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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 29, 1997
BRAZIL FAST FOOD CORP.
(Exact name of Registrant as specified in charter)
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Delaware 0-23278 13-3688737
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(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) Number)
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Praia do Flamengo
200-22o. Andar
CEP 22210-30, Rio de Janeiro, Brazil N/A
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 55 21 556 0424
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Item 1. Changes in Control of Registrant
Item 5. Other Events
Effective August 11, 1997, AIG Latin America Equity Partners,
Ltd. ("AIGLAEP"), a Bermudian investment company, entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with Registrant pursuant to which
AIGLAEP purchased 1,500,000 shares of Registrant's Common Stock (the "Shares")
and five-year warrants (the "Warrants") to purchase 250,000 shares of
Registrant's Common Stock at an initial exercise price of $4.00 per share, which
exercise price and number of shares is subject to adjustment, for an aggregate
purchase price of $4,500,000.
Pursuant to the terms of the Stock Purchase Agreement and
Stockholders' Agreement between AIGLAEP, Registrant and certain stockholders of
Registrant listed on Schedule A thereto (which agreement was entered into
concurrently with the Stock Purchase Agreement and is attached hereto as Exhibit
99.2), AIGLAEP and certain of its transferees have the right to nominate one
member of Registrant's Board of Directors, and have the right to nominate
additional directors which, under certain circumstances may enable AIGLAEP to
nominate directors constituting a majority of Registrant's Board of Directors
(through an expansion of the Board and the filling of vacancies created by the
resignation of certain directors serving at such time) if Registrant does not
attain certain operating goals. Pursuant to the terms of the Stockholders'
Agreement the current directors and executive officers and certain other
stockholders of Registrant have agreed to take any and all action, including
voting their respective shares of Registrant's Common Stock, to cause the
nominee(s) designated by AIGLAEP to be elected to the Board.
The Stockholders' Agreement also provides that Registrant
shall not offer, issue or sell any shares of capital stock of Registrant or any
warrants or options to purchase or rights to subscribe for or any other
securities convertible into or exchangeable for shares of capital stock of
Registrant, unless Registrant first offers to AIGLAEP its proportionate
percentage (as such term is defined in the Stockholders' Agreement) of the
securities proposed to be offered by Registrant. Pursuant to the terms of the
Stockholders' Agreement, AIGLAEP also has certain other rights in connection
with certain sales by the stockholders party to such agreement of the shares of
Registrant's Common Stock owned by such stockholders.
In addition, as more fully described in the Stockholders'
Agreement, Registrant may not, without the prior written approval of AIGLAEP and
certain of its transferees: (i) sell, abandon, transfer, lease or otherwise
dispose of all or substantially all of its properties or assets to any other
company, companies, entity or entities, subject to Registrant's Board of
Directors fulfilling its fiduciary duties; (ii) purchase, lease or otherwise
acquire all or substantially all of the properties or assets of another
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corporation or entity; (iii) during the first three (3) years after August 11,
1997, make any payment on account of the purchase, redemption or other
retirement of any shares of its capital stock and thereafter, make any payment
on account of the non-pro rata purchase, redemption or other retirement of any
shares of its capital stock; (iv) merge or consolidate with or into, or permit
any subsidiary to merge, or consolidate with or into, any other company,
companies, entity or entities, provided that any wholly-owned subsidiary of
Registrant may merge or consolidate with or into another wholly-owned subsidiary
of Registrant, subject to Registrant's Board of Directors fulfilling its
fiduciary duties; (v) voluntarily dissolve, liquidate or wind up or carry out
any partial liquidation or distribution or transaction in the nature of a
partial liquidation or distribution; (vi) take any action to cause an amendment
to the Certificate of Incorporation or By-laws of Registrant which would affect
the rights or obligations of any of the stockholders party to the Stockholders'
Agreement; (vii) enter into any agreements or transactions between Registrant or
any affiliate thereof and the Chief Executive Officer, Chief Financial Officer,
Chief Operating Officer and President of Registrant or any management group
stockholder or any of their respective affiliates; (viii) issue or agree to
issue any shares of preferred equity at any price or any shares of common equity
or any security, right, option or warrant convertible into or exercisable for,
shares of Registrant's capital stock, in either case, at a lower per share price
than that paid by AIGLAEP for its Shares; provided, however that this
restriction shall not apply to (a) shares of Common Stock or warrants, options,
rights or securities convertible into or exchangeable for capital stock of
Registrant issued as consideration in the acquisition by Registrant of the stock
or assets of another company, provided that such acquisition and issuance has
been approved by Registrant's Board of Directors, including the Director
nominated by AIGLAEP, (b) any shares of Common Stock or warrants, options,
rights or securities convertible into or exchangeable for capital stock of
Registrant issued in connection with any pro rata stock split, stock dividends
or similar event affecting the Common Stock, and (c) shares of Common Stock
issued pursuant to the exercise of currently outstanding warrants or options or
any options which may be issued under Registrant's current existing Stock Option
Plan; (ix) increase the number of persons serving on the Board; (x) make any
significant changes in Registrant's or its subsidiaries' accounting policies,
unless required by law; (xi) permit material deviations from its business
strategy, such as any expansion of Registrant's business outside of Brazil or
any change in the fundamental nature of Registrant's business as conducted on
August 11, 1997; (xii) change any component of the current compensation of
Registrant's Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer and President, which compensation shall include salary, bonus, stock
options and fringe benefits; (xiii) declare any dividends; (xiv) adopt or amend
any stock option, stock purchase or similar plan.
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AIGLAEP and Registrant have also entered into a Registration
Rights Agreement (attached hereto as Exhibit 99.4) pursuant to which Registrant
has agreed to register the Shares under the Securities Act of 1933, as amended,
within 45 days of August 11, 1997. In the event that the Shares are not subject
to an effective registration statement within 135 days after August 11, 1997,
AIGLAEP shall have the right to sell the Shares to Registrant at a price of
$4.00 per share within 30 days of such 135-day period.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements:
Inapplicable
(b) Pro Forma Financial Information:
Inapplicable
(c) Exhibits:
99.1 Stock Purchase Agreement by and between
Registrant and AIGLAEP.
99.2 Stockholders' Agreement by and among
Registrant, AIGLAEP and the stockholders
listed on Schedule A thereto.
99.3 Warrant Agreement by and between AIGLAEP
and Registrant.
99.4 Registration Rights Agreement between
AIGLAEP and Registrant.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Dated: August 29, 1997 BRAZIL FAST FOOD CORP.
(Registrant)
By: /s/Ira Roxland
Ira Roxland
Assistant Secretary
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EXHIBIT INDEX
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Exhibit Number Description
-------------- -----------
99.1 Stock Purchase Agreement by and between
Registrant and AIGLAEP.
99.2 Stockholders' Agreement by and among
Registrant, AIGLAEP and the stockholders
listed on Schedule A thereto.
99.3 Warrant Agreement by and between AIGLAEP
and Registrant.
99.4 Registration Rights Agreement between
AIGLAEP and Registrant.
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STOCK PURCHASE AGREEMENT
by and between
BRAZIL FAST FOOD CORP.
(a Delaware Corporation)
and
AIG LATIN AMERICA EQUITY PARTNERS, LTD.
(a Bermuda Company)
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS....................................................................................1
ARTICLE II SALE AND PURCHASE OF SHARES...................................................................5
2.1 Agreement to Sell and Purchase....................................................................5
2.2 Purchase Price....................................................................................5
ARTICLE III CLOSING......................................................................................5
3.1 Time of Closing...................................................................................5
3.2 The Company's Obligations.........................................................................5
3.3 the Purchaser's Obligations.......................................................................5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................6
4.1 Organization and Corporate Power..................................................................6
4.2 Authorization.....................................................................................7
4.3 Capitalization....................................................................................7
4.4 SEC Documents and Financial Statements............................................................8
4.5 Absence of Certain Changes........................................................................9
4.6 Absence of Undisclosed Liabilities...............................................................10
4.7 Litigation.......................................................................................10
4.8 Restrictions on Business Activities..............................................................10
4.9 Certain Contracts and Arrangements...............................................................10
4.10 Title of Property...............................................................................11
4.11 Intellectual Property...........................................................................11
4.12 Environmental Matters...........................................................................13
4.13 Taxes...........................................................................................13
4.14 Employee Benefit and Labor Matters..............................................................14
4.15 Employee Matters................................................................................16
4.16 Interested Party Transactions...................................................................17
4.17 Insurance.......................................................................................17
4.18 Compliance with Laws............................................................................17
4.19 Minutes Books...................................................................................17
4.20 Complete Copies of Materials....................................................................17
4.21 Brokers' and Finders' Fees......................................................................18
4.22 Suppliers.......................................................................................18
4.23 Occupational Safety and Health..................................................................18
4.24 Representations Complete........................................................................18
ARTICLE V REPRESENTATIONS OF THE PURCHASER..............................................................18
5.1 Organization.....................................................................................18
5.2 Authority........................................................................................18
5.3 Enforceability...................................................................................19
5.4 Securities Act...................................................................................19
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ARTICLE VI CONDITIONS OF PURCHASE.......................................................................19
6.1 Conditions Precedent to the Purchaser's Performance..............................................19
6.2 Conditions Precedent to the Company's Performance................................................22
ARTICLE VII COVENANTS OF THE COMPANY....................................................................22
7.1 Use of Proceeds..................................................................................22
7.2 Registration Rights..............................................................................22
7.3 Underwriters.....................................................................................22
7.4 Exchange, Transfer and Replacement of Share Certificates.........................................23
7.5 Reservation of Shares............................................................................23
ARTICLE VIII COMPANY'S OBLIGATIONS BEFORE CLOSING.......................................................23
8.1 Affirmative Obligations of the Company..........................................................23
8.2 Negative Obligations of the Company..............................................................24
ARTICLE IX OBLIGATIONS AFTER CLOSING....................................................................26
9.1 Company's Indemnity..............................................................................26
9.2 Claims Between the Purchaser and the Company.....................................................26
9.3 De Minimis.......................................................................................26
9.4 Payment..........................................................................................27
ARTICLE X GENERAL.......................................................................................27
10.1 Amendments, Waivers and Consents................................................................27
10.2 Survival of Covenants; Assignability of Rights.................................................27
10.3 Governing Law...................................................................................27
10.4 Section Headings................................................................................27
10.5 Publicity.......................................................................................27
10.6 Counterparts....................................................................................28
10.7 Notices.........................................................................................28
10.8 Severability....................................................................................29
10.9 Expenses........................................................................................29
10.10 Entire Agreement...............................................................................29
10.11 Specific Enforcement; Injunctive Relief........................................................29
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made and
entered into as of July 23, 1997, by and between AIG Latin America Equity
Partners, Ltd., a Bermuda company (the "Purchaser"), and Brazil Fast Food Corp.,
a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company desires to obtain Four Million Five
Hundred Thousand Dollars ($4,500,000) of additional capital by selling to the
Purchaser One Million Five Hundred Thousand (1,500,000) shares (the "Shares") of
its common stock, par value $0.0001 per share (the "Common Stock") and five-year
warrants (the "Warrants") to purchase 250,000 shares of Common Stock at an
initial exercise price of $4.00 per share, and the Purchaser desires to acquire
the same, all subject to the terms and conditions of this Stock Purchase
Agreement; and
WHEREAS, the Purchaser and the Company are, simultaneously
with the Closing of this Stock Purchase Agreement, entering into a certain
Registration Rights Agreement and a Warrant Agreement, and certain stockholders
of the Company, the Purchaser and the Company are, simultaneously with the
Closing of this Stock Purchase Agreement, entering into a Stockholders'
Agreement among the Purchaser, the Company and the persons named in Schedule A
thereto (the "Stockholders' Agreement") (collectively, the above agreements are
hereafter referred to as the "Agreements"), all of which collectively provide
for a constructive and mutually beneficial relationship between the Purchaser
and the Company; and
NOW, THEREFORE, in consideration of the respective agreements
herein contained and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the terms and
conditions set forth herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article I.
"Agreement" shall have the meaning set forth in the recitals hereto.
"Agreements" shall have the meaning set forth in the recitals hereto.
"Balance Sheet" shall have the meaning set forth in Section 4.6.
"Balance Sheet Date" shall have the meaning set forth in Section 4.5.
"Best Knowledge of the Company" shall mean and include (a) actual knowledge of
the executive officers and directors of the Company and (b) that knowledge which
a prudent
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businessperson could have obtained in the management of his or her business
affairs after making due inquiry and exercising due diligence with respect
thereto. In connection therewith, the knowledge of any such executive officer or
director of the Company shall be imputed to be the knowledge of the Company.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall mean such date as the parties hereto mutually agree;
provided, however, that in no event shall such date be later than August 11,
1997.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliations Act of 1985,
as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall have the meaning set forth in the recitals hereto.
"Company" shall have the meaning set forth in the recitals hereto.
"Confidential Information" shall have the meaning set forth in Section 4.11.
"Contracts" shall have the meaning set forth in Section 4.9.
"Defined Benefit Plan" shall have the meaning set forth in Section 4.14.
"Defined Contribution Plan" shall have the meaning set forth in Section 4.14.
"DOL" shall mean the Department of Labor.
"Dollars, US Dollars and $" shall mean the lawful currency of the United States
of America , or its equivalent in any other currency.
"Encumbrances" shall mean all liens, mortgages, pledges, options, claims,
charges, security interests, rights of first refusal, rights of way,
hypothecations or other legal or equitable encumbrances, limitations, defects in
title or restrictions of any kind or nature whatsoever.
"Environmental Law" shall mean any requirement of foreign or U.S. federal,
state, or local law, civil or criminal, or regulation, relating to air quality,
surface water quality, ground water quality, soil, solid waste management,
hazardous or toxic substances, or the protection of health or the environment;
and all applicable state statutes and regulations; including any retroactive
amendments or extensions thereof in effect on the date hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Facilities" shall have the meaning set forth in Section 4.12.
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"Financial Statements" shall have the meaning set forth in Section 4.4.
"Governmental Authorization" shall mean any approval, consent, license, permit,
waiver or other authorization issued, granted, given or otherwise made available
by or under the authority of any Governmental Body.
"Governmental Body" shall mean any multi-national, U.S., Brazilian or other,
federal, national, state, local (including county, city, town, village),
municipal, or other jurisdiction or government or governmental authority
(including any branch, agency, department, official or Person, and any court or
other tribunal) or any body exercising or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
"Hazardous Materials" shall have the meaning set forth in Section 4.12.
"Indemnified Party" shall have the meaning set forth in Section 9.2.
"Indemnifying Party" shall have the meaning set forth in Section 9.2.
"Intellectual Property" shall mean all trademarks, service marks, trade dress,
logos and trade names; patents or inventions; copyrights (including software);
mask works; and trade secrets, formulas and confidential business information
and know-how, used or owned by or licensed to the Company or any of its
subsidiaries which are of any value or importance to its business or which it is
authorized to use in the provision, production or marketing of any services or
products now provided, produced or proposed to be provided, produced or marketed
by the Company.
"Legal Requirement" shall mean any U.S., Brazilian, or other federal, state,
local, municipal, foreign, international, multinational or other administrative
order, constitution, law, ordinance, principle of common law, regulation, code,
statute or treaty.
"Licenses" shall have the meaning set forth in Section 4.1.
"Material Adverse Effect" shall mean a material adverse effect upon the
business, operations, prospects, properties, assets, liabilities or condition
(financial or other) of the Company or the Company and its subsidiaries, taken
as a whole.
"Multi-employer Plan" shall have the meaning set forth in Section 4.14.
"Ordinary Course of Business" shall mean an action taken by a Person which is:
(a) consistent with the past practices of such Person and taken in the
ordinary course of the normal day-to-day operations of such Person;
(b) not required to be authorized by the board of directors of such
Person (or by any Person or group of Persons exercising similar authority); and
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(c) similar in nature and magnitude to actions customarily taken,
without any authorization by the board of directors (or by any Person or group
of Persons exercising similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business as
such Person.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean any individual, corporation, (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plan" shall have the meaning set forth in Section 4.14.
"Purchaser" shall have the meaning set forth in the recitals hereto.
"Purchase Price" shall have the meaning set forth in Section 2.2.
"Purchaser Indemnified Party" shall have the meaning set forth in Section 9.1.
"Purchaser Losses" shall have the meaning set forth in Section 9.1.
"Real Properties" shall mean the real properties owned, leased, occupied or used
by the Company, or in connection with its business.
"Receita Federal" shall have the meaning set forth in Section 4.14.
"SEC Documents" shall have the meaning set forth in Section 4.4.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall have the meaning set forth in the recitals hereto.
"Stock Option Plan" shall have the meaning set forth in Section 4.3.
"Stockholders' Agreement" shall have the meaning set forth in the recitals
hereto.
"Taxes" shall mean any federal, state, local, municipal or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, wind-fall profits, environmental (including taxes under the Code
Section 59A), customs, duties, capital stock, franchise, profits, business and
occupation, withholding, social security (or similar), unemployment, disability,
real property or personal property, intangibles, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated or other tax
of any kind whatsoever, including any interest, penalty, or addition thereto
whether disputed or not imposed by or on behalf of the United States, Brazil, or
any other country (or any political subdivision or tax authority thereof or
therein).
"Tax Return" shall mean any return, declaration, estimate, report, claim for
refund, or information return or statement relating to Taxes, including any
amendment thereof.
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"Third Party Intellectual Property Rights" shall have the meaning set forth in
Section 4.11.
"Warrants" shall have the meaning set forth in the recitals hereto.
ARTICLE II
SALE AND PURCHASE OF SHARES
2.1 Agreement to Sell and Purchase. At the Closing, the
Company agrees, on the terms and subject to the conditions hereinafter set
forth, to sell, transfer and deliver or cause to be sold, transferred and
delivered to the Purchaser, free and clear of all Encumbrances, and the
Purchaser agrees to purchase from the Company on the terms, subject to the
conditions, and in reliance upon the covenants, agreements, representations,
warranties and indemnities of the Company hereinafter set forth, the Shares and
the Warrants.
2.2 Purchase Price. In consideration of the issuance to the
Purchaser of the Shares and the Warrants, at the Closing, the Purchaser shall
pay to the Company as the purchase price (the "Purchase Price") Four Million
Five Hundred Thousand Dollars ($4,500,000) by wire transfer in immediately
available funds to an account designated in writing by the Company.
ARTICLE III
CLOSING
3.1 Time of Closing. Subject to the terms and conditions of
this Agreement, the closing (the "Closing") of the sale and purchase of the
Shares and the Warrants shall take place at the offices of Curtis,
Mallet-Prevost, Colt & Mosle, 101 Park Avenue, New York, New York 10178 at such
time and place as may be acceptable to the parties provided, however, that in no
event shall such date be later than August 11, 1997.
3.2 The Company's Obligations. At the Closing, the Company is
delivering to the Purchaser (i) a duly executed copy of this Agreement; (ii) the
Shares; (iii) the Warrants; (iv) a duly executed copy of the Registration Rights
Agreement; (v) a duly executed copy of the Stockholders' Agreement; (vi) a duly
executed copy of the Warrant Agreement; (vii) an opinion of counsel to the
Company required by Section 6.1 hereof; (viii) the President's Certificate
required by Section 6.1 hereof; (ix) the Good Standing Certificate(s) required
by Section 6.1 hereof; and (x) the Certificate of Incorporation, Bylaws, and
resolutions of the Board of Directors of the Company authorizing the execution,
delivery and performance of this Agreement, and such other certificates and
opinions as the Purchaser may reasonable request.
3.3 The Purchaser's Obligations. At the Closing, the Purchaser
is delivering to the Company (i) the Purchase Price; (ii) a duly executed copy
of this Agreement; (iii) a duly executed copy of the Registration Rights
Agreement; (iv) a duly executed copy of the Stockholders' Agreement; (v) a duly
executed copy of the Warrant
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Agreement; and (vi) evidence of the authorization of the execution, delivery and
performance of this Agreement..
