Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BOSTON CHICKEN, INC.,
BCI ACQUISITION SUB, L.L.C.
and
BC EQUITY FUNDING, L.L.C.
MARKET PARTNERS, L.L.C.
Dated as of March 16, 1998
AGREEMENT AND PLAN OF MERGER, dated as of March 16, 1998 (this
"Agreement"), among BOSTON CHICKEN, INC., a Delaware corporation ("BCI" or the
"Company"), BCI Acquisition Sub, L.L.C., a Delaware limited liability company
and a wholly owned subsidiary of BCI ("BCI Sub"), and BC Equity Funding, L.L.C.
("BCEF") and Market Partners, L.L.C. ("Market Partners"), each a Delaware
limited liability company.
WHEREAS, the Board of Directors of BCI has determined that it is in
the best interests of its stockholders, and the respective Managers of each of
BCI Sub, BCEF and Market Partners have each approved a transaction whereby BCI
acquires BCEF and Market Partners upon the terms and subject to the conditions
set forth herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that BCEF
and Market Partners merge with and into BCI Sub (the "Merger"), whereby each
issued and outstanding limited liability company interest of each of BCEF (the
"BCEF LLC Interests") and Market Partners (the "Market Partners LLC Interests",
and, together with the BCEF LLC Interests, the "LLC Interests") will be
converted into the right to receive the Merger Consideration (as defined in
Sections 1.06(a) and 1.06(b)); and
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of BCI and BCI as the Manager of BCI Sub, and the respective Managers
of each of BCEF and Market Partners, have each approved the Merger in accordance
with, in the case of BCI, its governing documents and the Delaware General
Corporation Law (the "DGCL"), and, in the case of BCI Sub, BCEF and Market
Partners, the terms of their respective limited liability company agreements and
the Delaware Limited Liability Company Act (the "DLLCA") upon the terms and
subject to the conditions set forth herein; and
WHEREAS, as partial consideration for the merger consideration
provided for herein and for the registration rights set forth in the
Registration Rights Agreement (as hereinafter defined), the holders of LLC
Interests are providing the release, representations and agreements contained in
the Letter of Transmittal (as hereinafter defined); and
WHEREAS, BCI, BCI Sub, BCEF and Market Partners desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, BCI, BCI Sub, BCEF and Market Partners hereby agree as follows:
ARTICLE I
THE MERGER
----------
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in Article Five, and in accordance with the DLLCA, at the
Effective Time (as hereinafter defined), each of BCEF and Market Partners shall
be merged with and into BCI Sub. As a result
of the Merger, the separate corporate existence of BCEF and Market Partners
shall cease and BCI Sub shall continue as the surviving limited liability
company of the Merger (the "Surviving Corporation") and shall succeed to all the
rights, privileges, powers and franchises and assume all the restrictions,
disabilities, duties and obligations of each of BCEF and Market Partners in
accordance with the DLLCA.
SECTION 1.02. Effective Time; Closing. Unless this Agreement shall
have been terminated and the transactions herein contemplated shall have been
abandoned pursuant to Article Six, as promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
Five, the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger (the "Certificate of Merger") in the Office of the
Secretary of State of the State of Delaware, in such form as is required by, and
executed in accordance with, the relevant provisions of the DLLCA. The Merger
shall become effective upon such filing or at such time thereafter as is
provided in the Certificate of Merger (the "Effective Time"). Prior to such
filing, a closing (the "Closing") shall be held at the offices of Shearman &
Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, or such other place
as the parties shall agree, for the purpose of confirming the satisfaction or
waiver, as the case may be, of the conditions set forth in Article Five. The
date on which the Closing occurs shall be the "Closing Date."
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
DLLCA.
SECTION 1.04. Limited Liability Company Agreement. Unless otherwise
determined by BCI prior to the Effective Time, at the Effective Time the limited
liability company agreement of BCI Sub, as in effect immediately prior to the
Effective Time, shall be the limited liability company agreement of the
Surviving Corporation until thereafter amended as provided by the DLLCA.
SECTION 1.05. Manager. The Manager of BCI Sub immediately prior to
the Effective Time shall be the Manager of the Surviving Corporation immediately
thereafter, to hold office in accordance with the limited liability company
agreement of the Surviving Corporation until a successor is duly elected or
appointed.
