) and take
such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities.
(g) The Issuer will make available for inspection by any Selling
Holder of such Registrable Securities, any Underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other professional retained by any such Selling Holder or
Underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Issuer (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause the Issuer's officers, directors and
employees to supply all information reasonably requested by any Inspectors in
connection with such registration statement. Records which the Issuer
reasonably determines, in good faith, to be confidential and which it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors
unless (i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such registration statement or (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Each Selling Holder of such Registrable Securities
agrees that information obtained by it as a result of such inspections shall
be deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Issuer or its Affiliates unless and
until such is made generally available to the public. Each Selling Holder of
such Registrable Securities further agrees that it will, upon learning that
disclosure of such Records is sought by subpoena or in a court of competent
jurisdiction, give notice to the Issuer and allow the Issuer, at its expense,
to undertake appropriate action to prevent disclosure of the Records deemed
confidential.
(h) The Issuer will furnish, at the effectiveness of the registration
statement and again at closing, to each Selling Holder and to each
Underwriter, if any, a signed counterpart, addressed to such Selling Holder
and such Underwriter, of (i) an opinion or opinions of counsel to the Issuer
and (ii) a comfort letter or comfort letters from the Issuer's independent
public accountants, each in customary form and covering such matters of the
type customarily covered by opinions or comfort letters, as the case may be.
(i) The Issuer will otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
(j) The Issuer will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange or quotation
system on which similar securities issued by the Issuer are then listed. The
Issuer's registrar and transfer agent is Boston Equiserve, L.P., 150 Royal
Street, Canton, MA 02021.
As a condition to its rights to sell Registrable Securities in such
registration, each Selling Holder of Registrable Securities shall, upon the
Issuer's request, promptly furnish in writing to the Issuer such information
regarding the distribution of the Registrable Securities as the Issuer may
from time to time reasonably request and such other information as may be
legally required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice from the
Issuer of the happening of any event of the kind described in Section 3.1(e)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 3.1(e) hereof,
and, if so directed by the Issuer, such Selling Holder will deliver to the
Issuer all copies, other than permanent file copies then in such Selling
Holder's possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event the Issuer
shall give such notice, the Issuer shall extend the period during which such
registration statement shall be maintained effective (including the period
referred to in Section 3.1(a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to Section 3.1(e)
hereof to the date when the Issuer shall make available to the Selling Holders
of Registrable Securities covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of Section 3.1(e)
hereof.
SECTION 3.2. Registration Expenses. In connection with any
registration statement required to be filed hereunder, the Issuer shall pay
all expenses incurred in connection with the registration hereunder (the
"Registration Expenses") including, without limitation, the following: (i) all
registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), (iii) printing expenses, (iv) internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), (v) the fees and expenses incurred in
connection with the listing of the Registrable Securities, (vi) reasonable
fees and disbursements of counsel for the Issuer and customary fees and
expenses for independent certified public accountants retained by the Issuer
(including the expenses of any comfort letters or costs associated with the
delivery by independent certified public accountants of a comfort letter or
comfort letters requested pursuant to Section 3.1(h) hereof), (vii) the
reasonable fees and expenses of any special experts retained by the Issuer in
connection with such registration, and (viii) reasonable fees and expenses of
not more than one counsel (who shall be reasonably acceptable to the Issuer)
for all Holders whose Registrable Securities are included in such registration
provided, however, that if representation for all such Holders by the same
counsel would be inappropriate due to actual or potential differing interests
between them, then in any such case the Issuer shall pay the reasonable fees
and expenses of one additional counsel. The Issuer shall have no obligation
to pay any underwriting fees, discounts or commissions attributable to the
sale of Registrable Securities.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the Issuer. The Issuer agrees to
indemnify and hold harmless each Selling Holder of Registrable Securities, its
officers, directors and agents, and each Person, if any, who controls the
Issuer (an "Issuer Control Person") or such Selling Holder within the meaning,
in each case, of Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating
to the Registrable Securities (as amended or supplemented if the Issuer shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information furnished in
writing to the Issuer by such Selling Holder or on such Selling Holder's
behalf expressly for use therein provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Selling Holder from whom the person asserting any such
loss, claim, damage or liability purchased the Registrable Securities if it is
determined that (i)it was the responsibility of such Selling Holder to provide
such person with a current copy of the prospectus, (ii) such Selling Holder
had been furnished with copies of such current prospectus within a reasonable
time prior to such purchase, and (iii) such current copy of the prospectus
would have cured the defect giving rise to such loss, claim, damage or
liability. The Issuer also agrees to indemnify any Underwriters of the
Registrable Securities, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section 4.1.