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchaser to enter into this Agreement,
the Company represents and warrants to the Purchaser, its successors and assigns
as follows:
4.1 Organization and Corporate Power
(a) Each of the Company and its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and is qualified to do business as a foreign
corporation in each jurisdiction in which such qualification is required, except
where the failure to so qualify could not have a Material Adverse Effect. Each
of the Company and its subsidiaries has all required power and authority
(corporate and other) to own, operate and lease its properties and assets and to
carry on its business as presently conducted, and the Company has all required
power and authority (corporate and other) to enter into and perform each of the
Agreements and to carry out the transactions contemplated hereby and thereby.
The copies of the Certificate of Incorporation and By-Laws of the Company, as
amended to date, which have been furnished to counsel for the Purchaser by the
Company, are correct and complete at the date hereof. Neither the Company nor
any of its subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws or equivalent organizational documents.
No consent, approval, order, license, permit or authorization of, or
registration, declaration or filing with, any Governmental Body or any other
Person is required to be obtained or made by or with respect to the Company in
connection with any of the Agreements or the consummation of the transactions
contemplated hereby or thereby, except where the failure to obtain or make could
not have a Material Adverse Effect.
(b) Except as disclosed in Schedule 4.1, the Company is the
owner, directly or indirectly through its subsidiaries, of all outstanding
shares of capital stock of each of its subsidiaries and all such shares are duly
authorized, validly issued, fully paid and non-assessable and are owned by the
Company, directly or indirectly through its subsidiaries, free and clear of all
liens, charges, claims and Encumbrances or rights of others. There are no
outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable
or convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of any such
subsidiary, or otherwise obligating the Company or any such subsidiary to issue,
transfer, sell, purchase, redeem or otherwise acquire such securities. The
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
(c) Except as provided in Schedule 4.1, the Company and each
of its subsidiaries and their respective properties, assets, operations and
businesses are in
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compliance in all material respects with all applicable statutes, laws,
ordinances, rules and regulations of any court, administrative agency or
commission or other Governmental Body and any filing requirements relating
thereto, including Environmental Laws. The Company and each of its subsidiaries
has obtained all permits, licenses and other authorizations (collectively,
"Licenses") which are required with respect to the operation of their respective
businesses and the ownership of their respective assets under U.S., Brazilian or
other, federal, state, local and foreign laws, including Environmental Laws
except when the failure to obtain could not have a Material Adverse Effect, and
each of them is in compliance in all material respects with all terms and
conditions of such Licenses.
4.2 Authorization. Each of the Agreements and all documents
and instruments executed pursuant thereto, are legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms. The execution and delivery of each of the Agreements by
the Company does not, and the consummation of the transactions contemplated
hereby or thereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of any benefit under (i) any provision of the Certificate of Incorporation
or Bylaws or equivalent organizational documents of the Company or any of its
subsidiaries, as amended, or (ii) any mortgage, indenture, lease, contract or
other agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, laws, ordinance rule or regulation applicable to the
Company or any of its subsidiaries or any of their respective properties, assets
or businesses, except where such conflict, violation, default, termination,
cancellation or acceleration with respect to the foregoing provisions of clause
(ii) would not have and could not reasonably be expected to have a Material
Adverse Effect. The execution, delivery and performance of the Agreements and
the issuance of the Shares and the Warrants have been duly authorized by all
necessary corporate action of the Company.
4.3 Capitalization.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Common Stock, $0.0001 par value, and 5,000 shares of
Preferred Stock $.01 par value, of which there were issued and outstanding
immediately prior to Closing 10,784,525 shares of Common Stock and no shares of
Preferred Stock. There are no other outstanding shares of capital stock or
voting securities and no outstanding commitments to issue any shares of capital
stock or voting securities other than pursuant to (i) the exercise of options
outstanding under the Company's Stock Option Plan (the "Stock Option Plan"),
(ii) the exercise of outstanding warrants evidencing the right of the holders
thereof to purchase an aggregate of 5,379,250 shares of Common Stock, as more
fully described in Schedule 4.3 hereof, (iii) the exercise of outstanding
options ("Director Options") granted to certain Directors of the Company to
purchase 220,000 shares of Common Stock and (iv) as provided in the Agreements.
All outstanding shares of Common Stock are duly authorized, validly issued,
fully paid and non-assessable and are free of any Encumbrances other than any
liens or encumbrances created by or imposed
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upon the holders thereof, and are not subject to preemptive rights or rights of
first refusal created by statute, the Certificate of Incorporation, as amended,
or Bylaws, as amended, of the Company or any agreement to which the Company is a
party or by which it is bound. Immediately prior to Closing, the Company has
reserved 500,000 shares of Common Stock for issuance to employees and
consultants pursuant to the Stock Option Plan, no shares have been issued
pursuant to option exercises, 372,500 shares are subject to outstanding,
unexercised options, and no shares are subject to outstanding stock purchase or
other rights. Immediately prior to Closing, the Company has reserved 5,379,250
shares of Common Stock for issuance upon exercise of the warrants described on
Schedule 4.3. Except for the rights created pursuant to the Agreements, the
warrants described on Schedule 4.3, the Stock Option Plan and the Director
Options, there are no other options, warrants, calls, rights, commitments or
agreements of any character to which the Company is a party or by which it is
bound obligating the Company to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of
capital stock of the Company or obligating the Company to grant, extend,
accelerate the vesting of, change the price of, or otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. Other than as
set forth on Schedule 4.3 hereof, there are no contracts, commitments or
agreements relating to voting, purchase or sale of the Company capital stock (i)
between or among the Company and any of its stockholders or other Persons and
(ii) to the Best Knowledge of the Company, between or among any of the Company
stockholders. True and complete copies of all agreements and instruments
relating to or issued under the Stock Option Plan, have been filed as an exhibit
to the SEC documents and such agreements and instruments have not been amended,
modified or supplemented, and there are no agreements to amend, modify or
supplement such agreements or instruments in any case from the form as filed.
(b) Other than as provided in Schedule 4.3 and as set forth in
the Registration Rights Agreement, there are no outstanding rights (other than
those of which have been satisfied) which permit the holder thereof to cause the
Company to file a registration statement under the Securities Act or which
permit the holder thereof to include securities of the Company in a registration
statement filed by the Company under the Securities Act, and there are no
outstanding agreements or other commitments which otherwise relate to the
registration of any securities of the Company under the Securities Act. All
securities of the Company heretofore issued and sold by the Company were issued
and sold in compliance with all applicable Federal and state securities laws.
Assuming that the representations and warranties of the Purchaser set forth in
Article V are true and correct, the offering, issuance and sale of the Shares
and the Warrants will be exempt from the registration requirements of the
Securities Act.
4.4 SEC Documents and Financial Statements. The Company has
furnished or made available to the Purchaser a true and complete copy of each
statement, report, registration statement (with the prospectus in the form filed
pursuant to Rule 424(b) under the Securities Act, definitive proxy statement and
other filing filed with the SEC by the Company since January 1, 1996, and, prior
to the Closing, the Company will have furnished the Purchaser with true and
complete copies of any additional documents
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filed with the SEC by the Company prior to the Closing (collectively, the "SEC
Documents"). In addition, the Company has made available to the Purchaser all
exhibits to the SEC Documents filed prior to the date hereof, and will promptly
make available to the Purchaser all exhibits to any additional SEC Documents
filed prior to the Closing. The Company has filed with the SEC all reports and
registration statements and other filings required to be filed with the SEC
under the rules and regulations of the SEC. All documents required to be filed
as exhibits to the SEC Documents have been so filed, and all material contracts
so filed as exhibits are in full force and effect, except those which have
expired in accordance with their terms or have been revised as disclosed in the
SEC Documents, and neither the Company nor any of its subsidiaries is in default
thereunder. As of their respective filing dates, the SEC Documents complied in
all material respects with the requirements of the Exchange Act and the
Securities Act, and none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except to the extent
corrected by a subsequently filed SEC Document. The financial statements of the
Company, including the notes thereto, included in the SEC Documents (the
"Financial Statements") were complete and correct in all material respects as of
their respective dates, complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as of their respective dates, and were prepared
in accordance with generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q
of the SEC). The Financial Statements fairly present the financial condition and
operating results of the Company and its subsidiaries at the dates and for the
periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments). There has been no change in the
Company's accounting policies except as described in the notes to the Financial
Statements.
4.5 Absence of Certain Changes. Since March 31, 1997, (the
"Balance Sheet Date"), each of the Company and its subsidiaries has conducted
its business in the Ordinary Course of Business, consistent with past practice
and there has not occurred: (i) any change, event or condition (whether or not
covered by insurance) that has resulted in, or might reasonably be expected to
result in, a Material Adverse Effect; (ii) any acquisition, sale or transfer of
any material asset of the Company or any of its subsidiaries; (iii) any change
in accounting methods or practices (including any change in depreciation or
amortization policies or rates) by the Company or any of its subsidiaries or any
revaluation by the Company or any of its subsidiaries of any of their respective
assets; (iv) any declaration, setting aside, or payment of a dividend or other
distribution with respect to the shares of capital stock of the Company, or any
direct or indirect redemption, purchase or other acquisition by the Company of
any of its shares of capital stock; (v) any material contract entered into by
the Company or any of its subsidiaries, other than in the Ordinary Course of
Business and as provided to the Purchaser, or any material amendment or
termination of, or default under, any material contract to which the Company or
any of its subsidiaries is a party or by which any of
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<PAGE> 13
them are bound; or (vi) any commitment or agreement by the Company or any of its
subsidiaries to do any of the things described in the preceding clauses (i)
through (v).
4.6 Absence of Undisclosed Liabilities. Neither the Company
nor any of its subsidiaries has any material obligations or liabilities of any
nature (matured or unmatured, fixed or contingent) other than (i) those set
forth or adequately provided for in the balance sheet included in the Company's
Quarterly Report on Form 10-Q for the period ended March 31, 1997, including the
notes thereto (the "Balance Sheet"), (ii) those incurred in the Ordinary Course
of Business and not required to be set forth in the Balance Sheet under
generally accepted accounting principles, (iii) those incurred in the Ordinary
Course of Business since the Balance Sheet Date; and (iv) those incurred in
connection with the execution of the Agreements.
4.7 Litigation. Except as set forth in the SEC Documents or on
Schedule 4.7, there is no private or governmental action, suit, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or, to the Best Knowledge of the Company,
threatened against the Company, any of its subsidiaries or any of their
respective properties or any of their respective officers or directors (in their
capacities as such) that, individually or in the aggregate, if determined
adversely against the Company and its subsidiaries could reasonably be expected
to have a Material Adverse Effect. There is no judgment, decree or order against
the Company, or any of its subsidiaries or, to the Best Knowledge of the
Company, any of their respective directors or officers (in their capacities as
such), that could prevent, enjoin, alter or delay any of the transactions
contemplated by the Agreements, or that could reasonably be expected to have a
Material Adverse Effect.
4.8 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or decree binding upon the Company or any
of its subsidiaries which has or reasonably could be expected to have the effect
of prohibiting or materially impairing any current or future business practice
of the Company or any of its subsidiaries, any acquisition of property by the
Company or any of its subsidiaries or the conduct of business by the Company or
any of its subsidiaries as currently conducted or as proposed to be conducted by
the Company or any of its subsidiaries.
4.9 Certain Contracts and Arrangements. Except for agreements
listed as exhibits to the SEC Documents, neither the Company nor any of its
subsidiaries is a party to any (i) material employment agreement or employment
agreement with any officer or director, (ii) material collective bargaining or
industry-wide labor agreement, (iii) material license agreement or arrangement,
(iv) indenture, mortgage, note, installment obligation, agreement or other
instrument relating to the borrowing of money in excess of $50,000 or the
guaranty of any obligation for the borrowing of money in excess of such amount,
or (v) other material agreement or arrangement.
The Company is in compliance with the provisions of all
material contracts (the "Contracts") to which it is a party, including, without
limitation, (i) the Assignment and Transfer of Quotas and Other Covenants dated
March 19, 1996 by and among Bob's Industria e Comercio Ltda. ("BIEC"), Arnaldo
Bisoni ("Bisoni"), the
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Company and Vendex do Brasil Industria e Comercio Ltda. ("Vendex"); (ii) the
Conditional Assignment and Transfer of Trademark Rights dated March 19, 1996
between the Company and Vendex International, N.V. and (iii) the Pledge and
Security Agreement dated March 19, 1996 by and among Shampi Investments A.E.C.
("Shampi"), the Company, BIEC, Vendex and Vendex International, N.V., and there
is no default or event that with or without notice or lapse of time, or both,
would constitute a default or an event of acceleration by any party to any of
the Contracts or would give any party the right to terminate, modify, cancel or
exercise any remedy under any of the Contracts. All necessary Governmental
Authorizations with respect to the Contracts have been obtained. The Company has
not given or received any notice or other communication (oral or written)
regarding any actual, alleged, possible or potential violation or breach of, or
default under any Contract and does not have any knowledge or reason to believe
that any party to any of the Contracts intends to cancel or terminate any
Contract or to exercise or not exercise any options under any Contract. The
Company is not a party to, nor is it or its property bound by, any agreement
that is materially adverse to the business, operations, prospects, assets,
liabilities or condition, financial or other, of the Company or of the Company
and its subsidiaries, taken as a whole.
4.10 Title of Property. Each of the Company and its
subsidiaries has good and valid title to all of their respective properties,
interests in properties and assets, real and personal, reflected in the Balance
Sheet or acquired after the Balance Sheet Date (except properties, interests in
properties and assets sold or otherwise disposed of since the Balance Sheet date
in the Ordinary Course of Business), or in the case of leased properties and
assets, valid leasehold interests in such properties, free and clear of all
Encumbrances, except (i) liens for of current taxes not yet due and payable,
(ii) such imperfections of title, liens and easements as do not and will not
materially detract from or interfere with the use of the properties subject
thereto or affected thereby, or otherwise materially impair business operations
involving such properties and (iii) liens securing debt which is reflected on
the Balance Sheet. The plants, property and equipment of the Company and its
subsidiaries are in good operating condition and repair. All properties used in
the operations of the Company and its subsidiaries are reflected in the Balance
Sheet to the extent generally accepted accounting principles require the same to
be reflected.
4.11 Intellectual Property.
(a) The Company or its subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use, all Intellectual Property
that is used or proposed to be used in the business of the Company and the
businesses of its subsidiaries as currently conducted or as proposed to be
conducted by the Company and its subsidiaries, except to the extent that the
failure to have such rights have not and could not reasonably be expected to
have a Material Adverse Effect.
(b) To the Best Knowledge of the Company, there is no material
unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property rights of the Company or any of its subsidiaries, any
trade secret material to the
11
<PAGE> 15
Company or any of its subsidiaries, or any material licenses, sublicenses and
other agreements as to which the Company or any of its subsidiaries is a party
and pursuant to which the Company or any of its subsidiaries is authorized to
use any third party patents, trademarks or copyrights, including software
("Third Party Intellectual Property Rights"), by any third party, including any
employee or former employee of the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries has entered into any agreement to
indemnify any other Person against any charge of infringement of any
Intellectual Property.
(c) Neither the Company nor any of its subsidiaries is, nor
will the Company or any of its subsidiaries be as a result of the execution and
delivery of the Agreements or the performance of the Company's obligations under
the Agreements, in breach of any license, sublicense or other agreement relating
to the Intellectual Property or Third Party Intellectual Property Rights.
(d) All patents, registered trademarks, service marks and
copyrights held by the Company or any of its subsidiaries are valid and
subsisting. Neither the Company nor any of its subsidiaries (i) has been sued in
any suit, action or proceeding which involves a claim of infringement of any
patents, trademarks, service marks, copyrights or violation of any trade secret
or other proprietary right of any third party or (ii) has brought any action,
suit or proceeding for infringement of Intellectual Property or breach of any
license or agreement involving Intellectual Property against any third party.
The manufacture, marketing, licensing or sale of the products and services of
the Company and its subsidiaries do not infringe any patent, trademark, service
mark, copyright, trade secret or other proprietary right of any third party.
(e) Each of the Company and its subsidiaries has secured valid
written assignments from all consultants and employees who contributed to the
creation or development of Intellectual Property of the rights to such
contributions that the Company and its subsidiaries does not already own by
operation of law.
(f) Each of the Company and its subsidiaries has taken all
reasonable and appropriate steps to protect and preserve the confidentially of
all Intellectual Property not otherwise protected by patents, or patent
applications or copyright ("Confidential Information"). All use, disclosure or
appropriation of Confidential Information owned by the Company and its
subsidiaries or to a third party has been pursuant to the terms of a written
agreement with such third party. All use, disclosure or appropriation of
Confidential Information not owned by the Company and its subsidiaries has been
pursuant to the terms of a written agreement with the owner of such Confidential
Information, or is otherwise lawful.
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4.12 Environmental Matters
(a) The following terms shall be defined as follows:
(i) "Hazardous Materials" shall mean any toxic or
hazardous substance, material or waste or any pollutant or contaminant, or
infectious or radioactive substance or material, including without limitation,
petroleum products and those substances, materials and wastes defined in or
regulated under any Environmental Law.
(ii) "Facilities" shall mean all buildings and
improvements on the Real Properties.
(b) The Company represents and warrants as follows with
respect to the operations of the Company and its subsidiaries: (i) to the Best
Knowledge of the Company, no friable asbestos is contained in the Facilities;
(ii) all Hazardous Materials have been disposed of in accordance with all
Environmental Laws; (iii) the Company and its subsidiaries has received no
notice (verbal or written) of any noncompliance of the Facilities or its past or
present operations with Environmental Laws; (iv) no notices, administrative
actions or suits are pending or, to the Best Knowledge of the Company,
threatened relating to a violation of any Environmental Laws; (v) to the Best
Knowledge of the Company, there have not been in the past, and are not now, any
Hazardous Materials under or migrating to or from the Facilities or the Real
Properties; (vi) to the Best Knowledge of the Company, there have not been in
the past, and are not now, any underground tanks or underground improvements at,
on or under the Real Properties, including without limitation , treatment or
storage tanks, sumps, or water, gas or oil wells; (vii) to the Best Knowledge of
the Company, the Facilities and the Company's and its subsidiaries uses and
activities therein have at all times complied with all Environmental Laws; and
(viii) the Company and its subsidiaries have all the permits and licenses
required to be issued and are in full compliance with the terms and conditions
of those permits.
4.13 Taxes. The Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for tax purposes of which the
Company or any of its subsidiaries is or has been a member have timely filed all
Tax Returns required to be filed by it taking into account extensions of due
dates, has paid all Taxes shown thereon to be due and has provided adequate
accruals in accordance with generally accepted accounting principles in its
financial statements for any Taxes that have not been paid, whether or not shown
as being due on any Tax Returns. Except as disclosed in the SEC Documents, (i)
no material claim for Taxes has become a lien against the property of the
Company or any of its subsidiaries or is being asserted against the Company
other than liens for Taxes not yet due and payable, (ii) no audit of any Tax
Return of the Company or any of its subsidiaries is being conducted by a Tax
authority, (iii) no Tax authority is now asserting, or to the Best Knowledge of
the Company, threatening to assert against the Company or any of its
subsidiaries any deficiency or claim for additional Taxes, and there are no
requests for information from a Tax authority currently outstanding that could
affect the Taxes of the Company or any of its subsidiaries, (iv) no extension of
the statute of limitations on the assessment of any
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<PAGE> 17
Taxes has been granted by the Company or any of its subsidiaries and is
currently in effect, and (v) neither the Company nor any of its subsidiaries has
entered into any compensatory agreements with respect to the performance of
services which payment thereunder would result in a nondeductible expense
pursuant to Sections 162(m) or 280G of the Code. Neither the Company nor any of
its subsidiaries is a party to any tax sharing or tax allocation agreement nor
does the Company owe any amount under any such agreement. The Company and each
of its subsidiaries is in full compliance with all terms and conditions of any
tax exemptions or other tax-sparing agreement or order of a foreign government
and the consummation of the transactions contemplated by the Agreements shall
not have any adverse effect on the continued validity and effectiveness of such
tax exemptions or other tax-sparing agreement or order.