SECTION 1.06. Conversion of Securities; Cash Consideration. At the
Effective Time, by virtue of the Merger and without any action on the part of
BCEF, Market Partners or BCI Sub or the holders of any of the following
securities:
(a) Each BCEF LLC Interest issued and outstanding immediately prior to
the Effective Time shall be cancelled and shall be converted automatically
into the right to receive (i) 20,076.667 fully paid and nonassessable
shares of 10% Series A Exchangeable Preferred Stock of BCI (the "BCI
Preferred Stock"), with the rights and privileges as set forth in the form
of Certificate of Designations attached as Exhibit A hereto (the
"Certificate of Designations"), (ii) 25,900 shares of common stock, par
value $.01 per share, of BCI, with the rights and privileges as set forth
in BCI's Certificate of Incorporation (the "BCI Common Stock"), and (iii)
subject to adjustment of Schedule 3.10 as provided in Section 3.10 hereof,
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with respect to BCEF LLC Interests held immediately prior to the Effective
Time by holders of BCEF LLC Interests who are not BCI Insiders (as defined
to include those persons or entities on Schedule 3.10 attached hereto as
furnished by the Company on or before the Closing Date), $81,484.93 in cash
(the 20,076.667 shares of BCI Preferred Stock, the 25,900 shares of BCI
Common Stock and the $81,484.93 in cash, if applicable, are collectively
referred to herein, per each BCEF LLC Interest, as the "BCEF Merger
Consideration"), upon surrender of such BCEF LLC Interest and delivery of
the Letter of Transmittal as provided in Section 1.07;
(b) Each Market Partners LLC Interest issued and outstanding
immediately prior to the Effective Time shall be cancelled and shall be
converted automatically into the right to receive (i) 43,509.804 fully paid
and nonassessable shares of BCI Preferred Stock, with the rights and
privileges as set forth in the form of Certificate of Designations, (ii)
63,594.771 shares of BCI Common Stock, and (iii) subject to adjustment of
Schedule 3.10 as provided in Section 3.10 hereof, with respect to Market
Partners LLC Interests held immediately prior to the Effective Time by
holders of Market Partners LLC Interests who are not BCI Insiders,
$204,788.21 in cash (the 43,509.804 shares of BCI Preferred Stock, the
63,594.771 shares of BCI Common Stock and the $204,788.21 in cash, if
applicable, are collectively referred to herein, per each Market Partners
LLC Interest, as the "Market Partners Merger Consideration", and, together
with the BCEF Merger Consideration the "Merger Consideration"), upon
surrender of such Market Partners LLC Interest and delivery of the Letter
of Transmittal as provided in Section 1.07;
(c) As of the Effective Time, all LLC Interests shall no longer be
outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of LLC Interests shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration, without interest, to be issued in partial consideration for
the LLC Interest held by such holder, upon surrender of such LLC Interest
and delivery of the Letter of Transmittal to the Company as provided in
Section 1.07;
(d) Each limited liability company interest of BCI Sub issued and
outstanding immediately prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and nonassessable limited
liability company interest of the Surviving Corporation; and
(e) To the extent the aggregate number of shares of BCI Common Stock
to be received by any holder of LLC Interests pursuant to this Section 1.06
would result in such holder receiving a fractional share of such BCI Common
Stock, such fractional shares shall be rounded up to one full share of BCI
Common Stock, which shall be deemed to constitute a part of the Merger
Consideration.
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SECTION 1.07. Closing. At or following the Closing: (a) BCI shall
deliver to each holder of LLC Interests who has previously delivered to the
Company an executed Letter of Transmittal and such other documentation required
by Section 1.07(b) herein (i) certificates representing the BCI Preferred Stock
and BCI Common Stock constituting the non-cash portion of the Merger
Consideration (each bearing the transfer restrictions as set forth in Exhibit B
attached hereto) and (ii) if applicable, the cash portion of the Merger
Consideration that is payable as of the Effective Time to such holders in
accordance with Section 1.06;
(b) Each holder of LLC Interests shall deliver to BCI a properly
executed letter of transmittal (the "Letter of Transmittal"), and instructions
for transfer in customary form, including, among other things, (x) the release
and tolling provisions as set forth in Section 7.01 hereof (without
modification), (y) a statement to the effect that such holder has read the
Registration Rights Agreement (as hereinafter defined) and acknowledges and
agrees that the registration rights contained therein are being granted in
partial consideration for such holder giving such release and that such holder
agrees to be bound by the terms and conditions of the Registration Rights
Agreement, and (z) such investor representations customary in unregistered
private placement transactions, as are reasonably acceptable to BCI and counsel
to the Pooled Preferred Negotiating Committee, for use in effectuating the
exchange of LLC Interests for the Merger Consideration in accordance with the
terms of this Agreement. BCI shall deliver or cause to be delivered to the
holders of LLC Interests as promptly as practicable after the date hereof, but
in no event later than 15 days prior to the date on which the adoption and
approval of this Agreement and the Merger by the written consent of the holders
of 66 2/3% of the BCEF LLC Interests and the holders of 66 2/3% of the Market
Partners LLC Interests (the "Interestholders' Approvals") must be received by
the Company pursuant to Section 4.02 hereof, a sufficient number of copies of
the Letter of Transmittal and instructions for completion and delivery thereof
at the Closing. No holder of LLC Interests shall be entitled to receive the
Merger Consideration until he, she or it delivers to BCI a properly executed
Letter of Transmittal. Until delivery of a properly executed Letter of
Transmittal and surrender of a holder's LLC Interests as contemplated by this
Section 1.07, each LLC Interest shall be deemed at any time after the Effective
Time to represent only the right to receive upon such delivery and surrender the
Merger Consideration (without interest thereon) which the holder thereof has the
right to receive in respect of such LLC Interest pursuant to the provisions of
this Article One.