SECTION 4.2. Indemnification by Holders of Registrable Securities.
Each Selling Holder agrees, severally but not jointly, to indemnify and hold
harmless the Issuer, its officers, directors and agents and each Person, if
any, who controls the Issuer within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuer to such Selling Holder, but only with
reference to information related to such Selling Holder furnished in writing
by such Selling Holder or on such Selling Holder's behalf expressly for use in
any registration statement or prospectus relating to the Registrable
Securities, or any amendment or supplement thereto, or any preliminary
prospectus subject to the proviso that the liability of each Selling Holder to
the Issuer and its officers, directors, agents and control persons set forth
in this Section 4.2 shall be limited to the net proceeds received by such
Selling Holder as a result of his or its sale of Registrable Securities
pursuant to such registration statement or prospectus (including amendments
and supplements thereto) Notwithstanding the foregoing, each Selling Holder
also agrees to indemnify and hold harmless Underwriters of the Registrable
Securities, their officers and directors and each person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Issuer provided in this Section 4.2.
SECTION 4.3. Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2, such person (an "Indemnified Party") shall promptly notify
the person against whom such indemnity may be sought (an "Indemnifying Party")
in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such
Indemnified Party, and shall assume the payment of all fees and expenses. In
any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel,
(ii) the named parties to any such proceeding (including any impleaded
parties) include both the Indemnified Party and the Indemnifying Party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them as reasonably
determined by the Indemnified Party or (iii) Indemnifying Party fails to
retain counsel or diligently pursue the defense. It is understood that the
Indemnifying Party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) at any time for all such Indemnified Parties, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Indemnified Parties, such firm shall be designated in
writing by the Indemnified Parties. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its consent, but
if settled with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent
stated above) by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Party shall have requested
an Indemnifying Party to reimburse the Indemnified Party for fees and expenses
of counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 business days after receipt by such Indemnifying
Party of the aforesaid request and (ii) such Indemnifying Party shall not have
reimbursed the Indemnified Party in accordance with such request prior to the
date of such settlement. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened proceeding in respect of with any Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such proceeding.
SECTION 4.4. Contribution. If the indemnification provided for in
this Article 4 is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (i) as between the Issuer and
the Selling Holders (subject to the limitations on liabilities of each Selling
Holder to the Issuer set forth in the proviso contained in Section 4.2 hereof)
on the one hand and the Underwriters on the other, in such proportion as is
appropriate to reflect the relative benefits received by the Issuer and the
Selling Holders on the one hand and the Underwriters on the other from the
offering of the Registrable Securities, or if such allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not only
the relative benefits but also the relative fault of the Issuer and the
Selling Holders on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations and (ii) as between the Issuer on the one hand and each Selling
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Issuer and of each Selling Holder in connection with
such statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by the Issuer and the Selling
Holders on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Issuer and the Selling Holders bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Issuer
and the Selling Holders on the one hand and of the Underwriters on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Issuer and the Selling Holders or by the Underwriters. The relative fault of
the Issuer on the one hand and of each Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by such party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Issuer and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 4.4, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Registrable Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, and no Selling Holder shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities of such Selling Holder were offered to the public exceeds the
amount of any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section ll(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Selling Holder's obligations to contribute pursuant to
this Section 4.4 are several in proportion to the proceeds of the offering
received by such Selling Holder bears to the total proceeds of the offering
received by all the Selling Holders and not joint.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Participation in Underwritten Registrations. No Person
may participate in any underwritten registration hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and
these Registration Rights.
SECTION 5.2. Rule 144. The Issuer covenants that it will use its best
efforts to file any reports required to be filed by it under the Securities
Act and the Exchange Act and that it will take such further action as any
Holder may reasonably request, all to the extent required from time to time to
enable Holders to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act, as such Rule may be amended from time to time,
or (b) any similar rule or regulation hereafter adopted by the Commission.
Upon the request of any Holder, the Issuer will deliver to such Holder a
written statement as to whether it has complied with such requirements.
SECTION 5.3. Holdback Agreements. (a) Restrictions on Public Sale by
Holder of Registrable Securities. To the extent not inconsistent with
applicable law, each Holder whose securities are included in a registration
statement agrees not to effect any public sale or distribution of the issue
being registered or a similar security of the Issuer, or any securities
convertible into or exchangeable or exercisable for such securities, including
a sale pursuant to Rule 144 under the Securities Act, during the 14 days prior
to, and during the 90-day period beginning on, the effective date of such
registration statement (except as part of such registration), if and to the
extent requested by the managing Underwriter or Underwriters in the case of an
underwritten public offering.