4.14 Employee Benefit and Labor Matters.
(a) Neither the Company nor any subsidiary has in the past and
does not now sponsor, maintain, contribute or otherwise have any obligation with
respect to any pension, profit sharing, retirement, fringe benefit, deferred
compensation, stock purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical insurance or life insurance
plan, oral or written commitment of any nature regarding retiree health care, or
program or any other type of employee benefit plan, program or arrangement
within the meaning of Section 3(3) of ERISA including without limitation any
defined benefit plan within the meaning of Section 3(35) of ERISA or Section
414(j) of the Code or any defined contribution plan within the meaning of
Section 3(34) of ERISA or Section 414(j) of the Code or any multiemployer plan
within the meaning of Section 3(37) and 4001(a)(3) of ERISA for the benefit of
any current or former officers or employees of the Company or any subsidiary or
their beneficiaries (whether on an active or frozen basis).
(b) Except as set forth on Schedule 4.14, neither the Company
nor any subsidiary has in the past and does not now sponsor, maintain,
contribute or otherwise have any obligation with respect to any pension, profit
sharing, retirement, fringe benefit, deferred compensation, stock purchase,
stock option, incentive, bonus, vacation, severance, disability,
hospitalization, medical insurance or life insurance plan, oral or written
commitment of any nature regarding retiree health care, or program or any other
type of employee benefit plan, program or arrangement under Brazilian law
including without limitation any defined benefit plan ("Defined Benefit Plan")
or any defined contribution plan ("Defined Contribution Plan") or any
multiemployer plan ("Multiemployer Plan") for the benefit of any current or
former officers or employees of the Company or any subsidiary or their
beneficiaries (whether on an active or frozen basis) (hereinafter each
individually referred to as a "Plan" and collectively referred to as the
"Plans")
(c) Except as set forth on Schedule 4.14, (A) the Company and
each subsidiary have complied in all material respects with all applicable laws,
rules and regulations of governmental agencies or authorities relating to the
employment of labor in connection with the operation of their businesses,
including, without limitation, ERISA
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and the regulations and published interpretations of the Internal Revenue
Service, regulations issued by the Brazilian Internal Revenue Services ("Receita
Federal"), the Secretaria de Previdencia Complementar and the Superintendencia
de Seguros Privados - SUSEP, the PBGC or the Department of Labor thereunder, the
requirements of COBRA, related to continuation of group health coverage by
employees and former employees, and those relating to wages, hours, salaries,
"aditionais" and other benefits granted by law, including "Consolidacao das Leis
do Trabalho" by virtue of collective bargaining agreements or individual
employment agreements, unemployment insurance, workers' compensation, equal
employment opportunity, collective bargaining and the payment and withholding of
Taxes, including income and disability Taxes and any other applicable
contributions required by law, including, but not limited to, social security
taxes and the severance indemnity account and (B) except as disclosed in the SEC
Documents, (x) since March 19, 1996, neither the Company nor any subsidiary has
experienced any strikes, work stoppages, significant grievance proceedings or
claims of unfair labor practices filed nor have there been any threats known to
the Company within such period to file any such significant grievance
proceedings or claims of unfair labor practices and (y) to the Best Knowledge of
the Company prior to March 19, 1996, neither the Company nor any subsidiary has
experienced any strikes, work stoppages, significant grievance proceedings or
claims of unfair labor practices filed nor have there been any threats known to
the Company within such period to file any such significant grievance
proceedings or claims of unfair labor practices.
(d) Except as set forth in Schedule 4.14, neither the Company
nor any subsidiary has in the past and does not now sponsor, maintain,
contribute to or otherwise have any obligation with respect to any Plan. The
Company has furnished to Purchaser true and correct copies of (A) all documents
evidencing each of the Plans referred to in Schedule 4.14 hereto (or true and
correct written summaries of such Plans to the extent not evidenced by
documents) and all employee communications with respect to the Plans, (B) copies
of the last filed Annual Report with respect to each Plan and all Schedules and
exhibits to all such reports (to the extent such reports were required) and the
most recent actuarial valuation and annual accounting of Plan assets and (C) all
contracts relating to such Plans with respect to which the Company, the Plans
may have liability, including without limitation, insurance contracts,
investment management agreements, subscription and participation agreements and
record keeping agreements.
(e) Each Plan administered by the Company has been operated in
accordance with all applicable laws, the Company's By-Laws and its internal
procedures. No investigation or review by the Brazilian Authorities, including,
but not limited to, the Receita Federal, the Secretaria de Previdencia
Complementar and the Superintendencia de Seguros Privados - SUSEP is currently
pending. No assessment of any Taxes has been made, or to the Best Knowledge of
the Company, is contemplated against the Company or any subsidiary on the basis
of a failure of any qualification or exemption. Annual Reports have been timely
filed with respect to all Plans.
(f) Except as set forth on Schedule 4.14, there has been no
material violation of the administrative, reporting and disclosure requirements
imposed under
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applicable Brazilian laws for which a penalty has been or may be imposed with
respect to any Plan listed in Schedule 4.14 which could potentially disqualify
the Plan. No Plan has any material liability of any nature, accrued or
contingent, including, without limitation, liabilities for Taxes and
contributions (including excise and penalty Taxes), other than for routine
payments (including but not limited to death benefit payments) to be made in due
course to or on behalf of participants and beneficiaries.
(g) (A) Except as set forth on Schedule 4.14, the Company and
each subsidiary have made all payments due to date under or with respect to each
Plan set forth in Schedule 4.14 and all amounts properly accrued to date due as
liabilities of the Company or any subsidiary, under or with respect to each
Plan, for the current plan years, have been recorded on the books of the Company
or any subsidiary; (B) the Company and each subsidiary have performed all
material obligations required to be performed, and are not in material default
under, or in material violation of, any such Plan; (C) the Company and each
subsidiary are in compliance in all material respects with the requirements
prescribed by all statutes, orders or governmental rules or regulations
applicable to each such Plan, and none of the Company, any subsidiary, any such
Plan is required to take any action to remedy any material violation of any of
such requirements; (D) there are no actions, suits, arbitrations, claims (other
than insignificant claims), governmental or other proceedings (formal or
informal) or investigations pending or to the knowledge of the Company,
threatened against any such Plan, the assets of any such Plan, or any fiduciary,
administrator or sponsor (in its capacity as such) of any such Plan or related
trust (except for claims for benefits payable in the normal operation of such
Plan which have not previously been denied under such Plan); (E) except as set
forth on Schedule 4.14, no such Plan has incurred any accumulated funding
deficiency or actuarial deficiency whether or not waived by the competent
authorities; (F) neither the Company nor any subsidiary has incurred, and does
not reasonably expect to incur, any liability to the Brazilian authorities,
including, but not limited to, the Receita Federal, the Secretaria de
Previdencia Complementar and the Superintendencia de Seguros Privados -SUSEP ,
and no Defined Benefit Plan described in Schedule 4.14 has been terminated or
has been the subject of any termination proceeding under circumstances which
could reasonably result in the imposition of any such liability on the Company
or any subsidiary; (G) no notice of termination has been filed by the plan
administrator with respect to any such Defined Benefit Plan; (H) neither the
Company nor any subsidiary has contributed, nor does it now contribute to any
Multiemployer Plan nor does it have any liability or potential liability for
complete or partial withdrawal from any Multiemployer Plan; and (I) the Company
has the power to amend and/or terminate every Plan.
4.15 Employee Matters. The Company and each of its
subsidiaries is in compliance with all applicable laws and regulations
respecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices, and is not engaged in any unfair labor practice, except where the
failure to be in compliance or the engagement in such unfair labor practices
could not have a Material Adverse Effect. Except as set forth
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in the SEC Documents, there are no material pending claims against the Company
or any of its subsidiaries under any workers compensation plan or policy or for
long term disability. Neither the Company nor any of its subsidiaries has
obligations under COBRA with respect to any former employees or qualifying
beneficiaries thereunder, except for obligations that could not have a Material
Adverse Effect. There are no controversies pending or, to the Best Knowledge of
the Company, threatened, between the Company or any of its subsidiaries and any
of its employees, which controversies have or could reasonably be expected to
have a Material Adverse Effect.
4.16 Interested Party Transactions. Except as disclosed in the
SEC Documents, neither the Company nor any of its subsidiaries is indebted to
any director, officer, employee or agent of the Company or any of its
subsidiaries (except for amounts due as normal salaries and bonuses and in
reimbursement of ordinary expenses), and no such person is indebted to the
Company or any of its subsidiaries and there have been no other transactions of
the type required to be disclosed pursuant to Items 402 and 404 of Regulation
S-K under the Securities Act and the Exchange Act since January 1, 1996.
4.17 Insurance. The Company and each of its subsidiaries has
policies of insurance and bonds of the type and in amounts customarily carried
by Persons conducting businesses or owning assets similar to those of the
Company and its subsidiaries and is sufficient in amount and scope to cover
those risks to which the Company and its subsidiaries are exposed. There is no
material claim pending under any of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and the Company and its
subsidiaries are otherwise in compliance in all material respects with the terms
of such policies and bonds. To the Best Knowledge of the Company there is no
threatened termination of, or material premium increase with respect to, any of
such policies.
4.18 Compliance with Laws. Each of the Company and its
subsidiaries has complied with, is not in violation of, and has not received any
notices of violation with respect to, any U.S., Brazilian, or other, federal,
state, or local statute, law or regulation with respect to the conduct of its
business, or the ownership or operation of its business, except for such
violations or failures to comply which, singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
4.19 Minutes Books. The minutes of the Company made available
to the Purchaser contain complete and accurate summaries of all meetings of
directors and stockholders or actions by written consent since the time of
incorporation of the Company and the respective subsidiaries through the date of
this Agreement, and reflect all transactions referred to in such minutes
accurately in all material respects.
4.20 Complete Copies of Materials. The Company and its
subsidiaries has delivered or made available true and complete copies of each
document that has been requested by the Purchaser or its counsel in connection
with their legal and accounting review of the Company and its subsidiaries.
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4.21 Brokers' and Finders' Fees. The Company has not incurred,
nor will it incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or investment bankers' fees or any similar
charges in connection with the Agreements or any transaction contemplated
hereby.
4.22 Suppliers. As of the date hereof, no material supplier of
the Company or any of its subsidiaries has indicated to the Company or any of
its subsidiaries that it will stop, or decrease the rate of, supplying
materials, products or services to the Company or any of its subsidiaries .
Neither the Company nor any of its subsidiaries has breached any agreement with,
or engaged in any fraudulent conduct with respect to, any supplier of the
Company or any of its subsidiaries.
4.23 Occupational Safety and Health. The Company and its
subsidiaries and their respective operations, assets and other properties are
presently in compliance with all applicable occupational safety and health Legal
Requirements. Neither the Company nor any of its subsidiaries has received any
notice of, or know of or has any reasonable grounds to believe that there exists
any potential environmental or occupational safety and health problem in
connection with the Company's or its subsidiaries' operations, assets or
properties.
4.24 Representations Complete. None of the representations or
warranties made by the Company herein or in any Schedule, attached hereto, or in
any certificate furnished by the Company or any of its subsidiaries pursuant to
this Agreement, or the SEC Documents, contains or will contain at the Closing
Date any untrue statement of a material fact, or omits or will omit at the
Closing Date to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
ARTICLE V
REPRESENTATIONS OF THE PURCHASER
To induce the Company to execute this Agreement, the Purchaser
hereby represents and warrants to, and covenants with, the Company with respect
to the Purchaser's purchase of Shares and Warrants hereunder, that:
5.1 Organization. The Purchaser is a company duly organized,
validly existing and in good standing under the laws of Bermuda.
5.2 Authority. The Purchaser has the full right, power, legal
capacity and authority to execute, deliver and perform its obligations under the
Agreements. The execution and delivery of each of the Agreements by the
Purchaser does not, and the consummation of the transactions contemplated hereby
or thereby will not, conflict with, or result in any violation of, or default
under (with or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any obligation or loss of
any benefit under (i) any provision of the organizational documents of the
Purchaser or (ii) any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, laws,
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ordinance, rule or regulation applicable to the Purchaser or any of its
subsidiaries or any of their respective properties, assets or businesses, except
where such conflict, violation, default, termination, cancellation or
acceleration with respect to the foregoing provisions of clause (ii) would not
have and could not reasonably be expected to have a material adverse effect on
the Purchaser. The execution, delivery and performance of the Agreements have
been duly authorized by all necessary action of the Purchaser.
5.3 Enforceability. This Agreement has been, and the other
agreements, documents and instruments required to be delivered by the Purchaser
hereunder, when executed and delivered in accordance with the provisions hereof
will be duly executed and delivered on behalf of the Purchaser and this
Agreement constitutes and the other Agreements, when so executed and delivered
will constitute, a legal, valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with the terms hereof and
thereof.
5.4 Securities Act.
(a) The Shares and Warrants to be purchased by the Purchaser
pursuant to this Agreement are being acquired for investment purposes only and
not with a view to any public distribution thereof, and it will not offer to
sell or otherwise dispose of the Shares or Warrants so acquired by it in
violation of any of the registration requirements of the Securities Act.
(b) The Purchaser has substantial experience in business and
financial matters and in making investments of the type contemplated by this
Agreement and is capable of evaluating the merits and risks of its purchase of
the Shares and Warrants and is able to bear the economic risks of its
investment.
(c) The Purchaser has had an opportunity to discuss the
Company's business, management and financial affairs, and the terms and
conditions of the Shares and Warrants with the Company's management and all such
questions have been answered to the full satisfaction of the Purchaser.
(d) The Purchaser is an entity that qualifies as an
"accredited investor" within the meaning of Rule 5.01(a) of Regulation D under
the Securities Act.
ARTICLE VI
CONDITIONS OF PURCHASE
6.1 Conditions Precedent to the Purchaser's Performance. The
obligation of the Purchaser to consummate the transactions described herein
which are to be consummated on the Closing Date and to perform its other
covenants and agreements in accordance with the terms and conditions of this
Agreement is subject to the satisfaction, at or before Closing, of each of the
conditions set forth in this Section 6.1. The Purchaser may waive any or all of
these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute a waiver by
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the Purchaser of any of its other rights or remedies, at law or in equity, if
the Company shall be in default of any of its respective representations,
warranties, agreements, or covenants under this Agreement.
(a) Representations and Warranties of Shareholder or Company.
All representations and warranties made by the Company in the Agreements, or in
any other statement that shall be delivered to the Purchaser by or on behalf of
the Company in connection with the transactions contemplated hereby and thereby
shall be true and complete when made, and on and as of the Closing Date as
though made as of such date.
(b) Performance of the Company. The Company shall have
performed and complied with all covenants and agreements, and satisfied all
obligations and conditions required by the Agreements to be performed, complied
with or satisfied by it at or before the Closing.
(c) No Adverse Changes. During the period from the Balance
Sheet Date to Closing, there shall not have been or occurred any material
adverse change in the business, operations, prospects, properties, assets,
liabilities or condition, (financial or other), of the Company or the Company
and its subsidiaries, taken as a whole and neither the Company nor any of its
subsidiaries shall have sustained any material loss or damage to any of their
respective assets or properties, whether or not insured.
(d) Certificate of the Company The Purchaser shall have
received a certificate, dated as of the Closing Date, signed by the Company's
President certifying, in such detail as the Purchaser and its counsel may
reasonably request, that the conditions specified in paragraphs (a) through (c)
above and (g), (j) and (n) below have been satisfied.
(e) Share Certificates. The Purchaser shall have received
share certificates representing all of the Shares and the Warrants, duly
registered in the name of the Purchaser.
(f) Good Standing Certificate. The Purchaser shall have
received certificates of good standing of the Company dated not more than one
month prior to Closing, in the State of Delaware and each of the other
jurisdictions in which it is qualified to do business at the time of Closing.
(g) Absence of Litigation. No action, suit, or proceeding
before any Governmental Body pertaining to the transactions contemplated by the
Agreements or to their consummation, shall have been instituted or threatened by
a third party on or before the Closing.
(h) Notice of Changes. The Purchaser shall have received from
the President and Chief Financial Officer of the Company a certificate, dated
the Closing Date, that on the basis of a review of the latest available
accounting records of the Company and its subsidiaries and upon consultation
with other responsible officers of the Company and its subsidiaries, and upon
other pertinent inquiries that they may deem
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necessary, from the Balance Sheet Date to a specific date not more than five
business days before Closing, there was no adverse change in the financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole.
(i) Opinion of Counsel. The Purchaser shall have received from
counsel for the Company, Cooperman Levitt Winkoff Lester & Newman, P.C., their
opinion addressed to the Purchaser, dated the Closing Date in the form set forth
in Exhibit 6.1 hereto.
(j) Authorization. The Board of Directors of the Company shall
have duly adopted resolutions in form reasonably satisfactory to the Purchaser
authorizing the Company to consummate the transactions contemplated hereby and
by the other Agreements in accordance with the terms hereof and thereof, and the
Purchaser shall have received a duly executed certificate of the Secretary or an
Assistant Secretary of the Company setting forth a copy of such resolutions and
such other matters as may be requested by the Purchaser.
(k) Stockholders' Agreement. The Company, the Purchaser, and
certain stockholders of the Company identified by the Purchaser shall have
executed and delivered a Stockholders' Agreement in the form of Exhibit A
hereto, with a revised Schedule D thereto, which Schedule shall be acceptable to
the parties hereto.
(l) Registration Rights Agreement. The Company and the
Purchaser shall have executed and delivered a Registration Rights Agreement in
the form of Exhibit B hereto.
(m) Warrant Agreement. The Company and the Purchaser shall
have executed and delivered a Warrant Agreement in the form of Exhibit C hereto.
(n) Reservation of Shares. The Company shall have reserved for
issuance solely for the purposes of issue upon exercise of the Warrants, such
number of shares of Common Stock as shall then be issuable upon exercise of the
Warrants.
(o) Purchaser Authorization. The execution and delivery of the
Agreements and the consummation of the transactions contemplated hereby and
thereby shall have been authorized by all necessary action (corporation or
other) on the part of the Purchaser.
(p) All Proceedings Satisfactory. All corporate and other
proceedings taken prior to or at the Closing in connection with the transactions
contemplated by this Agreement, and all documents and evidences incident
thereto, shall be reasonably satisfactory in form and substance to the
Purchaser, and the Purchaser shall receive such copies thereof.
(q) Employment Agreements. The Purchaser shall have received
evidence, satisfactory to the Purchaser, that each Person party to a severance
or employment agreement with the Company has agreed that the acquisition by the
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Purchasers or its transferees of Common Stock on the Closing Date and from time
to time thereafter, including the Shares and the Warrants will not constitute a
"Change of Control" as such term is defined in each such agreement.
(r) Other. The Purchaser shall have received such other
opinions, certificates, and documents as it may reasonably request and shall
have completed its due diligence review of the Company and be satisfied with the
results thereof.
6.2 Conditions Precedent to the Company's Performance. The
obligations of the Company to consummate the transactions described herein which
are to be consummated on the Closing Date and to perform its other covenants and
agreements in accordance with the terms and conditions of this Agreement are
subject to the satisfaction, at or before Closing, of each of the conditions set
forth in this Section 6.2. The Company may waive any or all of these conditions
in whole or in part without prior notice; provided, however, that no such waiver
of any condition shall constitute a waiver by the Company of any of their rights
or remedies, at law or in equity, if the Purchaser shall be in default of any of
its representations, warranties, agreements or covenants under this Agreement.
(a) Representations and Warranties of the Purchaser. All
representations and warranties by the Purchaser contained in this Agreement or
in any written statement delivered by the Purchaser under this Agreement shall
be true on and as of the Closing Date as though such representations and
warranties were made on and as of such date.
(b) Performance of the Purchaser. The Purchaser shall have
performed and complied with all covenants and agreements, and satisfied all
obligations and conditions required by this Agreement to be performed, complied
with, or satisfied by it on or before the Closing.
ARTICLE VII
COVENANTS OF THE COMPANY
The Company shall comply with the following covenants, except
as shall otherwise be expressly agreed pursuant to a written consent executed by
the Purchaser.