SECTION 1.08. Escrow of Cash; Effective Time. Concurrently with the
execution of this Agreement, BCI shall deposit cash in an amount equal to
$10,000,000 (the "Escrow Amount") with LaSalle National Bank (the "Escrow
Agent") pursuant to the Escrow Agreement, dated the date hereof, among BCI,
BCEF, Market Partners and the Escrow Agent, a form of which is attached hereto
as Exhibit C (the "Escrow Agreement"), for the purpose of paying to the holders
of LLC Interests who are not BCI Insiders that amount of the cash portion of the
Merger Consideration that is payable to such holders in accordance with Section
1.06. At the Effective Time, BCI shall cause the Escrow Agent to pay to holders
of LLC Interests who are not BCI Insiders that amount of cash that is payable to
such holders in accordance with Section 1.06. Prior to the Effective Time, BCI
shall take all such action it is required to take pursuant to the Escrow
Agreement so that the Escrow Agent is able to pay the cash portion of the Merger
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Consideration as contemplated in the preceding sentence as promptly as
practicable after the Effective Time.
SECTION 1.09. No Further Ownership Rights in LLC Interests. The
issuance of BCI Preferred Stock and BCI Common Stock and the payment of cash
consideration, as applicable, upon the execution and delivery to BCI of the
Letter of Transmittal in accordance with the terms of this Article One shall be
deemed to have been issued in full satisfaction of all rights pertaining to the
LLC Interests theretofore represented by such LLC Interests.
SECTION 1.10. Registration Rights Agreement. The issuance of the
shares of BCI Preferred Stock and the BCI Common Stock to the holders of LLC
Interests pursuant to this Article One will not be registered under the
Securities Act of 1933, as amended, or any state securities laws in reliance
upon certain exemptions from registration contained therein. The transfer of
such shares of BCI Preferred Stock and BCI Common Stock will, accordingly, be
subject to certain restrictions under applicable law, including the Securities
Act of 1933, as amended (the "1933 Act"). As a result thereof, and as partial
consideration for the holders of LLC Interests agreeing to the release included
in the Letter of Transmittal and set forth in Section 7.01 herein, the holders
of LLC Interests who are not BCI Insiders will be provided certain rights to the
registration of such shares of BCI Preferred Stock and BCI Common Stock pursuant
to a Registration Rights Agreement substantially in the form of Exhibit D hereto
(the "Registration Rights Agreement").
SECTION 1.11. Adjustment to BCI Common Stock. If, prior to the
Effective Time, BCI should split or combine the BCI Common Stock, or pay a stock
dividend or other stock distribution in BCI Common Stock, then the number of
shares of BCI Common Stock comprising a portion of the Merger Consideration
under this Article One will be appropriately adjusted to reflect such split,
combination, dividend or other distribution.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BCEF AND MARKET PARTNERS
----------------------------------------------------------
BCEF and Market Partners each hereby, severally and not jointly,
represent and warrant to BCI and BCI Sub that:
SECTION 2.01. Organization and Qualification. (a) Each of BCEF and
Market Partners is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
requisite power and authority to own its properties and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority and governmental
approvals would not, individually or in the aggregate, have a Material Adverse
Effect (as defined below) with respect to BCEF or Market Partners. When used
herein, the term "Material Adverse Effect" means any change or effect that is or
is reasonably likely to be materially adverse to the business, operations,
properties, condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) of the applicable entity
or entities, taken as a whole (if applicable).
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SECTION 2.02. Certificate of Formation. BCEF and Market Partners
have each heretofore furnished or made available to BCI a complete and correct
copy of each entity's respective Certificate of Formation and limited liability
company agreement, each as amended to date.