(b) Restrictions on Public Sale by the Issuer and Others. The Issuer
and its Affiliates agree (i) not to effect any public sale or distribution of
any securities similar to those being registered in accordance with Section
2.1 or Section 2.2 hereof, or any securities convertible into or exchangeable
or exercisable for such securities, during the 14 days prior to, and during
the 90-day period beginning on, the effective date of any registration
statement (except as part of such registration statement where the Majority
Holders of the Registrable Securities to be included in such registration
statement consent) or the commencement of a public distribution of Registrable
Securities; and (ii) that any agreement entered into after the date of the
Agreement pursuant to which the Issuer issues or agrees to issue any privately
placed securities shall contain a provision under which holders of such
securities agree not to effect any public sale or distribution of any such
securities during the periods described in (i) above, in each case including a
public sale or distribution pursuant to Rule 144 under the Securities Act
(except as part of any such registration, if permitted); provided, however,
that the provisions of this paragraph (b) shall not prevent the conversion or
exchange of any securities pursuant to their terms into or for other
securities.
SECTION 5.4. Existing Registration Agreements. Issuer represents that
it is not obligated under any agreement other than this Agreement to register
any of its securities on behalf of third parties. Issuer covenants and agrees
it will not, in the absence of a written agreement with each of the PG
Majority Holders and the Allied Majority Holders, on and after the date hereof
grant any registration rights to any third party except on terms which
subordinates those registration rights to the rights granted under this
Agreement.
SECTION 5.5 Notices. All notices or communications under this
agreement or the Debentures shall be mailed, postage prepaid, delivered by
facsimile, or delivered by courier to the following addresses (or to such
other address as shall at any time be designated by any party in writing to
the other parties):
To ACC and ACC II: Allied Capital Corporation
and
Allied Capital Corporation II
c/o Allied Capital Corporation
1666 K Street, N.W., Ninth Floor
Washington, DC 20006
Attention: Gay S. Truscott, Vice President
Facsimile: (202) 659-2053
With a copy to: Piper & Marbury L.L.P.
1200 Nineteenth Street, N.W.
Washington, DC 20036
Attention: Anthony H. Rickert, Esquire
Facsimile: (202) 223-2085
To CTI: Capital Trust Investments, Ltd.
c/o Capital Trust Limited
49 Mount Street
London, England W1Y5RE
Attention: Bassam Aburdene
Fax: 011 441 71 499 0524
With a copy to: Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: Charles E. Engros, Esquire
Facsimile: (212) 309-6273
To Princes Gate: Princes Gate Investors, L.P.
Acorn Partnership I, L.P.
PGI Investments Limited
PGI Sweden AB
Gregor Von Opel
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Hartley R. Rogers
Telecopier: (212) 761-0517
With a copy to: Davis, Polk &
Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Paul R. Kingsley
Facsimile: (212) 450-4800
To the Issuer: Au Bon Pain Co., Inc.
19 Fid Kennedy Avenue
Marine Industrial Park
Boston, MA 02210-2497
Attention: Louis I. Kane
Facsimile: (617) 423-7879
With a copy to: Gadsby & Hannah LLP
125 Summer Street
Boston, MA 02110
Attention: Walter D. Wekstein, Esquire
Marianne Gilleran, Esquire
Facsimile: (617) 345-7050
Rejection or other refusal to accept, or the inability to deliver because of a
changed address of which not notice was given, shall not affect the
effectiveness or the date of delivery for any notice sent in accordance with
the foregoing provisions. Each such notice, request or other communication
shall be deemed sufficiently given, served, sent and received for all purposes
at such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, the affidavit of the messenger or the answer back being
deemed conclusive (but not exclusive) evidence of such delivery) or at such
time as delivery is refused by addressee upon presentation.
SECTION 5.6 Binding Agreement. This Agreement shall bind and inure to
the benefit of each of the Holders, the Borrowers, and except as otherwise
expressly provided to the contrary herein, each of their respective heirs and
permitted successors and assigns. Without limiting the generality of the
foregoing sentence, the rights of the Holders to cause the Issuer to register
Registrable Securities granted pursuant to this Agreement may be transferred
or assigned by any holder to a transferee or assignee; provided, however, that
the transferee or assignee of such rights assumes the obligations of such
transferor or assignor, as the case may be, under this Agreement and that such
transferee or assignee executes and delivers a copy of this Agreement to the
Issuer.
SECTION 5.7 Entire Agreement; Integration Clause. This Agreement sets
forth the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof, and any prior agreements, including,
without limitation, the Original Registration Rights Agreement, are hereby
terminated.
SECTION 5.8 No Oral Modification or Waivers. The terms hereof may not
be modified or waived orally, but only by an instrument in writing signed by
the party against which enforcement of the modification or waiver (as the case
may be) is sought.