7.1 Use of Proceeds. The proceeds received by the Company
hereunder shall be used by the Company exclusively for the purposes set forth in
Schedule 7.1.
7.2 Registration Rights. All Shares purchased by the Purchaser
under this Agreement and all shares to be issued upon exercise of the Warrants
shall be subject to registration rights in accordance with the Registration
Rights Agreement set forth in Exhibit B.
7.3 Underwriters. Banco Icatu S.A. and/or Icatu Securities,
Inc. shall have the right of first refusal to be the sole and exclusive
underwriter or placement agent
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with respect to any debt or equity instruments issued by the Company; provided,
however, that any underwriting or placement wholly within the United States of
America and/or Europe or having a significant tranche therein shall have a
co-managing underwriter or co-placement agent reasonably satisfactory to the
Company and Banco Icatu S.A. and/or Icatu Securities, Inc.
7.4 Exchange, Transfer and Replacement of Share Certificates.
Upon surrender of any certificate representing Shares or Warrants for exchange
or transfer at the offices of the Company, the Company shall, at its expense
(exclusive of applicable transfer taxes), issue in exchange therefor new
certificates in such denomination or denominations as may be requested for the
same aggregate number of shares of Common Stock or Warrants represented by the
certificate so surrendered and registered as may be requested. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any certificate representing Shares or Warrants and, in the
case of any such loss, theft or destruction, upon delivery of an agreement of
indemnity, and if required such other instruments or security bond, reasonably
satisfactory to the Company and its transfer agent, or, in the case of any such
mutilation, upon surrender and cancellation thereof, the Company shall, at its
expense, issue a new certificate for the same aggregate number of Shares or
Warrants represented by such lost, stolen, destroyed or mutilated certificate,
as the case may be.
7.5 Reservation of Shares The Company will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issue upon exercise of the Warrants, such number of shares of Common
Stock as shall then be issuable upon exercise of the Warrants. The Company
covenants that all shares of Common Stock which shall be issuable upon exercise
of the Warrants shall, at the time of delivery thereof and upon payment of the
exercise price with respect thereto, be duly and validly issued and fully paid
and non-assessable and free from all preemptive or similar rights, taxes, liens,
charges and Encumbrances with respect to the issue thereof, and that upon
issuance such shares shall have been registered with the Securities and Exchange
Commission under the Securities Act and shall be listed on each securities
exchange, if any, on which the other shares of outstanding Common Stock of the
Company are then listed.
ARTICLE VIII
COMPANY'S OBLIGATIONS BEFORE CLOSING
8.1 Affirmative Obligations of the Company. During the period
from the date of this Agreement and continuing until the Closing, the Company
agrees (except to the extent expressly contemplated by this Agreement or as
consented to in writing the Purchaser), to carry on its and its subsidiaries'
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted; to pay Taxes when due subject (i) to good faith
disputes over such debts or Taxes, and (ii) to the Purchaser's consent to the
filing of material Tax Returns, if applicable; to pay or perform all other
obligations when due; and to use all reasonable efforts consistent with past
practice and
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policies to preserve intact its and its subsidiaries' present business
organizations, use its best efforts consistent with past practice to keep
available the services of its and its present subsidiaries' officers and key
employees and use its best efforts consistent with past practice to preserve its
relationships with suppliers, distributors, licensors, licensees, and others
having business dealings with it, to the end that its and its subsidiaries'
ongoing businesses shall be unimpaired at the Closing. The Company agrees to
notify promptly the Purchaser of any event or occurrence not in the Ordinary
Course of its Business, and of any event which could have a Material Adverse
Effect. Without limiting the foregoing, except as expressly contemplated by this
Agreement, the Company shall not do or cause or permit any of the actions set
forth in Section 9 of the Stockholders' Agreement, without the prior written
consent of the Purchaser;
The Company agrees that if the Shares and the shares of Common
Stock underlying the Warrants are not subject to an effective registration
statement within 135 days after the Closing Date, the Purchaser shall have the
right to sell the Shares to the Company at a price of $4.00 per share and the
Company shall have the obligation to purchase the Shares for cash within 30 days
following such 135-day period.
8.2 Negative Obligations of the Company During the period from
the date of this Agreement and continuing until the Closing, except as expressly
contemplated by this Agreement, the Company shall not do, cause or permit any of
the following without the prior written consent of the Purchaser, which consent
shall not be unreasonable withheld:
(a) Material Contracts. Enter into any material contract or
commitment, or violate, amend or otherwise modify or waive any of the terms of
any of its material contracts;
(b) Intellectual Property. Transfer to any Person any rights
to its Intellectual Property;
(c) Exclusive Rights. Enter into or amend any agreements
pursuant to which any other party is granted exclusive marketing or other
exclusive rights of any type or scope with respect to any of its products or
technology;
(d) Dispositions. Sell, lease, license or otherwise dispose of
or encumber any of its properties or assets which are material, individually or
in the aggregate, to its and its subsidiaries' business, taken as a whole;
(e) Indebtedness. Incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others, other than in the Ordinary Course of
Business consistent with the Business Plan (as such term is defined in the
Stockholders' Agreement);
(f) Leases. Enter into any operating lease providing for
payments in excess of an aggregate of $100,000, other than in the Ordinary
Course of Business consistent with the Business Plan;
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(g) Payment of Obligations. Pay, discharge or satisfy in an
amount in excess of $10,000 in any one case or $100,000 in the aggregate, any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) arising other than in the Ordinary Course of Business,
other than the payment, discharge or satisfaction of liabilities reflected or
reserved against in the Financial Statements and other than the expenses related
to this Agreement or any of the transactions contemplated hereby;
(h) Capital Expenditures. Make any capital expenditures,
capital additions or capital improvements except in the Ordinary Course of
Business consistent with the Business Plan;
(i) Insurance. Reduce the amount of any insurance coverage
provided by existing insurance policies;
(j) Employee Benefit Plans; New Hires; Pay Increases. Adopt or
amend any employee benefit or stock purchase or option plan, or hire any new
director level or officer level employee, pay any special bonus or special
remuneration to any employee or director, or increase the salaries or wage rates
of its employees;
(k) Severance Arrangements. Grant any severance or termination
pay (i) to any director or officer, or (ii) to any other employee, except
payments made pursuant to standard written agreements outstanding on the date
hereof;
(l) Lawsuits. Commence a lawsuit other than (i) for the
routine collection of bills or (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material impairment
of a valuable aspect of its business, provided that it consults with the
Purchaser prior to the filing of such a suit;
(m) Acquisitions. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof;
(n) Taxes. Other than in the Ordinary Course of Business, make
or change any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, file any material Tax Return or any
amendment to a material Tax Return, enter into any closing agreement or settle
any claim or assessment in respect of Taxes, or consent to any extension or
waiver of the limitation period applicable to any claim or assessment in respect
of Taxes;
(o) Revaluation. Revalue any of its assets, including without
limitation writing down the value or inventory or writing off notes or accounts
receivable other than in the Ordinary Course of Business; or
(p) Other. Take or agree in writing or otherwise to take, any
of the actions described in Sections 8.2(a) through (o) above, or any action
which would make
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any of its representations or warranties contained in this Agreement untrue or
incorrect or prevent it from performing or cause it not to perform its covenants
hereunder.
ARTICLE IX
OBLIGATIONS AFTER CLOSING
9.1 Company's Indemnity. The Company hereby agrees to
indemnify, defend and hold harmless the Purchaser, any affiliate of the
Purchaser and any director, officer, employee, representative or agent of any of
them (a "Purchaser Indemnified Party") from and against, and agrees to pay or
cause to be paid to the Purchaser all amounts ("Purchaser Losses") equal to the
sum of, any and all claims, demands, costs, expenses or other liabilities of any
kind that any Purchaser Indemnified Party may incur or suffer, directly or
indirectly, including without limitation the cost of investigation, fines,
penalties, cleanup, containment and preventative, restoration or mitigating
measures and all professional fees (including without limitation reasonable
attorneys', accountants', consultants' and engineering fees) which arise out of,
result from or relate to any misrepresentation or breach by the Company of, or
any failure by the Company to perform, any of its representations, warranties,
covenants, obligations or agreements in any of the Agreements, or in any
schedule, certificate, exhibit, or other instrument furnished by, or on behalf
of, the Company under the Agreements.
9.2 Claims Between the Purchaser and the Company. Any claim
for indemnification under this Agreement which does not result from the
assertion of a claim by a third party shall be asserted by written notice given
by the party seeking indemnification (the "Indemnified Party") to the other
party (the "Indemnifying Party"). The Indemnifying Party shall have a period of
20 days within which to respond thereto. If the Indemnifying Party does not
respond within such 20 day period, the Indemnifying Party shall be deemed to
have accepted responsibility for such indemnity, and shall have no further right
to contest the validity of such claim. If the Indemnifying Party does respond
within such 20 day period and rejects such claim in whole or in part, the
Indemnified Party shall be free to pursue such remedies as may be available to
it under this Agreement and applicable law.
9.3 De Minimis If the Closing occurs, the Purchaser shall not
make any claims or assert any rights under this Agreement until the aggregate
amount of all actual damages incurred by the Purchaser exceeds $50,000 (fifty
thousand dollars). At such time the Purchaser shall be entitled to recover the
full amount of such damages. The limitation set forth in this Section 9.3 shall
not apply to (a) any misrepresentation or breach of any representation or
warranty which the Company had knowledge at the time such representation or
warranty was made or deemed to have been made that such representation or
warranty was untrue, (ii) any breach or misrepresentation of Section 4.6 or
(iii) any intentional breach or failure to perform any covenant or obligation or
agreement contained herein
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9.4 Payment. Any and all amounts determined from time to time
to be paid by the group hereto by reason of its indemnity obligations under
Section 9.1 of this Agreement shall be paid in cash, on demand.
ARTICLE X
GENERAL
10.1 Amendments, Waivers and Consents. For the purposes of
this Agreement and all agreements, documents and instruments executed pursuant
hereto, except as otherwise specifically set forth herein or therein, no course
of dealing between the Company and the Purchaser and no delay on the part of any
party hereto in exercising any rights hereunder or thereunder shall operate as a
waiver of the rights hereof and thereof. No covenant or other provision hereof
or thereof may be waived otherwise than by a written instrument signed by the
party so waiving such covenant or other provision. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon the Purchaser
and the Company.
10.2 Survival of Covenants; Assignability of Rights
(a) All representations and warranties of the Company
contained herein or in any of the other Agreements or in any certificate or
other instrument delivered by the Company pursuant to the Agreements or in
connection with the transactions contemplated hereby or thereby shall survive
the closing.
(b) This Agreement and the rights hereunder shall not be
assignable or transferable by the Purchaser or the Company (except by operation
of law in connection with a merger, consolidation or other reorganization or
sale of all or substantially all the assets of the Purchaser or the Company)
without the prior written consent of the other party hereto; provided that the
Purchaser may assign, in its sole discretion, any or all of its rights,
interests and obligations under this Agreement to any transferee of the Shares
or Warrants. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns. The assignment by the Purchaser of any
rights, interest or obligations under this Agreement to any transferee of the
Shares or Warrants acquired hereunder shall not affect or diminish the rights or
obligations of the Purchaser under this Agreement.
10.3 Governing Law The enforcement of this Agreement shall be
governed by, and in connection with such enforcement this Agreement shall be
construed in accordance with, the laws of the State of New York.
10.4 Section Headings. The descriptive headings in this
Agreement have been inserted for convenience only and shall not be deemed to
limit or otherwise affect the construction of any provision thereof or hereof.
10.5 Publicity. The Company and the Purchaser agree that (a)
no public release or announcement concerning the transactions contemplated
hereby shall be issued
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by any party hereto without the prior consent of the other party, except as such
release or announcement may be required by law or the rules or regulations of
any securities exchange, in which case the party required to make the release or
announcement shall allow the other party reasonable time to comment on such
release or announcement in advance of such issuance and (b) without the prior
consent of the Purchaser, the Company shall not issue any public release or
announcement or issue or distribute any document to be used in connection with
the private or public sale of debt or equity securities of the Company if such
release, announcement or document refers to the Purchaser's investment in or
contracts or other arrangements with the Company, except as may be required by
law or the rules or regulations of any securities exchange or by any
Governmental Body, in which case the Company shall allow the Purchaser
reasonable time to comment on the relevant portions of such release,
announcement or document.
10.6 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which when so executed and
delivered shall be taken to be an original; but such counterparts shall together
constitute but one and the same document.
10.7 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or mailed by certified or registered mail, postage prepaid,
return receipt requested, or delivered to a nationally recognized next business
day courier for delivery on the next business day, or by facsimile, with a copy
sent as aforesaid and in any instance addressed as follows:
(i) if to the Purchaser
AIG Latin America Equity Partners, Ltd.
AIG Latin America Investment Advisors, Inc.
80 Pine Street, 14th Floor
New York, NY 10005
Attn: Alberto Marcel
with a copy to:
Curtis, Mallet-Prevost, Colt & Mosle
101 Park Avenue, 35th Floor
New York, NY 10178
Attn: Lawrence Goodman, Esq.
(ii) if to the Company
Brazil Fast Food Corp.
Praia do Flamengo
200-22(degree): Andar
CEP 22210-030
Rio de Janeiro, Brazil
Attention: Peter van Voorst Vader
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with a copy to:
Cooperman Levitt Winikoff Lester & Newman, P.C.
800 Third Avenue
New York, NY 10022
Attn: Ira Roxland, Esq.
10.8 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions or this Agreement.
10.9 Expenses. The Company shall pay all costs and expenses
that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement, and the Purchaser shall pay all costs and
expenses that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement
10.10 Entire Agreement. This Agreement and the agreements
referred to herein contain the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings relating to such subject matter.
10.11 Specific Enforcement; Injunctive Relief. The parties
acknowledge that damages would be an inadequate remedy for any breach of the
provisions of this Agreement. Therefore, the obligations of the parties
hereunder shall be specifically enforceable and each of the parties agrees that
each of them shall be entitled to an injunction, restraining order or other
equitable relief from any court of competent jurisdiction, restraining any party
from committing any violations of the provisions of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as a sealed instrument as of the day and year first above written.
BRAZIL FAST FOOD CORP.
By: /s/ P.Van Voorst Vader
------------------------------------
Name: P. Van Voorst Vader
Title: Chief Executive Officer
AIG LATIN AMERICA EQUITY PARTNERS, LTD.
By: /s/ Alberto Marcel
------------------------------------
Name: Alberto Marcel
Title: Chief Executive Officer
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BRAZIL FAST FOOD CORP.
STOCKHOLDERS' AGREEMENT
THIS AGREEMENT is made as of the 11th day of August, 1997, by and among
Brazil Fast Food Corp., a Delaware Corporation (the "Company"); AIG Latin
America Equity Partners, Ltd., a Bermuda company (the "Fund"); and the Persons
named in Schedule A hereto (each a "Management Group Stockholder" and,
collectively, the "Management Group Stockholders"). The Management Group
Stockholders and the Fund are collectively referred to herein as the
"Stockholders". Capitalized terms used herein, unless otherwise defined herein,
shall have the meanings ascribed to them in the Stock Purchase Agreement (as
such term is hereinafter defined).
W I T N E S S E T H
WHEREAS, the Management Group Stockholders are the beneficial
owners of the issued and outstanding shares of common stock, par value $0.0001
per share of the Company (the "Common Stock") set forth opposite their names on
Schedule A hereto;
WHEREAS, the Fund and the Company are simultaneously with the
entering into of this Agreement, entering into a certain Stock Purchase
Agreement (the "Stock Purchase Agreement") pursuant to which the Fund is
purchasing 1,500,000 shares of Common Stock and the Company has agreed to issue
to the Fund five-year warrants to purchase 250,000 shares of the Common Stock
(the "Warrants"); and
WHEREAS, one of the conditions to Closing (as defined in the
Stock Purchase Agreement) is the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth below, the parties intending to be legally bound agree,
effective on the date of this Agreement, to the following terms and conditions:
1. Transferees. For purposes of this Agreement, unless otherwise
provided herein, the term "Management Group Stockholders" shall include any
permitted transferees of a Management Group Stockholder, to the extent of any
such transfer. For the purposes of this Agreement, the term "Investor Group"
shall include the Fund and the following transferees of the Fund: (i) the
partners of the Fund; (ii) any affiliate of the Fund or a partner thereof; and
(iii) transferees of any of the foregoing holding more than 750,000 of the
outstanding shares of Common Stock (including shares obtainable upon exercise of
the Warrants), which transferee has been approved by the Board of Directors of
the Company, which approval shall not be unreasonably withheld or delayed;
provided, however, that without the approval of the Board of Directors of the
Company, a transferee described in clause (iii) above shall nevertheless be
included in such definition for all purposes of this Agreement, except with
respect to Section 8(C), Sections 9(i), 9(ii), 9(iv), 9(vii), 9(x), 9(xi),
9(xii), and 9(xiii) and Section 10 hereof.
<PAGE> 2
2. Stock. The Fund is the registered owner of an aggregate of 1,500,000
shares of Common Stock, and the Warrants and the Management Group Stockholders
are the registered owners of that number of shares of Common Stock, stock
options and warrants set forth opposite such Management Group Stockholders name
on Schedule B hereto (collectively, and together with any shares of Common Stock
acquired or over which beneficial ownership is obtained after the date hereof,
the "Shares"). Each Stockholder's Shares shall be subject to a number of
restrictions as set forth in this Agreement.
3. Representations and Warranties of the Company.
The Company hereby represents and warrants to the Fund as follows:
(A) Organization. Each of the Company and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is qualified to
do business as a foreign corporation in each jurisdiction in which such
qualification is required, except where the failure to so qualify could not have
a Material Adverse Effect. Each of the Company and its subsidiaries has all
required power and authority (corporate and other) to own, operate and lease its
properties and assets and to carry on its business as presently conducted, and
the Company has all requisite power and authority (corporate and other) to enter
into and perform this Agreement and to carry out the transactions contemplated
hereby. Neither the Company nor any of its subsidiaries is in violation of any
of the provisions of its Certificate of Incorporation or By-Laws or equivalent
organizational documents. No consent, approval, order, license, permit or
authorization of, or registration, declaration or filing with, any Governmental
Body or any other Person is required to be obtained or made by or with respect
to the Company or any of its subsidiaries in connection with this Agreement or
the consummation of the transactions contemplated hereby.
(B) Authorization. This Agreement and all documents
and instruments executed pursuant hereto, are legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms. The execution and delivery of this Agreement by the Company does
not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any benefit under (i)
any provision of the Certificate of Incorporation or Bylaws or equivalent
organizational documents of the Company or any of its subsidiaries, as amended,
or (ii) any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its subsidiaries or any of their respective properties, assets, or businesses
except where such conflict, violation, default, termination, cancellation or
acceleration with respect to the foregoing provisions of (ii) would not have and
could not reasonably be expected to have a Material Adverse Effect. The
execution, delivery and performance of this Agreement has been duly authorized
by all necessary corporate action of the Company.
(C) Capitalization.