SECTION 2.03. Capitalization. The authorized capitalization of BCEF
consists of 60 LLC Interests. The authorized capitalization of Market Partners
consists of 30.6 LLC Interests. As of the date hereof, 60 and 30.6 LLC
Interests of BCEF and Market Partners, respectively, are issued and outstanding,
all of which are validly issued, fully paid and nonassessable. There are no
options, warrants or other rights, agreements, arrangements or commitments of
any character to which BCEF or Market Partners is a party, or may be bound by,
relating to the issued or unissued limited liability company interests of BCEF
or Market Partners to issue or sell any other interests in BCEF or Market
Partners. There are no outstanding contractual obligations of BCEF or Market
Partners to repurchase, redeem or otherwise acquire any limited liability
company interests or to provide funds to, or make any investment (in the form of
a loan, capital contribution or otherwise) in any person.
SECTION 2.04. Authority. Each of BCEF and Market Partners has all
necessary power and authority to execute and deliver this Agreement, the Escrow
Agreement and the Registration Rights Agreement, and, subject to obtaining the
Interestholders' Approvals and the filing and recordation of any merger
documents as may be required by the DLLCA, to perform its respective obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby (the "Transactions"). The execution and delivery of this Agreement,
the Escrow Agreement and the Registration Rights Agreement by BCEF and Market
Partners and the consummation by BCEF and Market Partners of the Transactions
has been duly and validly authorized by all necessary corporate action and, in
the case of consummation, subject to obtaining the Interestholders' Approvals
and the filing and recordation of any merger documents as may be required by the
DLLCA, no other proceedings on the part of BCEF and Market Partners are
necessary to authorize this Agreement, the Escrow Agreement and the Registration
Rights Agreement or to consummate the Transactions. This Agreement, the Escrow
Agreement and the Registration Rights Agreement have been duly and validly
executed and delivered by BCEF and Market Partners and, assuming the due
authorization, execution and delivery by BCI and BCI Sub in accordance with
their terms, constitute legal, valid and binding obligations of each of BCEF and
Market Partners, except as enforceability may be subject to the effects of any
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally (including, without limitation, all laws relating to
fraudulent transfers), and may be subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
SECTION 2.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement, the Escrow Agreement and the
Registration Rights Agreement by each of BCEF and Market Partners does not, and,
subject to obtaining the Interestholders' Approvals and the filing and
recordation of any merger documents as may be required by the DLLCA, the
performance of this Agreement, the Escrow Agreement and the Registration Rights
Agreement by each of BCEF and Market Partners will not, (i) conflict with or
violate the
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Certificate of Formation or limited liability company agreement of either of
BCEF or Market Partners or (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to BCEF or Market Partners or
by which any property or asset of BCEF or Market Partners is bound or affected
(subject to compliance with the HSR Act (as hereinafter defined), if necessary),
except in the case of clause (ii) where such conflicts or violations would not
(x) prevent or delay consummation of the Merger, or otherwise prevent BCEF or
Market Partners from performing its obligations under this Agreement, the Escrow
Agreement or the Registration Rights Agreement or (y) have a Material Adverse
Effect with respect to BCEF or Market Partners, as the case may be.
(b) The execution and delivery of this Agreement, the Escrow Agreement
and the Registration Rights Agreement by each of BCEF and Market Partners does
not, and the performance of this Agreement, the Escrow Agreement and the
Registration Rights Agreement will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except for (i) (x) applicable
requirements, if any, of state takeover laws, the pre-merger notification
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), (y) filing
and recordation of appropriate merger documents as required by the DLLCA and (z)
filing and recordation by BCI of the Certificate of Designations as required by
the DGCL and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
(x) prevent or delay consummation of the Merger, or otherwise prevent BCEF or
Market Partners from performing its obligations under this Agreement or (y)
individually or in the aggregate, have a Material Adverse Effect with respect to
BCEF or Market Partners.
SECTION 2.06. Ownership of BCEF and Market Partners Assets. The
assets of BCEF or Market Partners listed on Schedule 2.06 attached hereto are
owned beneficially solely by BCEF and Market Partners, as the case may be, free
and clear of all security interests, pledges, mortgages, liens, charges and
other encumbrances (collectively, "Encumbrances"); provided that Encumbrances
shall not include any rights or other encumbrances that arise pursuant to this
Agreement, as the case may be.
SECTION 2.07. Brokers. No broker, finder or investment banker
(other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney) is entitled to any brokerage, finder's or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of BCEF and Market Partners.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BCI AND BCI SUB
-------------------------------------------------
BCI and BCI Sub hereby, jointly and severally, represent and warrant
to BCEF and Market Partners and the holders of LLC Interests that execute and
deliver to BCI the Letter of Transmittal that:
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SECTION 3.01. Organization and Qualification. BCI is a corporation
and BCI Sub is a limited liability company in each case duly organized, validly
existing and in good standing under the DGCL and DLLCA, respectively, and each
has the requisite power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as is now
being conducted, except where the failure to be so organized, existing or in
good standing or to have such power, authority and governmental approvals would
not, individually or in the aggregate, have a Material Adverse Effect with
respect to BCI or BCI Sub and (in the case of BCI), any subsidiaries, taken as a
whole.