SECTION 5.9 Venue; Personal Jurisdiction; Full Faith and Credit;
Personal Service.
(a) Venue for the adjudication of any claim or dispute arising
out of this Agreement or any of the other Investment Documents shall be proper
only in the state or federal courts of the City and State of New York, and all
parties to this Agreement and the other Investment Documents hereby consent to
such venue and agree that it shall not be not inconvenient and not subject to
review by any court other than such courts in New York;
(b) The Issuer intends and agrees that the courts of the
jurisdictions in which the Issuer is formed and in which the Issuer conducts
its business should afford full faith and credit to any judgment rendered by a
court of the State of New York against the Issuer under this Agreement, and
the Issuer intends and agrees that such courts should hold that the New York
courts have jurisdiction to enter a valid, in personam judgment against the
Issuer;
(c) The Issuer agrees that service of any summons and
complaint, and other process which may be served in any suit, action or other
proceeding, may be made by mailing via U.S. certified or registered mail or by
hand-delivering a copy of such process to the Issuer at its address specified
above, with a copy to its counsel at its address specified above; and
(d) The Issuer expressly acknowledges and agrees that the
provisions of this Section 5.9 are reasonable and made for the express benefit
of each of the Holders.
SECTION 5.10 Waiver of Trial by Jury. Each party to this Agreement
agrees that any suit, action or proceeding, whether claim, defense or
counterclaim, brought or instituted by any party hereto or any successor or
assign of any party on or with respect to this Agreement or which in any way
relates, directly or indirectly, to any event, transaction or occurrence
arising out of or in any way connected with this Agreement or dealings of the
parties hereto with respect to the subject matter hereof, shall be tried only
by a court and not by a jury. EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND ACKNOWLEDGES
THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT IT MAKES THIS WAIVER
VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR THE OPPORTUNITY TO
CONSULT WITH, COUNSEL OF ITS CHOICE.
SECTION 5.11 Headings. The headings of the paragraphs and
sub-paragraphs of this Agreement are inserted for convenience only and shall
not be deemed to constitute a part of this Agreement.
SECTION 5.12 Severability. To the extent any provision herein
violates any applicable law, that provision shall be considered void and the
balance of this Agreement shall remain unchanged and in full force and effect.
SECTION 5.13 Counterparts. This Agreement may be executed in as many
counterpart copies as may be required. It shall not be necessary that the
signature of, or on behalf of, each party appear on each counterpart, but it
shall be sufficient that the signature of, or on behalf of, each party appear
on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in any proof of this
Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties.
SECTION 5.14 Consent or Approval of Holders. To the extent the terms
of this Agreement or any of the other Investment Documents require the Issuer
to obtain the consent, waiver or approval of Holders, or if the Issuer wishes
to amend this Agreement, such consent, waiver, approval, or amendment shall be
effective upon receipt by the Issuer of written consent or approval from the
individuals or entities holding not less than two-thirds (2/3rds) of the
Registrable Securities then held by, in each case, the Allied Holders and the
PG Holders.
SECTION 5.15 Governing Law. This Agreement shall be governed by, and
interpreted and construed in accordance with, the internal laws of the State
of New York (without regard to its conflicts of law principles).
(Signatures next page)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written by their authorized
representatives thereunto duly authorized.
Very truly yours,
AU BON PAIN CO., INC.
By: /s/ Louis I. Kane
-------------------------------
Name: Louis I. Kane
Title: Co-Chairman
ALLIED CAPITAL CORPORATION
By: /s/
-------------------------------
Name:
Title:
ALLIED CAPITAL CORPORATION II
By: /s/
-------------------------------
Name:
Title:
CAPITAL TRUST INVESTMENTS, LTD.
By: /s/
-------------------------------
Name:
Title:
PRINCES GATE INVESTORS, L.P.
By PG Investors, Inc.
its General Partner
By: /s/ David R. Powers
-------------------------------
Name: David R. Powers
Title: Vice President
ACORN PARTNERSHIP I, L.P.
By PG Investors, Inc.,
its General Partner
By: /s/ David R. Powers
-------------------------------
Name: David R. Powers
Title: Vice President
PGI INVESTMENTS LIMITED
By PG Investors, Inc.,
as Attorney-In-Fact
By: /s/ David R. Powers
-------------------------------
Name: David R. Powers
Title: Vice President
PGI SWEDEN AB
By PG Investors, Inc.
as Attorney-In-Fact
By: /s/ David R. Powers
-------------------------------
Name: David R. Powers
Title: Vice President
GREGOR VON OPEL
By PG Investors, Inc.,
as Attorney-In-Fact
By: /s/ David R. Powers
-------------------------------
Name: David R. Powers
Title: Vice President