(i) The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, $0.0001 par value, and 5,000
shares of Preferred Stock $.01 par value, of which there were issued and
outstanding immediately prior to Closing, 10,784,525 shares of
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<PAGE> 3
Common Stock and no shares of Preferred Stock. There are no other outstanding
shares of capital stock or voting securities and no outstanding commitments to
issue any shares of capital stock or voting securities other than pursuant to
(x) the exercise of options outstanding as of such date under the Company's
Stock Option Plan (the "Stock Option Plan"), (y) the exercise of outstanding
options ("Director Options") granted to certain Directors of the Company to
purchase 220,000 shares of Common Stock and (z) the exercise of outstanding
warrants evidencing the rights of the holders thereof to purchase an aggregate
of 5,379,250 shares of Common Stock, as more fully described on Schedule 4.3 to
the Stock Purchase Agreement and as provided for herein, in the Stock Purchase
Agreement and the Warrant Agreement. All outstanding shares of Common Stock are
duly authorized, validly issued, fully paid and non-assessable and are free of
any Encumbrances other than any liens or encumbrances created by or imposed upon
the holders thereof, and are not subject to preemptive rights or rights of first
refusal created by statute, the Certificate of Incorporation, as amended, or
Bylaws, as amended, of the Company or any agreement to which the Company is a
party or by which it is bound. Immediately prior to the Closing, the Company has
reserved 500,000 shares of Common Stock for issuance to employees and
consultants pursuant to the Stock Option Plan, no shares have been issued
pursuant to option exercises, 372,500 shares are subject to outstanding,
unexercised options, and no shares are subject to outstanding stock purchase or
other rights. Immediately prior to the Closing, the Company has reserved
5,379,250 shares of Common Stock for issuance upon exercise of the warrants
described on Schedule 4.3 to the Stock Purchase Agreement. Except for the rights
created pursuant to this Agreement, the Stock Purchase Agreement, the Warrant
Agreement, the warrants described on Schedule 4.3 to the Stock Purchase
Agreement, the Stock Option Plan and the Directors Options, there are no other
options, warrants, calls, rights, commitments or agreements of any character to
which the Company is a party or by which it is bound obligating the Company to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of capital stock of the Company or
obligating the Company to grant, extend, accelerate the vesting of, change the
price of, or otherwise amend or enter into any such option, warrant, call,
right, commitment or agreement. Other than as set forth on Schedule 2(C) hereof,
there are no contracts, commitments or agreements relating to voting,
purchase or sale of the Company capital stock (i) between or among the Company
and any of its stockholders or other Persons and (ii) to the Best Knowledge of
the Company, between or among any of the Company stockholders. True and complete
copies of all agreements and instruments relating to or issued under the Stock
Option Plan, have been filed as an exhibit to the SEC Documents and such
agreements and instruments have not been amended, modified or supplemented, and
there are no agreements to amend, modify or supplement such agreements or
instruments in any case from as filed.
(ii) Other than as provided in Schedule 2(C) and as
set forth in the Registration Rights Agreement, there are no outstanding rights
(other than those of which have been satisfied) which permit the holder thereof
to cause the Company to file a registration statement under the Securities Act
or which permit the holder thereof to include securities of the Company in a
registration statement filed by the Company under the Securities Act, and there
are no outstanding agreements or other commitments which otherwise relate to the
registration of any securities of the Company under the Securities Act. All
securities of the Company heretofore issued and sold by the Company were issued
and sold in compliance with all applicable Federal and state securities laws.
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<PAGE> 4
(D) Litigation. Except as set forth in the SEC
Documents or on Schedule 4.7 to the Stock Purchase Agreement, there is no
private or governmental action, suit, proceeding, claim, arbitration or
investigation pending before any agency, court or tribunal, foreign or domestic,
or, to the Best Knowledge of the Company, threatened against the Company or any
of its subsidiaries or any of their respective properties or any of their
respective officers or directors (in their capacities as such) that,
individually or in the aggregate, if determined adversely against the Company
and its subsidiaries could reasonably be expected to have a Material Adverse
Effect There is no judgment, decree or order against the Company or any of its
subsidiaries or, to the Best Knowledge of the Company, any of their respective
directors or officers (in their capacities as such), that could prevent, enjoin,
alter or delay any of the transactions contemplated by this Agreement, or that
could reasonably be expected to have a Material Adverse Effect.
(E) Representations Complete None of the
representations or warranties made by the Company herein or in any Schedule
attached hereto, or in any certificate furnished by the Company pursuant to this
Agreement contains or will contain at the Closing Date any untrue statement of a
material fact, or omits or will omit at the Closing Date to state any material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which made, not misleading.
4. Representations and Warranties of the Management Group Stockholders.
Each of the Management Group Stockholders jointly and
severally represent and warrant to the Fund as follows:
(A) Authorization. This Agreement and all documents
and instruments executed pursuant hereto, are legal, valid and binding
obligations of each Management Group Stockholder, enforceable against each
Management Group Stockholder in accordance with their terms. The execution and
delivery of this Agreement by each Management Group Stockholder does not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under (i) if applicable,
any provision of the Certificate of Incorporation or Bylaws or equivalent
organizational documents of each Management Group Stockholder, as amended, or
(ii) any mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to each Management Group Stockholder or
any of its properties or assets.
(B) Ownership. Each Management Group Stockholder (i)
owns, beneficially or of record, that number of Shares set forth opposite such
Management Group Stockholder's name on Schedule B hereto free and clear of all
Encumbrances and (ii) does not own, beneficially or of record, any other shares
of Common Stock.
(C) Material Contracts. Each Management Group
Stockholder is in compliance with the provisions of all material contracts to
which each such Management Group Stockholder is a party, and there is no default
or event that with or without notice or lapse of time, or both, would constitute
a default or event of acceleration by any party to any of such contracts or
would give either party the right to terminate, modify, cancel or exercise any
remedy under any of such contracts. The Management group Stockholders have not
given or received
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<PAGE> 5
any notice or other communication (oral or written) regarding any actual,
alleged, possible or potential violation or breach of, or default under any such
contract and has no knowledge or reason to believe that any party to any of such
contracts intends to cancel or terminate any such contract or to exercise or not
exercise any options under any such contract.
(D) Ownership. Each Management Group Stockholder (i)
owns, beneficially or of record, that number of Shares set forth opposite such
Management Group Stockholder's name on Schedule B hereto free and clear of all
Encumbrances and (ii) does not own, beneficially or of record, any other shares
of Common Stock.
5. Transferability. The Company and each Stockholder agree that the
Shares may be transferred only in accordance with the provisions set forth
herein and only if the transferee of such Shares agrees in writing to be bound
by the provisions hereof by executing a counterpart signature page to this
Agreement. Any transfer by a Stockholder not in accordance with the preceding
sentence shall be void, ab initio.
For the purposes of this Agreement, the term "transfer" shall
mean any sale, exchange, gift, bequest, hypothecation, pledge or grant of a
security interest or any other disposition of the Shares, or of any interest in
the Shares, whether voluntary or by operation of law, that would change the
legal or beneficial ownership of the Shares. The term "transfer" includes,
without limitation, any transaction that creates a form of joint ownership in
the Shares between the transferor and one or more person (whether or not that
other person is the spouse of the transferor) or any transaction that creates or
grants an option, warrant, or right to obtain an interest in the Shares.
6. Rights of First Offer.
(A) The Company shall not offer, issue or sell any
shares of capital stock of the Company, or any warrants or options to purchase
or rights to subscribe for or any other securities convertible into or
exchangeable for shares of capital stock of the Company, or enter into any
agreements or commitments pursuant to which the Company may become obligated to
issue any shares of capital stock, warrants, options, rights or securities
convertible into or exchangeable for capital stock of the Company, unless the
Company shall first offer to the Investor Group, the Investor Group's
Proportionate Percentage (as hereinafter defined) of the securities proposed to
be offered by the Company; provided, however that this Section 6, shall not
apply to (i) shares of Common Stock or warrants, options, rights or securities
convertible into or exchangeable for capital stock of the Company issued as
consideration in the acquisition by the Company of the stock or assets of
another company, which acquisition and issuance has been approved by the Board
of Directors of the Company, including the Fund Director (as hereinafter
defined), (ii) any shares of Common Stock or warrants, options, rights or
securities convertible into or exchangeable for capital stock of the Company
issued in connection with any pro rata stock split, stock dividends or similar
event affecting the Common Stock; and (iii) shares of Common Stock issued
pursuant to the exercise of currently outstanding warrants or options or any
options which may be issued under the Company's currently existing Stock Option
Plan. The offer shall be effected by delivery of written notice thereof by the
Company to the Investor Group, which notice shall contain (i) a description of
the securities being offered, (ii) the amount and type of consideration which
the Company will receive for each such security, (iii) the aggregate amount of
securities being offered, (iv) the manner of distribution of the securities and
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<PAGE> 6
(v) any other information which is material to a decision to accept or reject
the offer. Such offer shall remain open for a period of twenty-five (25) days
from receipt thereof.
(B) Notice of the Investor Group's intention to
accept in whole or in part any offer made pursuant to Section 6(A) hereof shall
be evidenced by a writing delivered to the Company prior to the end of the
twenty-five (25) day period of such offer, setting forth that portion of the
securities offered as the Investor Group elects to purchase (the "Notice of
Acceptance").
(C) In the event that a Notice of Acceptance is not
given by the Investor Group, the Company shall have one hundred and twenty (120)
days from the expiration of the foregoing twenty-five (25) day period, to sell
all or any part of such securities offered as to which a Notice of Acceptance
has not been given by the Investor Group to any other person or persons, but
only upon terms and conditions which are no more favorable to such other person
or persons or less favorable to the Company than those set forth in the original
offer.
(D) In each case, any securities offered but not
purchased by the Investor Group or other person or persons in accordance with
Section 6(C) may not be sold or otherwise disposed of until they are again
offered to the Investor Group under the procedures specified in this Section 6.
(E) For purposes of this Section 6, the term
"Proportionate Percentage" shall mean, as to the Investor Group, the result,
expressed as a percentage, obtained by dividing (i) the number of shares of
Common Stock held by the Investor Group (including any shares obtainable by the
Investor Group upon the conversion or exercise of convertible securities,
options, rights or warrants) by (ii) the number of shares of Common Stock then
outstanding (including any shares obtainable by the Investor Group upon the
conversion or exercise of convertible securities, options, rights or warrants).
7. Co-Sale Rights
(A) If at any time one or more Management Group
Stockholders (the "Seller") desires to sell, directly or indirectly, in one or a
series of related transactions, more than twenty percent (20%) of the aggregate
number of Shares held by the Seller at such time pursuant to a bona fide offer
or offers from a third party or parties (the "Proposed Transferee"), the Seller
shall submit a written notice (the "Notice") of such proposed sale of such
Shares (the "Offered Shares") to the Investor Group. The Notice shall disclose
the identity of the Proposed Transferee, the Offered Shares proposed to be sold,
the total number of Shares owned by the Seller, the terms and conditions,
including price, of the proposed sale, that the Proposed Transferee has been
informed of the rights and obligations provided for in this Section 7 and has
agreed to purchase the Offered Shares in accordance with the terms of this
Agreement, and any other material facts relating to the proposed sale.
(B) If upon receipt of a Notice pursuant to Section
7(A) above, the Investor Group desires to sell any or all of its pro rata
portion ("Pro Rata Portion") of Common Stock held by the Investor Group at such
time, then the Investor Group shall have the right, exercisable upon written
notice (the "Co-Sale Acceptance Notice") to the Seller, given within thirty (30)
days after the Notice has been delivered pursuant to Section 7(A) above, to
participate in the proposed sale of the Offered Shares pursuant to the terms and
conditions specified in the
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<PAGE> 7
Notice, and the Seller shall require the Proposed Transferee designated in the
Notice to purchase any or all of the Investor Group's Pro Rata Portion of Common
Stock. The Co-Sale Acceptance Notice shall state the number of Shares the
Investor Group proposes to include in such proposed sale to the Proposed
Transferee (the "Co-Sale Shares"). Any such sale by the Investor Group shall be
at the same price per share (including type of consideration) paid by the
Proposed Transferee and otherwise on identical terms and conditions as received
by the Seller in its sale to the Proposed Transferee; provided, however, that if
the Proposed Transferee is unable or unwilling to purchase the Co-Sale Shares
from the Investor Group, the total number of Shares to be sold to such Proposed
Transferee shall be allocated between the Seller and the Investor Group on a pro
rata basis.
(C) If no Co-Sale Acceptance Notice is received by
the Seller during the 30-day period referred to in Section 7(B) above, then the
Seller shall have the right to sell the Offered Shares to the Proposed
Transferee at any time within 120 days after the date of the Notice, subject to
the other provisions of this Agreement. Any such sale to the Proposed Transferee
shall be at the price and upon the terms and conditions specified in the Notice.
Any Offered Shares not sold within such 120 day period shall continue to be
subject to the requirements of this Section 7.
(D) Notwithstanding anything to the contrary
contained in Sections 7(A) through 7(C) above, if at any time, a Management
Group Stockholder desires to sell, directly or indirectly, in one or a series of
related transactions, more than forty nine percent (49%) of the aggregate number
of Shares owned or controlled by such Management Group Stockholder at such time
pursuant to a bona fide offer or offers from a third party or parties (the
"Management Group Proposed Transferee"), such Management Group Stockholder shall
submit a written notice (the "Management Group Notice") of such proposed sale of
such Shares (the "Management Group Offered Shares") to the Investor Group. The
Management Group Notice shall disclose the identity of the Management Group
Proposed Transferee, the Management Group Offered Shares proposed to be sold,
the total number of Shares owned by the Management Group Stockholder, the terms
and conditions, including price, of the proposed sale, that the Proposed
Transferee has been informed of the rights and obligations provided for in this
Section 7 and has agreed to purchase the Management Group Offered Shares in
accordance with the terms of this Agreement, and any other material facts
relating to the proposed sale.
(E) If upon receipt of a Management Group Notice
pursuant to Section 7(D) above, the Investor Group desires to sell any or all of
the Investor Group's Shares, then the Investor Group shall have the right,
exercisable upon written notice (the "Management Co-Sale Acceptance Notice") to
the Management Group Stockholder, given within thirty (30) days after the
Management Group Notice has been delivered pursuant to Section 7(D) above, to
participate in the proposed sale of the Management Group Offered Shares pursuant
to the terms and conditions specified in the Management Group Notice, and the
Management Group Stockholder shall require the Management Group Proposed
Transferee designated in the Management Group Notice to purchase any or all of
the Investor Group's Shares. The Management Co-Sale Acceptance Notice shall
state the number of Shares the Investor Group proposes to include in such
proposed sale to the Proposed Management Group Transferee (the "Management
Co-Sale Shares"). Any such sale by the Investor Group shall be at the same price
per share (including type of consideration) paid by the Management Group
Proposed Transferee and otherwise on identical terms and conditions as received
by the Management Group Stockholder in its sale to
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<PAGE> 8
the Management Group Proposed Transferee. In the event that the Management Group
Proposed Transferee does not purchase the Management Co-Sale Shares from the
Investor Group pursuant to a timely delivered Management Group Co-Sale
Acceptance Notice as required by this Section 7, then the Management Group
Stockholder shall not be permitted to, and shall not, sell any Management Group
Offered Shares to the Management Group Proposed Transferee in the proposed sale.
(F) If no Management Group Co-Sale Acceptance Notice
is received by the Management Group Stockholder during the 30-day period
referred to in Section 7(E) above, then the Management Group Stockholder shall
have the right to sell the Management Group Offered Shares to the Management
Group Proposed Transferee at any time within 120 days after the date of the
Management Group Notice, subject to the other provisions of this Agreement. Any
such sale to the Management Group Proposed Transferee shall be at the price and
upon the terms and conditions specified in the Management Group Notice. Any
Management Group Offered Shares not sold within such 120-day period shall
continue to be subject to the requirements of this Section 7.
(G) In the event that any Management Group
Stockholder desires to transfer, in the aggregate, at any time or from time to
time 20% (twenty percent) or less of the aggregate number of Shares held by such
Management Group Stockholder, the Investor Group shall have no rights with
respect to such transfer.
Notwithstanding anything to the contrary contained in this
Section 7, the foregoing Co-Sale rights shall not apply to any Shares that are
offered for sale or are sold in a public market transaction.
8. (A) Right of the Investor Group to Elect Board
Member. So long as at least 750,000 of the issued and outstanding shares of
Common Stock (including shares obtainable upon exercise of the Warrants) are
held by the Investor Group, the Investor Group shall have the right to nominate
one member of the Board of Directors, and the Company, the Management Group
Stockholders and the Investor Group agree to take any and all action, including
voting all of their shares of Common Stock, which may be necessary to cause the
election to the Board of Directors of the person nominated by the Investor
Group (the "Fund Director"). The Investor Group shall have the right to require
the resignation of its nominee and his or her replacement with another nominee
of the Investor Group.
(B) Right of the Management Group Stockholders to
Elect Board Members. The Management Group Stockholders and the Fund agree that
(i) Shampi Investment, A.E.C. shall have the right to nominate two members of
the Board of Directors; (ii) BigBurger Ltda. shall have the right to nominate
one member of the Board of Directors; and (iii) Lawrence Burstein, John
Cattier, Barry Goldin and Barry W, Ridings (the "Burstein Group"), shall have
the right, as a group, to nominate two members of the Board of Directors. The
Company, the Management Group Stockholders and the Investor Group agree to take
any and all action, including voting all of their shares of Common Stock, which
may be necessary to cause the election to the Board of Directors of the person
nominated by each of Shampi Investment, A.E.C., BigBurger Ltda. and the
Burstein Group.
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<PAGE> 9
(C) Approval of Budgets. The Company shall prepare and submit
to the Investor Group for approval, an annual operating and capital budget, and
shall not permit, without the prior written consent of the Investor Group, any
variation by more than 5% from the amounts set forth in such budgets for
indebtedness, capital expenditures, fixed costs and the ratio of total
liabilities to total assets, provided that the Investor Group shall exercise
such approval right in what it in good faith believes to be in the best
interests of the Company and its stockholders.
9. Covenants. The Company shall not and each of the Management Group
Stockholders in their capacity as shareholders, officers and directors, to the
extent applicable, shall cause the Company not to, directly or indirectly,
without the prior written consent or approval of the Investor Group, undertake
or agree to undertake any of the following actions: (i) sell, abandon, transfer,
lease or otherwise dispose of all or substantially all of its properties or
assets to any other company, companies, entity or entities; provided, however
that nothing contained in this Section 9(i) shall restrict the Board of
Directors of the Company from taking any action necessary to fulfill its
fiduciary duties; (ii) purchase, lease or otherwise acquire all or substantially
all of the properties or assets of another corporation or entity; (iii) during
the first three (3) years after the Closing Date, make any payment on account of
the purchase, redemption or other retirement of any shares of its capital stock
and thereafter, make any payment on account of the non pro rata purchase,
redemption or other retirement of any shares of its capital stock; (iv) merge or
consolidate with or into, or permit any subsidiary to merge or consolidate with
or into, any other company, companies, entity or entities, provided that any
wholly-owned subsidiary of the Company may merge or consolidate with or into
another wholly-owned subsidiary of the Company, provided, however that nothing
contained in this Section 9(iv)shall restrict the Board of Directors of the
Company from taking any action necessary to fulfill its fiduciary duties; (v)
voluntarily dissolve, liquidate or wind up or carry out any partial liquidation
or distribution or transaction in the nature of a partial liquidation or
distribution; (vi) take any action to cause an amendment to the Certificate of
Incorporation or By-Laws of the Company which would affect the rights or
obligations of any of the Stockholders; (vii) enter into any agreements or
transactions between the Company or any affiliate thereof and the CEO, CFO, COO
and President of the Company or any Management Group Stockholder or any of their
respective affiliates; (viii) issue or agree to issue any shares of preferred
equity at any price or any shares of common equity or any security, right,
option or warrant convertible into or exercisable for, shares of the Company's
stock, in either case, at a lower per share price than that paid by the Investor
Group for its Shares; provided, however that this Section 9(viii), shall not
apply to (a) shares of Common Stock or warrants, options, rights or securities
convertible into or exchangeable for capital stock of the Company issued as
consideration in the acquisition by the Company of the stock or assets of
another company, provided that such acquisition and issuance has been approved
by the Board of Directors of the Company, including the Fund Director, (b) any
shares of Common Stock or warrants, options, rights or securities convertible
into or exchangeable for capital stock of the Company issued in connection with
any pro rata stock split, stock dividends or similar event affecting the Common
Stock, and (c) shares of Common Stock issued pursuant to the exercise of
currently outstanding warrants or options or any options which may be issued
under the Company's currently existing Stock Option Plan; (ix) increase the
number of persons serving on the Board; (x) make any significant changes in the
Company's or its subsidiaries' accounting policies, unless required by law; (xi)
permit material deviations from the business strategy provided to the Investor
Group, attached hereto as Schedule C (the "Business Plan"), such as any
expansion of the Company's business outside of Brazil or any change in the
fundamental nature of the business of the Company as conducted on the Closing
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<PAGE> 10
Date (i.e., Hamburger Fast Food Restaurants); (xii) change any component of the
current compensation of the CEO, CFO, COO and President of the Company, which
compensation shall include salary, bonus, stock options and fringe benefits;
(xiii) declare any dividends; (xiv) adopt or amend any stock option, stock
purchase or similar plan.