SECTION 3.02. Authority. Each of BCI and BCI Sub has all necessary
power and authority to execute and deliver this Agreement, the Escrow Agreement
and the Registration Rights Agreement to perform its obligations hereunder and
thereunder and to consummate the Transactions, and has or will have taken at the
Effective Time all necessary actions to create and issue the BCI Preferred Stock
to be issued to holders of LLC Interests pursuant to Article One hereof. The
execution and delivery of this Agreement, the Escrow Agreement and the
Registration Rights Agreement by BCI and BCI Sub and the consummation by BCI and
BCI Sub of the Transactions has been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of BCI
or BCI Sub are necessary to authorize this Agreement, the Escrow Agreement and
the Registration Rights Agreement or to consummate the Transactions (other than,
with respect to the Merger, the filing and recordation of appropriate merger
documents as required by the DLLCA and the filing and recordation of the
Certificate of Designations as required by the DGCL). This Agreement, the
Escrow Agreement and the Registration Rights Agreement have been duly and
validly executed and delivered by BCI and BCI Sub and, assuming the due
authorization, execution and delivery by BCEF and Market Partners in accordance
with their terms, constitute legal, valid and binding obligations of each of BCI
and BCI Sub, enforceable against each of BCI and BCI Sub in accordance with
their terms, except as enforceability may be subject to the effects of any
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally (including, without limitation, all laws relating to
fraudulent transfers), and may be subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
SECTION 3.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement, the Escrow Agreement and the
Registration Rights Agreement by BCI and BCI Sub does not, and the performance
of this Agreement, the Escrow Agreement and the Registration Rights Agreement by
BCI and BCI Sub and the filing and recordation of any merger documents as may be
required by the DLLCA and the filing and recordation by BCI of the Certificate
of Designations and the consummation of the Transactions will not, (i) conflict
with or violate (A) the Certificate of Incorporation or By-laws, or other
organizational documents, of BCI or (B) the Certificate of Formation or limited
liability company agreement of BCI Sub, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to BCI or BCI Sub or by
which any property or asset of either of them is bound or affected (subject to
compliance with the HSR Act, if necessary), or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or
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cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of BCI or BCI Sub pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which BCI or BCI Sub is a party or by which BCI or
BCI Sub or any property or asset of either of them is bound or affected, except
for any such conflicts, violations, breaches, defaults or other occurrences
which would not (x) prevent or delay consummation of the Merger, or otherwise
prevent BCI or BCI Sub from performing its respective obligations under this
Agreement, the Escrow Agreement or the Registration Rights Agreement or (y), in
the case of clauses (ii) and (iii) above, individually or in the aggregate, have
a Material Adverse Effect with respect to BCI or BCI Sub and (in the case of
BCI), any subsidiaries taken as a whole.
(b) The execution and delivery of this Agreement, the Escrow Agreement
and the Registration Rights Agreement by BCI and BCI Sub does not, and the
performance of this Agreement, the Escrow Agreement and the Registration Rights
Agreement by BCI and BCI Sub will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except (i) (x) for applicable
requirements, if any, of the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), state securities or "blue sky" laws and state takeover
laws, and the HSR Act, (y) filing and recordation of appropriate merger
documents as required under the DLLCA and (z) filing and recordation by BCI of
the Certificate of Designations as required by the DGCL and (ii) where failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the Merger,
or otherwise prevent BCI or BCI Sub from performing their respective obligations
under this Agreement, the Escrow Agreement and the Registration Rights
Agreement, and would not, individually or in the aggregate, have a Material
Adverse Effect with respect to BCI or BCI Sub and (in the case of BCI) any
subsidiaries, taken as a whole.
SECTION 3.04. Offer Documents. The Offer Document (as defined in
Section 4.01 hereto), as amended or supplemented from time to time and any
documents incorporated by reference therein, will not, at the time the Offer
Document is sent or given to holders of LLC Interests and at the Closing Date,
as the case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, BCI and BCI Sub make
no representation or warranty with respect to any information supplied in
writing by BCEF and Market Partners or any of its representatives specifically
for use in the Offer Document which is in fact contained in the Offer Document.
SECTION 3.05. Certificate of Incorporation. BCI and its
subsidiaries have heretofore furnished to BCEF and Market Partners a complete
and correct copy of each entity's Certificate of Incorporation and By-laws, or
equivalent governing documents, each as amended to date.