10. Covenants of the CEO. For a period of five years from the
Closing Date or for so long as Peter van Voorst Vader is an officer, director or
consultant of the Company, whichever is shorter, provided that in no event shall
such period be less than three years from the Closing Date, Peter van Voorst
Vader shall not, directly or indirectly, without the prior written consent of
the Investor Group, (i) sell, in any three year period, more than 100,000 of the
Shares directly or indirectly owned (beneficially or of record) or controlled by
him, including the Shares owned of record by Shampi Investment A.E.C. but
beneficially owned by Peter van Voorst Vader or (ii) sell at any time or from
time to time after the Closing Date, an aggregate of more than 300,000 of the
Shares directly or indirectly owned (beneficially or of record) or controlled by
him, including the Shares owned of record by Shampi Investment A.E.C. but
beneficially owned by Peter van Voorst Vader.
11. Additional Rights. In the event that, at the end of fiscal
1999, 2000 or 2001, the Company has failed to achieve 75% of projected
cumulative EBITDA as set forth in Schedule D hereto measured for the period from
January 1, 1997 to December 31, 1999, 2000 or 2001, as the case may be, the
Investor Group shall have the right to (A) nominate 2 additional Board members
within thirty days of the completion of the audited financial statements for
fiscal 1999, (B) 1 additional Board member within thirty days of the completion
of the audited financial statements for fiscal 2000 and (C) in the event that
the Investor is not entitled to nominate an additional Board member pursuant to
Section (B) hereof, 1 additional Board member within thirty days of the
completion of the audited financial statements for fiscal 2001, as the case may
be, and the Company and each of the Management Group Stockholders, in their
capacity as stockholders, officers and directors, to the extent applicable,
agree to take any and all action, including voting their respective shares of
Common Stock for such nominee, causing the resignation of any Management Group
Stockholder nominee, if applicable, and expanding the number of Board members,
all as may be required in accordance with this Section 11, in order to cause
such nominee to be elected to the Board; provided, however that if the average
per share price of the Common Stock for the thirty trading days ending on
December 31, 1999, December 31, 2000 or December 31, 2001, as the case may be,
is $6.00 or higher, $7.00 or higher, or $8.00 or higher, respectively, the
Investor Group shall not have the right to nominate additional Board members
that it otherwise has the right to nominate on such date.
Notwithstanding the provisions of Section 8 hereof,
the Management Group Stockholders agree that if the Investor Group is entitled
under this Section 11 to (i) nominate 2 additional Board members pursuant to
11(A) above, a nominee of the Management Group Stockholders who is serving as a
member of the Board at such time shall resign and the number of members of the
Board shall be increased by one; (ii) nominate 1 additional Board member
pursuant to 11(B) above, a nominee of the Management Group Stockholders who is
serving as a member of the Board at such time shall resign; and (iii) nominate 1
additional Board member pursuant to 11(C) above, a nominee of the Management
Group Stockholders who is serving as a member of the Board at such time shall
resign. For purposes of (i), (ii) and (iii), the nominee of the Management Group
Stockholders who shall be required to resign shall be designated by the
Management Group Stockholders; provided, however, that in the event the
-10-
<PAGE> 11
Management Group Stockholders can not agree as to which member of the Board
shall be required to resign, the Investor Group, in its sole discretion may
designate such member and such designee shall resign.
12. Investor Group Action. Any action, consent or approval
required to be obtained or taken by the Investor Group shall be deemed to have
been obtained or taken if Shares representing 66-2/3% of the Shares held by the
Investor Group take such action or provide such consent or approval.
13. Existing Voting Agreement. The Company and certain of the
Management Group Stockholders, effective as of March 19, 1996 had entered into
an agreement (the "Original Agreement") with respect to the voting of the shares
of Common Stock owned by each of such Management Group Stockholders and a
limitation, effective through September 1996, on the disposition of shares owned
by Shampi Investment, A.E.C (the "Limitation"), which Original Agreement, with
the exception of the Limitation which remained in full force and effect, was
replaced and superseded in its entirety by an agreement (the "Voting Agreement")
dated as of March 19, 1996, by and between, Lawrence Burstein, John Cattier,
Barry L. Goldin and Barry W. Ridings, Shampi Investments, A.E.C. and BigBurger
Ltda. The Company and the Management Group Stockholders agree that the
Limitation and the Voting Agreement are hereby replaced and superseded in their
entirety by this Agreement.
14. Employment Agreements. Each of the Management Group
Stockholders party to a severance agreement ("Severance Agreement") with the
Company hereby agrees that the acquisition by the Fund of the Shares will not
constitute a Change of Control, as such term is defined in each Severance
Agreement.
15. No Waiver. Any waiver of a breach of any of the terms of
this Agreement shall not operate as a waiver of any other breach of such terms
or conditions or any other terms or conditions, nor shall any failure to enforce
any provision of this Agreement operate as a waiver of such provision or any
other provision.
16. Successor and Assigns. The rights, benefits and
obligations of the Company under this Agreement and all covenants and agreements
hereunder shall inure to the benefit of and be enforceable by or against its
successors and assigns. Subject to the limitations set forth herein, this
Agreement shall inure to the benefit and be binding upon the Stockholders'
heirs, successors, assigns and transferees, provided that the requirements set
forth in Section 5 hereof are satisfied.
17. (A) Company Indemnification. The Company shall, with
respect to the representations, warranties, agreements and covenants made by it
herein or in any certificate or other instrument delivered by it pursuant hereto
or in connection with the transactions contemplated hereby, indemnify, defend
and hold the Investor Group harmless against all liability, loss or damage,
together with all reasonable costs and expenses related thereto (including
reasonable legal and accounting fees and expenses), arising from the untruth,
inaccuracy or breach of any of such representations, warranties, agreements or
covenants of the Company.
(B) Management Group Stockholder Indemnification.
Each Management Group Stockholder shall jointly and severally, with respect to
the representations, warranties and
-11-
<PAGE> 12
agreements made by the Management Group Stockholders herein or in any
certificate or other instrument delivered by them pursuant hereto or in
connection with the transactions contemplated hereby, indemnify, defend and hold
the Investor Group harmless against all liability, loss or damage, together with
all reasonable costs and expenses related thereto (including reasonable legal
and accounting fees and expenses), arising from the untruth, inaccuracy or
breach of any such representations, warranties, agreements or covenants of the
Management Group Stockholders.
18. Remedies. In case any one or more of the covenants set
forth in this Agreement shall have been breached by the Company or any of the
Management Group Stockholders, the Investor Group may proceed to protect and
enforce its rights either by suit in equity and/or by action at law, including,
but not limited to, an action for damages as a result of any such breach and/or
an action for specific performance of any such covenant contained in this
Agreement.
19. Entire Agreement. This Agreement constitutes the entire
agreement among the parties. This Agreement may not be amended or modified,
except in writing, and signed by (i) the Company, (ii) holders of sixty-six and
two-thirds percent (66-2/3%) of the Shares then held by the Investor Group and
(iii) holders of sixty-six and two-thirds percent (66-2/3%) of the Shares then
held by the Management Group Stockholders.
20. Severability. If any provision of this Agreement or the
application thereof is held invalid or unenforceable, the invalidity or
unenforceability thereof shall not affect any other provisions or applications
of this Agreement which can be given effect without the invalid or unenforceable
provision or application. To that end, the provisions of this Agreement are to
be severable.
21. Termination. The provisions of this Agreement shall
terminate when the Investor Group no longer holds more than 750,000 of the
outstanding shares of Common Stock (including shares obtainable upon the
exercise of the Warrants).
22. Notice. All notices, request, consents and other
communications hereunder to any party shall be deemed sufficient if contained in
a written instrument delivered in person or duly sent by first class certified
mail, postage prepaid, addressed to such party at the address set forth below or
such other address as may hereafter be designated in writing in accordance with
the provisions of this Section 22:
( i) if to the Company, to
Brazil Fast Food Corp.
Praia do Flamengo
200-22(degree): Andar
CEP 22210-030
Rio de Janeiro, Brazil
Attention: Peter van Voorst Vader
-12-
<PAGE> 13
with a copy to:
Cooperman Levitt Winikoff Lester & Newman, P.C.
800 Third Avenue
New York, NY 10022
Attn: Ira Roxland, Esq.
( ii) if to the Fund, to
AIG Latin America Equity Partners, Ltd.
c/o AIG Latin America Investment Advisors, Inc.
80 Pine Street, 14th Floor
New York, NY 10005
Attention: Alberto Marcel
with a copy to:
Curtis, Mallet-Prevost, Colt & Mosle
101 Park Avenue, 35th Floor
New York, NY 10178
Attn: Lawrence Goodman, Esq.
(iii) if to a Management Group Stockholder, to the registered
address of such Stockholder, as such appears on the record
books of the Company
All such notices, requests, consents and other communications
shall be deemed to have been received (a) in the case of personal delivery, on
the date of such delivery and (b) in the case of mailing, on the third business
day following the date of such mailing.
23. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York (without
giving effect to its conflicts of laws principles).
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<PAGE> 14
IN WITNESS WHEREOF, the Company has caused this Agreement to
be signed and each Stockholder has executed this Agreement as of the date shown
below.
BRAZIL FAST FOOD CORP.
Dated: August 11, 1997 By: /s/ P. Van Voorst Vader
-----------------------
Name: P. Van Voorst Vader
Title: Chief Executive Officer
AIG LATIN AMERICA EQUITY PARTNERS, LTD.
Dated: August 11, 1997 By: /s/ Alberto Marcel
------------------
Name: Alberto Marcel
Title: Chief Executive Officer
-14-
<PAGE> 15
SCHEDULE A
MANAGEMENT GROUP STOCKHOLDERS
<TABLE>
<CAPTION>
<S> <C>
Dated: August 11, 1997 /s/ Peter van Voorst Vader
----------------------------------
Peter van Voorst Vader
Dated: August 11, 1997 /s/ Rogerio Carlos Lamim Braz
-----------------------------
Rogerio Carlos Lamim Braz
Dated: August 11, 1997 /s/ Marcos Bastos Rocha
-----------------------
Marcos Bastos Rocha
Dated: August 11, 1997 /s/ Omar Carneiro da Cunha
--------------------------
Omar Carneiro da Cunha
Dated: August 11, 1997 /s/ Ian S. Barnett
------------------
Ian S. Barnett
Dated: August 11, 1997 /s/ Lawrence Burstein
---------------------
Lawrence Burstein
Dated: August 11, 1997 /s/ Jose Ricardo Bosquet Bomeny
-------------------------------
Jose Ricardo Bosquet Bomeny
Dated: August 11, 1997 /s/ Peter van Voorst Vader
--------------------------
Shampi Investment A.E.C.
Dated: August 11, 1997 /s/ Lawrence Burstein
---------------------
Trinity Capital
Dated: August 11, 1997 /s/ John Cattier
----------------
John Cattier
Dated: August 11, 1997 /s/ Barry Goldin
----------------
Barry Goldin
Dated: August 11, 1997 /s/ Barry W. Ridings
--------------------
Barry W. Ridings
Dated: August 11, 1997 /s/ BigBurger Ltda.
-------------------
BigBurger Ltda.
Dated: August 11, 1997 /s/ Seaview Venture Group
-------------------------
Seaview Venture Group
</TABLE>
-15-
<PAGE> 16
SCHEDULE B
MANAGEMENT GROUP STOCKHOLDERS
OWNERSHIP OF SHARES, WARRANTS AND OPTIONS
<TABLE>
<CAPTION>
NAME SHARES WARRANTS OPTIONS
---- ------ -------- -------
<S> <C> <C> <C>
Peter van Voorst Vader 23,000 185,000
Rogerio Carlos Lamim Braz 5,000 120,000
Marcos Bastos Rocha 35,000
Omar Carneiro da Cunha 20,000 50,000
Ian S. Barnett 11,111 35,000
Lawrence Burstein 225,556 100,000 35,000
Jose Ricardo Bosquet Bomeny 35,000
Shampi Investment A.E.C. 453,450
Trinity Capital 11,111
John Cattier 27,668 39,000
Barry Goldin 187,875 100,000
Barry W. Ridings 13,779 39,000
BigBurger Ltda 1,520,000
Seaview Venture Group 453,450
</TABLE>
-16-
<PAGE> 1
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of this 11th day of August, 1997, between AIG Latin
America Equity Partners, Ltd., a Bermuda company (the "Fund") and Brazil Fast
Food Corp. (the "Company"). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Stock Purchase
Agreement, dated as of the date hereof, between the Fund and the Company (the
"Stock Purchase Agreement").
WHEREAS, the Fund and the Company are entering into the Stock
Purchase Agreement dated the date hereof; and
WHEREAS, pursuant to the Stock Purchase Agreement, the Fund
has agreed to purchase and the Company has agreed to sell 1,500,000 shares of
common stock, $0.0001 par value per share of the Company (the "Common Stock");
and
WHEREAS, pursuant to the Stock Purchase Agreement, the Company
has agreed to issue to the Fund five-year warrants to purchase 250,000 shares of
Common Stock (the "Warrants") at an exercise price of $4.00 per share, subject
to anti-dilution and other adjustments pursuant to the provisions hereof.
NOW, THEREFORE, in consideration of the Fund executing and
delivering the Stock Purchase Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Fund hereby agree as follows:
SECTION 1. Warrants and Issuance of Warrant Certificates The Fund is entitled to
subscribe for and purchase from the Company, at any time or from time to time
subsequent to August _____, 1997 and prior to 5:00 p.m. on August _____, 2002,
New York time (the "Exercise Period") initially an aggregate of 250,000 shares
of fully paid, validly issued and nonassessable shares of Common Stock, at a
purchase price of $4.00 per share, subject to adjustment as provided herein (the
"Exercise Price").
(a) Each Warrant shall initially entitle the person in
whose name such Warrant is registered on the books of
the Company (the "Registered Holder") to purchase at
the Exercise Price therefor, one share of Common
Stock upon
<PAGE> 2
the exercise thereof, subject to modification and
adjustment as hereinafter provided.
(b) Upon execution of this Agreement, one Warrant
Certificate (substantially in form attached hereto as
Exhibit A) representing 250,000 Warrants to purchase
initially up to an aggregate of 250,000 shares of
Common Stock (subject to modification and adjustment
as hereinafter provided) shall be executed by the
Company and delivered to the Fund.
(c) From time to time, during the Exercise Period, as the
case may be, the Company shall countersign and
deliver Warrant Certificates in required
denominations of one or whole number multiples
thereof to the person entitled thereto in connection
with any transfer or exchange permitted under this
Agreement and the Stockholders' Agreement, dated as
of the date hereof, between the Fund, the Company and
the persons named in Schedule A thereto (the
"Stockholders' Agreement"). Except as provided in
Section 7 hereof, no Warrant Certificates shall be
issued except (i) Warrant Certificates initially
issued pursuant to Section 1(b) hereof, (ii) Warrant
Certificates issued upon any transfer or exchange of
Warrants, and (iii) Warrant Certificates issued to
reflect any adjustment or change in the Exercise
Price and the number of shares of Common Stock
purchasable upon exercise of the Warrants therefor
made pursuant to provisions of this Agreement.
SECTION 2. Form and Execution of Warrant
(a) The Warrant Certificates shall be substantially in
the form annexed hereto as Exhibit A (the provisions
of which are hereby incorporated herein) and may have
such letters, numbers or other marks of
identification or designation and such legends,
summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with
any law or with any rule or regulation made pursuant
thereto or to conform to usage. The Warrant
Certificates shall be dated the date of issuance
thereof (whether upon initial issuance, transfer,
exchange or in lieu of mutilated, lost, stolen or
destroyed Warrant Certificates).
(b) Warrant Certificates shall be executed on behalf of
the Company by its Chairman of the Board, President
or any Vice President and by its Treasurer or an
Assistant Treasurer or its Secretary or an Assistant
2
<PAGE> 3
Secretary, by manual signatures or by facsimile
signatures printed thereon, and shall have imprinted
thereon a manual or a facsimile of the Company's
seal.
SECTION 3. Election to Exercise The Warrants may be exercised in whole or in
part at any time during the Exercise Period by delivery of the Election to
Exercise attached hereto as Exhibit B duly executed (and, if this Warrant is
being exercised in whole, by the surrender of the Warrant Certificate
representing such Warrant) to the Company at its office at Praia do Flamenco,
200-22 Andar, CEP 22210-030, Rio de Janeiro, Brazil, Attention: President, or
such other place as may be designated in writing by the Company, together with a
certified or bank cashier's check payable to the order of the Company in an
amount equal to the Exercise Price multiplied by the number of shares of Common
Stock covered by such exercise.
SECTION 4. Exercise Upon exercise of the Warrants in whole or in part, the
Registered Holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or certificates representing
such shares of Common Stock shall not then have been physically delivered to the
Registered Holder. As soon as practicable after each such exercise of the
Warrants, but not later than five days from the date of such exercise, the
Company shall issue and deliver to the Registered Holder a certificate or
certificates for the shares of Common Stock issuable upon such exercise,
registered in the name of the Registered Holder. The Company shall not be
required to issue stock certificates representing fractions of shares, but
shall, in respect of any final fraction of a share, make a payment in cash in an
amount equal to the same fraction (calculated to the nearest 1/100th of a share)
of the closing sale price per share of the Common Stock on the principal public
trading market on which the Common Stock is then traded, or, if the Common Stock
is not then traded on any public trading market, in an amount determined in good
faith by the Company's Board of Directors.
SECTION 5. Reservation of Shares; Taxes
(a) The Company covenants that it will at all times
reserve and keep available out of its authorized
Common Stock, solely for the purpose of issue upon
exercise of the Warrants, such number of shares of
Common Stock as shall then be issuable upon exercise
of the Warrants. The Company covenants that all
shares of Common Stock which shall be issuable upon
exercise of the Warrants shall, at the time of
delivery thereof and upon payment of the Exercise
Price with respect thereto, be duly and validly
issued and fully paid and non-assessable and free
from all preemptive or similar rights, taxes, liens,
charges and Encumbrances, and that upon issuance such
shares shall be listed on each securities exchange,
if any, on which the other shares of outstanding
Common Stock of the Company are then listed.
3
<PAGE> 4
(b) The Company shall pay all documentary, stamp or
similar taxes and other governmental charges that may
be imposed with respect to the issuance of Warrants,
or the issuance or delivery of any shares of Common
Stock upon the exercise of the warrants.
SECTION 6. Exchange and Registration of Transfer
(a) The Warrants are transferable, subject to the
provisions of the Stockholders' Agreement.
(b) Warrant Certificates may be exchanged for other
Warrant Certificates representing an equal aggregate
number of Warrants, or, subject to the limitations
set forth in Section 6(h) hereof, may be transferred
in whole or in part. Warrant Certificates to be so
exchanged shall be surrendered to the Company at its
office at Praia do Flamenco, 200-22 Andar, CEP
22210-030, Rio de Janeiro, Brazil, Attention:
President, and the Company shall execute, issue and
deliver in exchange therefor to the Registered Holder
a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
(c) The Company shall keep, at such office, books in
which, subject to such reasonable regulations as it
may prescribe, it shall register Warrant
Certificates, and the transfer thereof. Upon due
presentment for registration of transfer of any
Warrant Certificate at such office, the Company shall
execute and shall issue and deliver to the Registered
Holder a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
(d) With respect to any Warrant Certificates presented
for registration or transfer, or for exchange or
exercise, the subscription or assignment form
accompanying the Warrant Certificate(s), as the case
may be, attached thereto shall be duly endorsed or be
accompanied by a written instrument or instrument of
transfer or subscription, in form satisfactory to the
Company, duly executed by the Registered Holder
thereof or his attorney duly authorized in writing.
(e) No service charge shall be made for any exchange of,
registration or transfer of Warrant Certificates.