SECTION 3.06. Capitalization. As of the date hereof (except for
clause (v) hereof), the authorized capitalization of BCI consists of (i)
480,000,000 shares of BCI Common
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Stock of which 71,464,290 shares are issued and outstanding, (ii) warrants to
purchase 905,651 shares of BCI Common Stock, (iii) zero options to purchase
shares of BCI Common Stock (not including options or awards granted pursuant to
equity incentive plans), (iv) $287,500,000 aggregate principal amount of 7 3/4%
Convertible Subordinated Debentures due 2004,(v) as of February 22, 1998,
$199,855,998 aggregate accreted amount of Zero Coupon Subordinated Liquid Yield
Option Notes due 2015 and (vi) $129,520,000 aggregate principal amount of 4 1/2%
Convertible Subordinated Debentures due 2004. Except as set forth in this
Section 3.06, in the instruments pursuant to or under which the securities
described above were issued, as otherwise contemplated by this Agreement or
pursuant to the terms of existing indebtedness of the Company to Progressive
Food Concepts, Inc., Einstein/Noah Bagel Corp., Financed Area Developers or
employees, (x) there are no options, warrants, preemptive or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued securities to issue or sell any other interests in BCI and (y) there
are no outstanding contractual obligations of BCI to repurchase, redeem or
otherwise acquire any securities or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in any person. To the
extent not otherwise stated herein, as of the date hereof there are no, and
immediately prior to the Closing, there will be no shares of capital stock of
BCI that rank, with respect to dividends and distributions upon the liquidation,
dissolution or winding up of the Company, senior to the BCI Preferred Stock.
SECTION 3.07. Financial Statements. The audited financial
statements and the related notes of BCI, at and as of December 28, 1997,
heretofore furnished to BCEF and Market Partners and which form a part of the
Offer Document, present fairly the financial position of BCI as of the dates
shown and its results of operation and cash flows for the periods shown and such
financial statements have been prepared in accordance with (i) generally
accepted accounting principles applied on a consistent basis and (ii) Regulation
S-X under the 1934 Act.
SECTION 3.08. Private Placement. Assuming (i) the accuracy of the
representations and warranties of the holders of LLC Interests as set forth in
the Letter of Transmittal (ii) the total number of holders of BCEF LLC Interests
and Market Partners LLC Interests from whom BCI has received a properly executed
Letter of Transmittal that does not include a representation that such holder is
an "accredited investor", as such term is defined in Rule 501(a) of Regulation D
under the 1933 Act, combined with the total number of holders of BCEF LLC
Interests and Market Partners LLC Interests from whom BCI does not receive a
properly executed Letter of Transmittal, does not exceed 26 in the aggregate,
the issuance of the BCI Preferred Stock and the BCI Common Stock to such holders
pursuant to the Merger will be exempt from registration under the 1933 Act.
SECTION 3.09. BCI Preferred Stock and the BCI Common Stock. Prior
to the Effective Time, BCI will have taken all necessary action to permit it to
issue the number of shares of BCI Preferred Stock and BCI Common Stock to be
issued by BCI to holders of LLC Interests pursuant to Article One. The shares
of BCI Preferred Stock and BCI Common Stock to be issued and delivered by BCI to
the holders of LLC Interests pursuant to Article One have been duly and validly
authorized and, when issued and delivered pursuant to this Agreement, will
conform to the Certificate of Designations and will be validly issued, fully
paid and non-
10
assessable and no person will have any preemptive right of subscription or
purchase in respect thereof, other than as provided herein. The BCI Preferred
Stock issuable as payment of dividends in lieu of cash as set forth in the
Certificate of Designations has been validly reserved for issuance and when
issued will be validly issued, fully paid and non-assessable, and no person will
have any preemptive right of subscription or purchase in respect thereof, or
other than as provided herein.
SECTION 3.10. Insiders Schedule. Schedule 3.10 attached hereto
accurately sets forth (based on representations as to beneficial ownership made
to BCI by the officers and directors of BCI ("BCI Insider Representations")) the
beneficial ownership of LLC Interests by such officers and directors and their
spouses, parents, children and siblings, and entities controlled by them ("BCI
Insiders"). If necessary, on or before the Closing Date, the Company shall
provide BCEF and Market Partners with a revised Schedule 3.10, based on the BCI
Insider Representations, which accurately sets forth the beneficial ownership of
LLC Interests by BCI Insiders as of the Closing Date.
SECTION 3.11. Registration Rights. Except as set forth on Schedule
3.11, no person or entity is entitled to any right, by contract or otherwise, to
require the registration under the 1933 Act, of any shares of capital stock or
other securities of BCI.
SECTION 3.12. BCI Sub. All of the issued limited liability company
interests of BCI Sub have been duly and validly issued, are fully paid and non-
assessable, and are owned directly by BCI. BCI Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated hereby.
SECTION 3.13. Brokers. No broker, finder or investment banker
(other than ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ahn) is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of BCI or BCI
Sub.