4
<PAGE> 5
(f) All Warrant Certificates surrendered for exercise or
for exchange shall be promptly canceled by the
Company.
(g) Prior to due presentment for registration or transfer
thereof, the Company may deem and treat the
Registered Holder of any Warrant Certificate as the
absolute owner of each Warrant represented thereby
(notwithstanding any notations of ownership or
writing thereon made by anyone other than the
Company) for all purposes and shall not be affected
by any notice to the contrary.
(h) The Warrants represented by the Warrant Certificates
may not be exercised nor may any interest in the
Warrants represented by the Warrant Certificates be
sold, assigned, pledged, hypothecated, encumbered or
in any other manner transferred or disposed of, in
whole or in part, except in compliance with
applicable United States federal and state securities
or Blue Sky laws and the terms and conditions hereof.
Each Warrant Certificate shall bear the legend set
forth in Section 11 hereof. Each share of Common
Stock issued upon exercise of the Warrants shall bear
a legend substantially in the form set forth in
Section 11 hereof. Any Warrant Certificate issued at
any time in exchange or substitution for any Warrant
Certificate bearing such legend shall also bear such
legend unless, in the opinion of legal counsel for
the Company, the Warrants represented thereby need no
longer be subject to the restriction contained
herein. The provisions of this Section 6(h) shall be
binding upon all subsequent Registered Holders of the
Warrant Certificates.
SECTION 7. Loss or Mutilation. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate and (in the case of loss, theft or destruction) of indemnity
satisfactory to it, and (in case of mutilation) upon surrender and cancellation
thereof, the Company shall execute and deliver in lieu thereof a new Warrant
Certificate to the Registered Holder thereof representing an equal aggregate
number of Warrants.
SECTION 8. Adjustment of Purchase Price
(a) Adjustments to Exercise Price for Diluting Issues.
(i) Special definitions. For purposes of this
Subsection 8(a), the following definitions shall
apply:
(A) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, excluding (x) rights or options granted to employees, directors or
consultants of the Company pursuant to the currently existing stock option plan
(the "Stock Option Plan") and (y) outstanding warrants evidencing the
5
<PAGE> 6
right of the holders thereof to purchase an aggregate of 5,379,250 shares of
Common Stock, as more fully described in Schedule 4.3 of the Stock Purchase
Agreement (provided that, for purposes of this Subsection 8(a)(i)(A), all shares
of Common Stock issuable upon exercise of options granted or available for grant
under the Stock Option Plan and the warrants described in this subparagraph (A),
shall be deemed to be outstanding).
(B) "Original Issue Date" shall mean the date on which the
Warrants are first issued.
(C) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
(D) "Additional Shares of Common Stock" shall mean all shares
of Common Stock issued (or, pursuant to Subsection 8(a)(iii) below, deemed to be
issued) by the Company after the Original Issue Date, other than shares of
Common Stock issued or issuable upon the exercise of options excluded from the
definition of "Option" in Subsection 8(a)(i)(A).
(E) "Rights to Acquire Common Stock" (or "Rights") shall mean
all rights issued by the Company to acquire common stock whether by exercise of
a warrant, option or similar call or conversion of any existing instruments, in
either case for consideration fixed, in amount or by formula, as of the date of
issuance.
(ii) No Adjustment of Exercise Price. No adjustment in the number of
shares of Common Stock into which the warrants are convertible shall be made, by
adjustment in the applicable Exercise Price thereof: (a) unless the
consideration per share (determined pursuant to Subsection 8(a)(v) below) for an
Additional Share of Common Stock issued or deemed to be issued by the Company is
less than the applicable Exercise Price in effect on the date of, and
immediately prior to, the issue of such additional shares, or (b) if prior to
such issuance, the Company receives written notice from the Registered Holders
of at least sixty-six and two-thirds percent (66-2/3%) of the then outstanding
Warrants agreeing that no such adjustment shall be made as the result of the
issuance of Additional Shares of Common Stock.
(iii) Issue of Securities Deemed Issue of Additional Shares of Common
Stock. If the Company at any time or from time to time after the Original Issue
Date shall issue any Options or Convertible Securities or other Rights to
Acquire Common Stock, then the maximum number of shares of Common Stock (as set
forth in the instrument relating thereto without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options, Rights or, in the case of Convertible Securities, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue, provided
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Subsection 8(a) (v)
hereof) of such Additional Shares of Common Stock would be less than the
applicable Exercise Price in effect on the date of and immediately prior to such
issue, or such record date, as the case may be, and provided further that in any
such case in which Additional Shares of Common Stock are deemed to be issued:
6
<PAGE> 7
(A) No further adjustment in the Exercise Price shall be made
upon the subsequent issue of shares of Common Stock upon the exercise of such
Rights or conversion or exchange of such Convertible Securities;
(B) Upon the expiration or termination of any unexercised
Option or Right, the Exercise Price shall not be readjusted, but the Additional
Shares of Common Stock deemed issued as the result of the original issue of such
Option or Right shall not be deemed issued for the purposes of any subsequent
adjustment of the Exercise Price; and
(C) In the event of any change in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange of any Option,
Right or Convertible Security, including, but not limited to, a change resulting
from the anti-dilution provisions thereof, the Exercise Price then in effect
shall forthwith be readjusted to such Exercise Price as would have been obtained
had the adjustment that was made upon the issuance of such Option, Right or
Convertible Security not exercised or converted prior to such change been made
upon the basis of such change, but no further adjustment shall be made for the
actual issuance of Common Stock upon the exercise or conversion of any such
Option, Right or Convertible Security.
(iv) Adjustment of Exercise Price upon Issuance of Additional Shares
of Common Stock. If the Company shall at any time after the Original Issue Date
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Subsection 8(a)(iii), but excluding
shares issued as a dividend or distribution as provided in Subsection 8(c) or
upon a stock split or combination as provided in Subsection 8(b)), without
consideration or for a consideration per share less than the applicable
Exercise Price in effect on the date of and immediately prior to such issue,
then and in such event, such Exercise Price shall be reduced, concurrently with
such issue to a price (calculated to the nearest cent) determined by
multiplying such Exercise Price by a fraction, (a) the numerator of which shall
be (1) the number of shares of Common Stock outstanding immediately prior to
such issue plus (2) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of Additional Shares
of Common Stock so issued would purchase at such Exercise Price; and (b) the
denominator of which shall be (1) the number of shares of Common Stock
outstanding immediately prior to such issue plus (2) the number of such
Additional Shares of Common Stock so issued.
Notwithstanding the foregoing, the applicable Exercise Price
shall not be reduced if the amount of such reduction would be an amount less
than $.01, but any such amount shall be carried forward and reduction with
respect thereto made at the time of and together with any subsequent reduction
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate $.01 or more.
(v) Determination of Consideration. For purposes of this
Subsection 8(a), the consideration received by the Company for the issue of any
Additional Shares of Common Stock shall be computed as follows:
7
<PAGE> 8
(A) Cash and Property: Such consideration shall:
(1.) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the
Company, excluding amounts paid or payable for
accrued interest or accrued dividends;
(2.) insofar as it consists of property other than
cash, be computed at the fair market value
thereof at the time of such issue, as
determined in good faith by the Board of
Directors; and
(3.) in the event Additional Shares of Common Stock
are issued together with other shares or
securities or other assets of the Company for
consideration which covers both, be the
proportion of such consideration so received,
computed as provided in clauses (1.) and (2.)
above, as determined in good faith by the
Board of Directors.
(B) Options, Rights and Convertible Securities. The
consideration per share received by the Company for Additional Shares of Common
Stock deemed to have been issued pursuant to Subsection 8(a)(iii), relating to
Options, Rights and Convertible Securities, shall be determined by dividing
- the total amount, if any, received or receivable by
the Company as consideration for the issue of such
Options, Rights or Convertible Securities, plus the
minimum aggregate amount of additional consideration
(as set forth in the instruments relating thereto,
without regard to any provision contained therein for
a subsequent adjustment of such consideration)
payable to the Company upon the exercise of such
Options, Rights or the conversion or exchange of such
Convertible Securities, by
- the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without
regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon
the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(b) Adjustment for Stock Splits and Combinations. If the Company shall at any
time or from time to time after the Original Issue Date effect a subdivision of
the outstanding Common Stock, the Exercise Price then in effect immediately
before that subdivision shall be proportionately decreased. If the Company shall
at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock, the Exercise Price then in effect
immediately
8
<PAGE> 9
before the combination shall be proportionately increased. Any adjustment under
this paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(c) Adjustment for Certain Dividends and Distributions. In the event the Company
at any time, or from time to time after the Original Issue Date shall make or
issue, a dividend or other distribution payable in Additional Shares of Common
Stock, then and in each event the Exercise Price shall be decreased as of the
time of such issuance, by multiplying the Exercise Price by a fraction:
- the numerator of which shall be the total number of
shares of Common Stock issued and outstanding
immediately prior to the time of such issuance, and
- the denominator of which shall be the total number of
shares of Common Stock issued and outstanding
immediately prior to the time of such issuance plus
the number of shares of Common Stock issuable in
payment of such dividend or distribution.
(d) Adjustments for Other Dividends and Distributions. In the event the Company
at any time or from time to time after the Original Issue Date shall make or
issue a dividend or other distribution payable in securities of the Company
other than shares of Common Stock, then and in each such event provision shall
be made so that the Registered Holders of the Warrants shall receive upon
conversion thereof in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Company that they would
have received had their Warrants been converted into Common Stock on the date of
such event and had thereafter, during the period from the date of such event to
and including the conversion date, retained such securities receivable by them
as aforesaid during such period given application to all adjustments called for
during such period, under this paragraph with respect to the rights of the
Registered Holders of the Warrants.
(e) Adjustment for Merger or Reorganization, etc. in case of any consolidation
or merger of the Company with or into another corporation or the sale of all or
substantially all of the assets of the Company to another corporation,
1. if the surviving entity shall consent in writing to
the following provisions, then each Warrant shall
thereafter be convertible into the kind and amount of
shares of stock or other securities or property to
which a holder of the number of shares of Common
Stock of the Company deliverable upon conversion of
the Warrants would have been entitled upon such
consolidation, merger or sale; and, in such case,
appropriate adjustment (as determined in good faith
by the Board of Directors) shall be made in the
application of the provisions of this Section 8 with
respect to the rights and interest thereafter of the
Registered Holders of the Warrants, to the end that
the provisions of this Section 8 (including
provisions
9
<PAGE> 10
with respect to changes in and other adjustments of
the Exercise Price) shall thereafter be applicable,
as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter
deliverable upon the conversion of the Warrants; or
2. if the surviving corporation shall not so consent, the each
registered Holder of the Warrants, may, after receipt of the
notice specified in subsection (g), elect to convert the
Warrants into shares of Common Stock as provided in Section 4
hereof.
(f) Adjustment for Reclassification, Exchange, or Substitution. If the Common
Stock issuable upon the conversion of the Warrants shall be changed into the
same or a different number of shares of any class or classes of stock, whether
by capital reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend provided for above, or a
reorganization, merger, consolidation, or sale of assets for above), then and in
each such event the Registered Holders of each Warrant shall have the right
thereafter to convert such Warrant into the kind and amount of shares of stock
and other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of Common
Stock into which such Warrants might have been converted immediately prior to
such reorganization, reclassification, or change, all subject to further
adjustment as provided herein.
(g) Notice of Record Date. In the event:
1. that the Company declares a dividend (or any other
distribution) on its Common Stock payable in Common
Stock or other securities of the Company;
2. that the Company subdivides or combines its
outstanding shares of Common Stock;
3. of any reclassification of the Common Stock of the
Company (other than a subdivision or combination of
its outstanding shares of Common Stock or a stock
dividend or stock distribution thereon), or of any
consolidation or merger of the Company into or with
another corporation, or of the sale of all or
substantially all of the assets of the Company; or
4. of the involuntary or voluntary dissolution,
liquidation or winding-up of the Company;
then the Company shall cause to be filed at its principal office, and shall
cause to be mailed to the Registered Holders of the Warrants at their last
addresses as shown on the records of the
10
<PAGE> 11
Company, at least ten days prior to the record date specified in (A) below or
twenty days before the date specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such dividend,
distribution, subdivision or combination are to be determined, or
(B) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, dissolution or winding-up.
(h) In addition to the foregoing, the Exercise Price of the Warrants shall be
subject to an aggregate adjustment of $0.75 per share as follows:
(i) If the Company fails to achieve 85% of projected
EBITDA for the three year period January 1, 1997
through December 31, 1999, as set forth in Schedule A
hereto, the Exercise Price shall be reduced by $0.25
per share; provided, however that if the average per
share price of the Common Stock for the thirty
trading days ending on December 31, 1999 is $6.00 or
higher, the exercise price of the Warrants shall not
be adjusted under this Section h(i).
(ii) If the Company fails to achieve 85% of projected
EBITDA for the one year period January 1, 2000
through December 31, 2000, as set forth in Schedule A
hereto, the Exercise Price shall be reduced by an
additional $0.25 per share; provided, however that if
the average per share price of the Common Stock for
the thirty trading days ending on December 31, 2000
is $7.00 or higher, the exercise price of the
Warrants shall not be adjusted under this Section
h(ii).
(iii) If the Company fails to achieve 85% of projected
EBITDA for the one year period January 1, 2001
through December 31, 2001, as set forth in Schedule A
hereto, the Exercise Price shall be reduced by an
additional $0.25 per share; provided, however that if
the average per share price of the Common Stock for
the thirty trading days ending on December 31, 2001
is $8.00 or higher, the exercise price of the
Warrants shall not be adjusted under this Section
h(iii).
11
<PAGE> 12
SECTION 9. Other Dilutive Events. In case any event shall occur as to which the
provisions of Sections 8 are not strictly applicable but the failure to make any
adjustment would not fairly protect the purchase rights represented by the
Warrants in accordance with the essential intent and principles of such Section,
then, in each such case, the Company shall make a good faith adjustment to the
Exercise Price and to the number of shares of Common Stock into which the
Warrants are exercisable in accordance with the intent of Section 8 hereof and,
upon the written request of the Registered Holder(s), shall appoint a firm of
independent certified public accountants of recognized national standing (which
may be the regular auditors of the Company), which shall give their opinion upon
the adjustment, if any, on a basis consistent with the essential intent and
principles established in Section 8 hereof, necessary to preserve, without
dilution, the purchase rights represented by the Warrants. Upon receipt of such
opinion, the Company shall promptly mail a copy thereof to the Registered
Holder(s) and shall make the adjustments described therein.
SECTION 10. Covenants The Company will not, by amendment to its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Agreement. Without limiting the generality of the foregoing, the Company
(a) will not increase the par value of any shares of
stock receivable upon the exercise of the Warrants
above the amount payable therefor upon such exercise,
(b) will take all such action as may be necessary or
appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of
stock upon the exercise of the Warrants from time to
time outstanding, and
(c) without the prior written consent of the Registered
Holder(s), will not issue any security providing for
anti-dilution protection of such security.
SECTION 11. Legend. The Warrants and the shares of Common Stock issuable upon
exercise of the Warrants have not been registered under the Act as of the date
hereof. Subject to the provisions of Section 12 hereof, if on the date of
exercise of the Warrants, the Common Stock underlying the Warrants shall not
have been registered under the Securities Act, then upon such exercise, in part
or in whole, of the Warrants, certificates representing the shares of Common
Stock underlying the Warrants and any of the other securities issuable upon
exercise of the Warrants shall bear the following legend:
12
<PAGE> 13
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR, UNLESS, IN THE OPINION OF COUNSEL, IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, OR TRANSFER IS EXEMPT FROM
REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH LAWS.
SECTION 12. Registration Rights The Company and the Fund acknowledge and agree
that the Warrants and the shares of Common Stock underlying the Warrants are
subject to a Registration Rights Agreement between the Fund and the Company,
dated as of the date hereof.
SECTION 13. Notices All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or mailed by certified or registered mail, postage prepaid, return receipt
requested, or delivered to a nationally recognized next business day courier for
delivery on the next business day, or by facsimile, with a copy sent as
aforesaid and in any instance addressed as follows:
(i) if to the Fund
AIG Latin America Equity Partners, Ltd.
c/o Latin America Investment Advisors, Inc.
80 Pine Street, 14th Floor
New York, NY 10005
Attn: Alberto Marcel
with a copy to:
Curtis, Mallet-Prevost, Colt & Mosle
101 Park Avenue, 35th Floor
New York, NY 10178
Attn: Lawrence Goodman, Esq.
(ii) if to the Company
Brazil Fast Food Corp.
Praia do Flamenco
200-22: Andar
CEP 22210-030
Rio de Janeiro, Brazil
Attention: Peter van Voorst Vader
13
<PAGE> 14
with a copy to:
Cooperman Levitt Winikoff Lester & Newman, P.C.
800 third Avenue
New York, NY 10022
Attn: Ira Roxland, Esq.
SECTION 14. Modification of Agreement This Agreement may not be modified,
supplemented or altered in any respect except with the consent in writing of the
Registered Holders representing not less than 51% of the Warrants and the
Company; provided, further, that no change in the number or nature of the
securities purchasable upon the exercise of any Warrant, or the Exercise Price
therefor shall be made without the consent in writing of the Registered Holder
of the affected Warrant, other than such changes as are specifically prescribed
by this Agreement as originally executed.
SECTION 15. Binding Effect This Agreement shall be binding upon and shall inure
to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors, and permitted assigns and any transferee of any of
the Warrants or the Common Stock issuable upon exercise thereof.
SECTION 16. Governing Law This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws principles thereof.
SECTION 17. Counterparts This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed an original, but
all of which together shall constitute one and the same instrument.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
BRAZIL FAST FOOD CORP.
By: /s/ P. Van Voorst Vader
--------------------------------------
Name: P. Van Voorst Vader
Title: Chief Executive Officer
AIG LATIN AMERICA EQUITY PARTNERS, LTD.
By: /s/ Alberto Marcel
--------------------------------------
Name: Alberto Marcel
Title: Chief Executive Officer
15
<PAGE> 16
EXHIBIT A
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS,
WHICH, IN THE OPINION OF COUNSEL, IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER, IS AVAILABLE.
NO. _____ VOID AFTER August __, 2002
WARRANT CERTIFICATE TO PURCHASE _____ SHARES OF COMMON STOCK
of
BRAZIL FAST FOOD CORP.
THIS CERTIFIES THAT, FOR VALUE RECEIVED
______________________________ or registered assigns (the "Registered Holder")
are the owners of the number of Common Stock Purchase Warrants (the "Warrants")
specified above. Each Warrant initially entitles the Registered Holder to
purchase, subject to the terms and conditions set forth in this Certificate and
the Warrant Agreement (as hereinafter defined), one fully paid and nonassesable
share of Common Stock, $.0001 par value per share, of Brazil Fast Food Corp., a
Delaware corporation (the "Company"), at any time beginning on August__, 1997,
and prior to the Expiration Date (as hereinafter defined) upon the presentation
and surrender of this Warrant Certificate with the Election to Exercise Form on
the reverse hereof duly executed, at the corporate office of the Company,
accompanied by payment of $4.00, subject to adjustment (the "Exercise Price"),
in lawful money of the United States of America in cash or by check made payable
to the Company.
This Warrant Certificate and each Warrant represented hereby
are issued pursuant to and are subject in all respects to the terms and
conditions set forth in the Warrant Agreement
16
<PAGE> 17
(the "Warrant Agreement"), dated as of August __, 1997, by and between the
Company and the holder thereof.
In the event of certain contingencies provided for in the
Warrant Agreement, the Exercise Price and the number of shares of Common Stock
subject to purchase upon the exercise of each Warrant represented hereby are
subject to modification or adjustment.
Each Warrant represented hereby is exercisable at the option
of the Registered Holder, but no fractional interests will be issued. In the
case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificate or Certificates of like
tenor for the balance of such Warrant.
The term "Expiration Date" shall mean 5:00 p.m. (New York
time) on August __, 2002. If such date shall in the state of New York be a
holiday or a day on which the banks are authorized to close, then the Expiration
Date shall mean 5:00 p.m. (New York time) the next following day which in the
state of New York is not a holiday or a day on which banks are authorized to
close.