ARTICLE IV
ADDITIONAL AGREEMENTS
---------------------
SECTION 4.01. Offer Document. As soon as reasonably practicable
following execution of this Agreement by all parties hereto, BCI shall
distribute to all holders of LLC Interests a joint proxy statement/private
offering memorandum (the "Offer Document") with respect to the Merger contained
herein, which shall contain, among other things, the Company's annual report on
form 10-K for its fiscal year ended December 28, 1997, and which will relate and
contain the appropriate proposals pertaining to the Interestholders' Approvals
and will comply with the requirements set forth in Regulation D of the 1933 Act
and such other applicable rules and regulations of the SEC. Until the Closing,
BCI agrees to correct promptly any information provided by it for use in the
Offer Document which shall have become false or misleading. BCI shall provide
the Pooled Preferred Negotiating Committee and its legal and financial advisor
with a copy of the Offer Document in the form proposed to be disseminated,
11
and the Pooled Preferred Negotiating Committee and its counsel and financial
advisor shall be offered reasonable opportunity to review and comment with
respect only to those parts of the Offer Document which set forth statements
describing the role of the Pooled Preferred Negotiating Committee, descriptions
of the background of the Transactions including any negotiations or meetings in
which the Pooled Preferred Negotiating Committee participated, the terms of the
Merger or the Merger Consideration, or this Agreement, the Escrow Agreement or
the Registration Rights Agreement. As used in this Agreement, "Pooled Preferred
Negotiating Committee" shall mean the negotiating committee nominated by holders
of BCEF LLC Interests and Market Partners LLC Interests to negotiate, among
other things, the terms of the Merger and the Transactions on behalf of such
holders and BCEF and Market Partners.
SECTION 4.02 Interestholders' Approvals. Each of BCEF and Market
Partners, acting through each entity's respective Manager, shall, in accordance
with its respective limited liability company agreements, duly solicit the
Interestholders' Approvals as soon as practicable following the delivery of the
Offer Document to all holders of LLC Interests, for the purpose of such holders'
considering and approving the Merger, this Agreement and the transactions
contemplated hereby.
SECTION 4.03. Notification of Certain Matters. BCEF and Market
Partners shall give prompt notice to BCI, and BCI shall give prompt notice to
BCEF and Market Partners and the Pooled Preferred Negotiating Committee, of (i)
the occurrence, or non-occurrence, of any event, the occurrence, or non-
occurrence, of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate or (ii) any failure of
any party hereto to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 4.03 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 4.04. Further Action; Reasonable Best Efforts. Upon the
terms and subject to the conditions hereof, each of the parties hereto shall, to
the extent required by law, (i) make promptly its respective filings, and
thereafter make any other required submissions, under the HSR Act with respect
to the Transactions, if required, and (ii) use its reasonable best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Transactions, and to fulfill
the conditions to the Merger.
SECTION 4.05. FAD Common Interests. BCI shall not pay to any owners
of limited liability company common interests or limited partnership common
interests, as the case may be, of any Financed Area Developers ("FAD Common
Interests") (i) cash or (ii) securities of BCI which rank senior, upon any
liquidation, dissolution or winding up of the Company, to the BCI Preferred
Stock in the capital structure of BCI, as consideration or in exchange for such
FAD Common Interests. "Financed Area Developers" means B.C.B.M. Southwest,
L.P., BC Boston, L.P., BCE West, L.P., BC GoldenGate, L.L.C., BC Heartland,
L.L.C., BC Northwest, L.P., BC Superior, L.L.C., BC Tri-States, L.L.C., Finest
Foodservice, L.L.C., P&L Foodservices, L.L.C., and R&A Food Services, L.P.
12
SECTION 4.06. Advisory Fees. BCI shall pay any and all reasonable
legal and advisory (including financial) fees and expenses incurred on behalf of
BCEF and Market Partners, including, the Pooled Preferred Negotiating Committee,
pursuant to the terms of that certain Fee Letter, dated December 17, 1997 (the
"Fee Letter"), between the Company and the Pooled Preferred Negotiating
Committee, as supplemented January 5, 1998, related to the Merger and continuing
through the date upon which the "Shelf Registration Statement" is declared
effective by the Securities and Exchange Commission (the "SEC"). At the Closing
Date, all such fees and expenses invoiced to BCI as of such date shall be paid
by BCI on such date, and all such fees and expenses incurred thereafter
shall be paid by BCI promptly as invoiced. "Shelf Registration Statement" means
the shelf registration statement to be filed by BCI with the SEC pursuant to the
terms of the Registration Rights Agreement.