This Warrant shall not be exercisable by a Registered Holder
in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender
hereof by the Registered Holder at the corporate office of the Company, for a
new Warrant Certificate or Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment of this Warrant Certificate, for
registration of transfer a new Warrant Certificate representing an equal
aggregate number of Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Warrant Agreement.
Except as provided in the Warrant Agreement, prior to the
exercise of any Warrant represented hereby, the registered Holder shall not be
entitled to any rights of a stockholder of the Company, including, without
limitation, the right to vote or receive any notice of any proceedings of the
Company.
Prior to the due presentment for registration of transfer
hereof, the Company may deem and treat the Registered Holder as the absolute
owner hereof and each Warrant represented hereby (notwithstanding any notations
of ownership or writing hereon made by anyone other than a duly authorized
officer of the Company) for all purposes and shall not be affected by any notice
to the contrary, except as provided in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the state of new York, without giving effect to
conflicts of law.
17
<PAGE> 18
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed as of the date hereof.
Dated: August 11, 1997
BRAZIL FAST FOOD CORP.
/s/ P. Van Voorst Vader
--------------------------------------
Name: P. Van Voorst Vader
Title: Chief Executive Officer
18
<PAGE> 19
EXHIBIT B
TO: Brazil Fast Food Corp.
ELECTION TO EXERCISE
The undersigned hereby exercises its right to subscribe for
and purchase from Brazil Fast Food Corp. ____ fully paid, validly issued and
nonassessable shares of Common Stock covered by the within Warrant and tenders
payment herewith in the amount of $______ in accordance with the terms thereof,
and requests that certificates for such shares be issued in the name of and
delivered to:
------------------------------
------------------------------
------------------------------
Date:
----------------
-------------------------------
By:
----------------------------
Name:
Title:
19
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made
and entered into as of August 11, 1997, between AIG Latin America Equity
Partners, Ltd., a Bermuda company (the "Fund") and Brazil Fast Food Corp., a
Delaware corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Fund and the Company are, simultaneously with
this Agreement, entering into a certain Stock Purchase Agreement (the "Stock
Purchase Agreement") to provide for the purchase by the Fund of 1,500,000 shares
of common stock, par value $0.0001 per share of the Company (the "Common Stock")
and five-year warrants to purchase 250,000 shares of Common Stock (the
"Warrants").
NOW, THEREFORE, in consideration of the respective agreements
herein contained and in order to induce the Fund to enter into the Stock
Purchase Agreement, the parties hereby agree as follows:
1. IMMEDIATE REGISTRATION
(a) The Company agrees that within 45 days of the Closing
Date, it will cause to be registered under the Securities Act of 1933, as
amended (the "Act"), on Form S-3, or any other similar form then in effect, a
"shelf" registration statement (the "Shelf Registration") with respect to all of
the shares of Common Stock then owned by the Fund, including the shares of
Common Stock issuable upon exercise of the Warrants (the "Shares"), and in the
event that the Company no longer qualifies to register the Shares on Form S-3,
the Company shall file, on demand, one or more successive registration
statements on Form S-1. The Company agrees that it will use its best efforts to
cause any registration statement filed pursuant to this Section 1 to become
effective as soon as practicable after Closing. With respect to any registration
statement filed pursuant to this Section 1, if the Fund desires to distribute
the shares in an underwritten offering, the managing underwriter or underwriters
shall be selected by the Fund, subject to the approval by the Company, which
approval shall not be unreasonably withheld or delayed, and the Company agrees
to enter into an underwriting agreement in customary form with such
underwriters.
(b) Notwithstanding the effectiveness of any Registration
Statement filed pursuant to this Section 1, the Fund agrees that it will not
publicly offer the Shares for sale for a period of one year from the Closing
Date, provided that this limitation shall not apply to any sales by the Fund
pursuant to any underwritten offering by the Company or any stockholder of the
Company, other than the Fund or any sale in connection with a tender or exchange
offer, merger or similar transaction.
<PAGE> 2
2. PIGGYBACK REGISTRATION
(a) If at any time or from time to time, the Company shall
determine to register any of its Common Stock, for its own account or for the
account of any of its stockholders, other than a registration relating solely to
employee benefit plans, or a registration relating solely to a Rule 145
transaction under the Act, and to distribute such Common Stock in an
underwritten offering, the Company will:
(i) give to the Fund written notice thereof as soon as
practicable prior to filing the registration statement; and
(ii) include in any such registration and in such underwriting
involved therein, all of the Shares specified in a written
request or requests made by the Fund within fifteen (15) days
after receipt of such written notice from the Company by the
Fund, except as set forth in subsection (b) below.
(b) If the Fund desires to distribute any or all of its shares
of Common Stock through such underwriting, it shall (together with the Company
and the other holders distributing their Common Stock through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. Notwithstanding the
foregoing, if in the written opinion of the managing underwriter for such
offering, the inclusion of all or a portion of the shares requested to be
included in such underwriting will exceed the maximum amount of the Company's
Common Stock which can be sold in such offering (the "Total Common Stock")
without materially adversely affecting the entire offering, then the Company
shall include in such underwriting only that number of shares which the Company
is so advised can be sold in such offering without having such adverse effect.
The shares of Common Stock which shall be excluded from such offering shall be
determined in following manner: (i) first, all shares of Common Stock held by
shareholders that do not have a contractual right to include their shares in
such offering and (ii) second, to the extent additional shares must be excluded,
all shares of Common Stock held by the Company and the shareholders possessing
such right (including the Fund), allocated pro rata among the Company and such
other holders of Common Stock (including the Fund) in accordance with the ratio
that the number or amount of Common Stock that the Company or such shareholders
sought to register bears to the Total Common Stock.
(c) Notwithstanding the provisions of this Section 2, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 2 (irrespective of whether any written request
for inclusion of Shares shall have already been made) to elect not to file any
such proposed registration statement, or to withdraw the same after the filing
but prior to the effective date thereof.
-2-
<PAGE> 3
3. REGISTRATION PROCEDURES
In the case of each registration statement filed, requested to
be filed or intended to be filed by the Company pursuant to this Agreement, the
Company will keep the Fund advised in writing as to the initiation of each
registration and as to the status and completion thereof. At its expense, the
Company will:
(a) keep such registration statement effective:
(i) in the case of the Shelf Registration or the S-1
Registration Statement, until such time as all of such Shares have been disposed
of in accordance with the intended methods of disposition set forth in such
registration statement; and
(ii) in the case of the Piggyback Registration Statement,
until the earlier of (A) 90 days following the effectiveness of such
registration statement and (B) such time as all of such Shares have been
disposed of in accordance with the intended methods of disposition set forth in
such registration statement;
(b) provide appropriate officers (including, if requested, the
Company's Chief Executive Officer and Chief Financial Officer) for such
reasonable periods as are requested by the underwriters to participate in a
"road show" or similar marketing effort being conducted by such underwriter with
respect to an underwriting offering;
(c) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith (including, without limitation, any post-effective amendment or
pricing supplement necessary to include a form of prospectus reasonably
requested by its underwriter) as may be necessary to keep such registration
statement continuously effective and to comply with the registration form used
by the Company or by the instructions applicable to such registration form or by
the Act (and use its best efforts to have such amendments declared effective as
soon as reasonably practicable after such filing);
(d) furnish such number of prospectuses and other documents
related thereto as the Fund may from time to time reasonably request;
(e) use its best efforts to obtain the withdrawal or lifting
of any order suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification of any of the Shares for sale in
any jurisdiction, at the earliest possible moment;
(f) register or qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Fund or its
underwriter reasonably requests, and keep such registration or qualification
effective during the period set forth in Section 3(a) above;
(g) cause the Shares covered by such registrations to be
listed on each securities exchange, including NASDAQ, on which similar
securities issued by the Company are
-3-
<PAGE> 4
then listed or, if no such listing exists, use its best efforts to list the
Shares on one of the New York Stock Exchange, the American Stock Exchange or
NASDAQ;
(h) cause its accountants to issue to the underwriter, if any,
or to the Fund, if there is no underwriter, comfort letters and updates thereof,
including "cold comfort" letters, in customary form and covering matters of the
type customarily covered in such letters with respect to underwritten offerings;
(i) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the Fund or the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Shares;
(j) make available for inspection by the Fund, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by the Fund or any such
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by the Fund, underwriter, attorney, accountant or agent in connection
with such registration statement; provided, however, that the Company may
request that customary confidentiality agreements be entered into prior to the
delivery of any such information to any such underwriter, attorney, accountant
or agent;
(k) if the offering is underwritten, at the request of the
Fund to furnish on the date that the Shares are delivered to the underwriters
for sale pursuant to such registration: (i) an opinion dated such date of
counsel representing the Company for the purposes of such registration,
addressed to the underwriters and to the Fund, stating that such registration
statement has become effective under the Act and that (A) to the best knowledge
of such counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are pending
or contemplated under the Act, (B) the registration statement, the related
prospectus and each amendment or supplement thereof comply as to form in all
material respects with the requirements of the Act, (C) nothing has come to the
attention of such counsel that would lead it to believe that the Registration
Statement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein not misleading and
nothing has come to the attention of such counsel that would lead it to believe
that the Prospectus contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made and (D) to such other
effects as may reasonably be requested by counsel for the underwriters or by the
Fund or its counsel and (ii) a letter dated such date from the independent
public accountants retained by the Company, addressed to the underwriters and
the Fund, stating that they are independent public accountants within the
meaning of the Act and that, in the opinion of such accountants, the financial
statements of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereto, comply as to form in all
material respects with the applicable accounting
-4-
<PAGE> 5
requirements of the Act, and such letter shall additionally cover such other
financial matters (including information as to the period ending no more than
five business days prior to the date of such letter) with respect to such
registration as such underwriters or the Fund may reasonably request;
(l) notify the Fund, at any time a prospectus covered by such
registration statement is required to be delivered under the Act, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and
(m) take such other actions as shall be reasonably requested
by the Fund.
4. PROSPECTUSES, DOCUMENTS, ETC.
Prior to the filing of a registration statement pursuant to
Section 1 hereof or upon making a request for piggyback registration pursuant to
Section 2 hereof, the Fund shall furnish to the Company such information
regarding the Fund's holdings and the proposed manner of distribution thereof as
shall be reasonably required in connection with any registration, qualification
or compliance referred to in such Sections, and shall otherwise reasonably
cooperate with the Company in the preparation and filing of any registration
statement, amendment or supplement required thereunder.
5. EXPENSES
With respect to the filing of a registration statement
pursuant to Section 1 or 2 hereof, the Fund shall pay for (i) all underwriters'
discounts and commissions applicable to the sale of the Shares and (ii) the fees
of its legal counsel. All other fees and expenses incurred in connection with
such a registration shall be borne by the Company, including, but not limited
to, (i) all expenses (including filing fees) incurred in connection with
qualifying under state securities or Blue Sky laws, (ii) all other filing fees,
including SEC and NASD filing fees, (iii) the fees of its legal counsel, (iv)
audit and other accounting fees and expenses, and (v) printing costs (together
the "Registration Costs").
6. INDEMNIFICATION AND CONTRIBUTION
(a) In connection with any registration statement, the Company
shall indemnify and hold harmless the Fund, each underwriter who participates in
an offering of the Shares, each Person, if any, who controls any of such parties
within the meaning of Section 15 of the Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and each of their
respective directors, officers, employees and agents, as follows:
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(i) from and against any and all loss, liability, claim,
damage and expense whatsoever as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement (or any amendment thereto), covering Shares, including all documents
incorporated therein by reference, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any prospectus (or any
amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by any
court or government agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, if such settlement is effected with the prior
written consent of the Company; and
(iii) from and against any and all expenses whatsoever, as
incurred (including reasonable fees and disbursement of counsel chosen by the
Fund, or any underwriter), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
court or governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any such expense is not paid
under subparagraph (i) or (ii) of this Section 6(a); provided, however, that (i)
this indemnity does not apply to any loss, liability, claim, damage or expense
to the extent that it shall be determined by a court in a judgment not subject
to appeal or final review that such loss, liability, claim, damage or expense
resulted from an untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written information
furnished in writing to the Company by the Fund or any underwriter, as the case
may be, expressly for use in a registration statement (or any amendment thereto)
or any prospectus (or any amendment or supplement thereto) and (ii) the Company
shall not be liable to the Fund or any underwriter, as the case may be, with
respect to any untrue statement or alleged untrue statement or omission or
alleged omission in any preliminary prospectus to the extent that any such loss,
liability, claim, damage or expense of the Fund or any underwriter, as the case
may be, results from the fact that the Fund or any underwriter, as the case may
be, sold Common Stock to a person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
as then amended or supplemented if the Company had previously furnished copies
thereof to the Fund or underwriter, as the case may be, and the loss, liability,
claim, damage or expense of the Fund or underwriter, as the case may be, results
from an untrue statement or omission of a material fact contained in the
preliminary prospectus which was corrected in the final prospectus.
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<PAGE> 7
(b) The Fund agrees, severally and not jointly, to indemnify
and hold harmless the Company and any underwriter and each of their respective
directors, officers (including each officer of the company who signed the
registration statement), employees and agents and each Person, if any, who
controls the Company or any underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all loss,
liability, claim, damage and expense whatsoever described in the indemnity
contained in Section 6 (a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in a
registration statement (or any amendment thereto) or any prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by the Fund with respect to the Fund
expressly for use in such registration statement (or any amendment thereto);
provided however, that the Fund shall not be liable for any amount hereunder in
excess of the amount of net proceeds received by the Fund from the sale of
Shares.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder enclosing a copy of all papers properly served
on such indemnified party, but failure to so notify an indemnifying party shall
not relieve such indemnifying party from any liability which it may have under
this Section 6, except to the extent that it is materially prejudiced by such
failure. In the event that an indemnifying party so elects within a reasonable
time after receipt of such notice, an indemnifying party, severally or jointly
with any other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and reasonably acceptable to
the indemnified parties defendant in such action, provided, however, that if (i)
representation of such indemnified party by the same counsel would present a
conflict of interest or (ii) the actual or potential party and the indemnifying
party and any such indemnified party reasonably determines that there may be
legal defenses available to such indemnified party which are different from or
in addition to those available to such indemnifying party, then in the case of
clauses (i) and (ii) of this Section 6 (c) such indemnifying party and counsel
for each indemnifying party or parties shall not be entitled to assume such
defense. If an indemnifying party is not entitled to assume the defense of such
action as a result of the proviso to the preceding sentence, counsel for such
indemnifying party and counsel for each indemnified party or parties shall be
entitled to conduct the defense of such indemnified party or parties. If an
indemnifying party assumes the defense of such action, in accordance with and as
permitted by the provisions of this paragraph, such indemnifying parties shall
not be liable for any fees and expenses of counsel for the indemnified parties
incurred thereafter in connection with such action. In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to local counsel), separate from its own counsel, for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this
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<PAGE> 8
Section 6 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional written release in form and substance satisfactory to the
indemnified parties of each indemnified party from all liability arising out of
such litigation, investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) Notwithstanding the last sentence of Section 6 (c), if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of counsel
pursuant to Section 6 (a) (iii) above, such indemnifying party agrees that it
shall be liable for any settlement effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement; provided that an indemnifying party shall not be
liable for any such settlement effected without its consent if such indemnifying
party (1) reimburses such indemnified party in accordance with such request to
the extent it considers reasonable and (2) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 6 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company and the Fund shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnify agreement incurred by the Company and
the Fund, as incurred; provided that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the 1933 Act) shall
be entitled to contribution from any person that was not guilty of such
fraudulent misrepresentation. As between the Company and the Fund, such parties
shall contribute to such aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement in such
proportion as shall be appropriate to reflect the relative fault of the Company,
on the one hand, and the Fund, on the other hand, with respect to the statements
or omissions which resulted in such loss, liability, claim, damage or expenses,
or action in respect thereof; as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Fund, on the other hand, 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 Company, on the one hand, or by or on behalf of the Fund, on the
other, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Fund of the Shares agree that it would not be just and equitable if
contribution pursuant to this Section 6 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the relevant equitable considerations. For purposes of this Section 6, each
affiliate of the
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<PAGE> 9
Fund, and each director, officer, employee, agent and Person, if any, who
controls the Fund or such affiliate within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
the Fund, and each director or officer of the Company who signed the
registration statement, and each Person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall
have the same rights to contribution as the Company.
(f) For purposes of this Section 6 the terms "control",
"controlling person" and "underwriter" have the meanings which they have in and
under the Act.
(g) The indemnification provided by this Section 6 shall be a
continuing right to indemnification and shall survive the registration and sale
of any securities by any Person entitled to indemnification hereunder.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Fund as follows:
(a) The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other agency of
government, the Articles of Organization or Bylaws of the Company or any
provision of any indenture, agreement or other instrument to which it or its
subsidiaries or any of their respective properties or assets is bound, conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument or
result in the creation or imposition of any lien, charge or Encumbrance of any
nature whatsoever upon any of the properties or assets of the Company or
subsidiaries.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
8. NEGATIVE COVENANT.
The Company may not, without the prior written consent of the
Fund, grant any rights to any Persons to register shares of capital stock or
securities of the Company, unless and until all of the Shares have been
registered pursuant to an effective registration statement in accordance with
the provisions hereof.
9. MISCELLANEOUS
(a) For so long as the Company is subject to the reporting
requirements of Section 13 or 15 of the Exchange Act and any Shares remain
outstanding, the Company covenants that it will file the reports required to be
filed by it under the Act and Section 13(a) or 14(d) of the Exchange Act and the
rules and regulations adopted by the SEC thereunder, that if it
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<PAGE> 10
ceases to be so required to file such reports, it will upon the request of the
Fund (a) make publicly available such information as is necessary to permit
sales pursuant to Rule 144 under the Act, (b) deliver such information to a
prospective purchaser as is necessary to permit sales pursuant to Rule 144A
under the Act and (c) take such further action, if any, that is reasonable in
the circumstances, in each case, to the extent required from time to time to
enable the Fund to sell its Shares without registration under the Act within the
limitation of the exemptions provided by (i) Rule 144 under the Act, as such
rule may be amended from time to time, (ii) Rule 144A under the Act, as such
rule may be amended from time to time, or (iii) any similar rules or regulations
hereafter adopted by the SEC. Upon the reasonable request of the Fund, the
Company will deliver to the Fund a written statement as to whether it has
complied with such requirements.
(b) The Fund and the Company acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any State thereof having jurisdiction, in addition
to any other remedy to which any of them may be entitled by law or equity.
(c) All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be validly given, made or served, if in writing and delivered or
mailed as provided in the Stock Purchase Agreement.
(d) This Agreement, the Stock Purchase Agreement, the
Stockholders' Agreement and the Warrant Agreement contain the entire
understanding of the parties with respect to the transactions contemplated
hereby and thereby and this Agreement may be amended only by an agreement in
writing executed by the parties hereto.
(e) For the convenience of the parties, any number of
counterparts of this Agreement may be executed by the parties hereto and each
such executed counterpart shall be, and shall be deemed to be, an original
instrument.
(f) Descriptive headings are for convenience only and shall
not control or affect the meaning or construction of any provisions of this
Agreement.
(g) This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the Fund, the Company and
any transferees of the Shares.
(h) If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision
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<PAGE> 11
of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein.
(i) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed therein.
10. DEFINITIONS
Each capitalized term used and not otherwise defined herein
shall have the meaning assigned to it by the Stock Purchase Agreement.
IN WITNESS WHEREOF, the Fund and the Company have caused this
Agreement to be duly executed by their respective officers, each of whom is duly
authorized, all as of the day and year first above written.
BRAZIL FAST FOOD CORP.
By:/s/ P. Van Voorst Vader
-------------------------------
Name: P. Van Voorst Vader
Title: Chief Executive Officer
AIG LATIN AMERICA EQUITY PARTNERS, LTD
By:/s/ Alberto Marcel
-------------------------------
Name: Alberto Marcel
Title: Chief Executive Officer
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