SECTION 4.07. Access to Information. BCI shall, and shall cause
each of its subsidiaries to, afford to the Pooled Preferred Negotiating
Committee and its legal and financial advisor, reasonable access and permit them
to make such inspections as they may reasonably require during normal business
hours during the period from the date of this Agreement through the Closing Date
to all their respective properties, books and records and, during such period,
BCI shall, and shall cause each of its subsidiaries to, furnish promptly to the
Pooled Preferred Negotiating Committee (i) a copy of each report, schedule,
registration statement and other document filed by it with the SEC during such
period, and (ii) all other information concerning its business, properties and
personnel as the Pooled Preferred Negotiating Committee or its legal or
financial advisor may reasonably request. Except as required by law, the Pooled
Preferred Negotiating Committee will hold, and will cause its affiliates,
associates and representatives to hold, any non-public information in confidence
until such time as such information otherwise becomes publicly available and
shall use all reasonable efforts to ensure that such affiliates, associates and
representatives do not disclose such information to others without the prior
written consent of the Company. All information provided to the Pooled
Preferred Negotiating Committee or its legal or financial advisor pursuant to
this Section 4.07 shall be subject to those certain Confidentiality Agreements,
dated December 8, 1997, between the Company and the Pooled Preferred Negotiating
Committee.
SECTION 4.08. Publicity. BCI will consult with the Pooled Preferred
Negotiating Committee and they will mutually agree upon the language in any
press release or public announcement pertaining to (i) the Pooled Preferred
Negotiating Committee or its legal or financial advisors or (ii) the
negotiations of the Merger and/or the transactions contemplated thereby between
the special committee of the Board of Directors of the Company (the "Special
Committee") and the Pooled Preferred Negotiating Committee or their respective
legal and financial advisors, and shall not issue any such press release or make
any such public announcement prior to such consultation and agreement, except
that BCI may issue any such release or make any such public announcement as it
determines, in its sole discretion, may be necessary or advisable under
applicable law or pursuant to any listing agreement with any national securities
exchange or automated quotation system that it is subject to, in which case BCI
shall use reasonable efforts to consult in good faith with the Pooled Preferred
Negotiating Committee (but shall not be required to obtain the agreement of the
Pooled Preferred Negotiating Committee) before issuing any such press release or
making any such public announcement.
13
SECTION 4.09. Assumption of This Agreement Upon a Sale of the
Company. In the event that prior to the Closing Date the Company (i) is
acquired through a purchase, merger, or other acquisition transaction or series
of transactions or (ii) engages in any sale (in one or a series of related
transactions) of all or substantially all of the property and assets of the
Company, in each case in a transaction approved by the Board of Directors of the
Company, the Company shall require as condition of any such transaction that the
acquiror or purchaser, as the case may be, assumes all of the Company's and BCI
Sub's obligations under this Agreement, including but not limited to, the
consummation of the Transactions.
SECTION 4.10. No Waiver of Lock-Up Agreements. The Company shall
not waive, amend or otherwise modify the provisions of those certain lock-up
agreements between the Company and each of the BCI Insiders (the "Lock-Up
Agreements") in such a way as to permit any BCI Insider to sell shares of BCI
Common Stock or BCI Preferred Stock received pursuant to the Merger in a
registered public offering for 3 years. Prior to the Closing, the Company will
provide the Pooled Preferred Negotiating Committee with a copy of each of such
Lock-Up Agreement.
SECTION 4.11. Conversion of Financed Area Developer Loans. The
Company shall use its best efforts to ensure that the condition to closing set
forth in Section 5.02(c) hereof is satisfied at or prior to the Closing Date.
ARTICLE V
CONDITIONS TO THE MERGER
------------------------
SECTION 5.01. Joint Conditions to the Merger. The respective
obligations of each of the parties hereto to effect the Merger shall be subject
to the accuracy of the representations and warranties on the part of each party
herein contained, to the performance and observance by each party of all
agreements herein contained to be performed and observed, and to the
satisfaction at or prior to the Closing Date of the following additional
conditions:
(a) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated;
(b) Interestholders' Approvals. This Agreement and the transactions
contemplated hereby shall have received the Interestholders' Approvals;
(c) No Order. No United States or state governmental authority or
other agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect
and has the effect of making the acquisition of the LLC Interests by BCI or
BCI Sub or any affiliate of either of them illegal or otherwise
restricting, preventing or prohibiting consummation of the Transactions;
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SECTION 5.02 BCI and BCI Sub Conditions to the Merger. The
respective obligations of BCI and BCI Sub to effect the Merger shall be subject
to the satisfaction at or prior to the Closing Date of the following conditions,
any or all of which may be waived in whole or in part by BCI and BCI Sub at or
prior to the Closing Date:
(a) Representations and Warranties. The representations and
warranties of BCEF and Market Partners made herein are at and as of the
Closing Date, true and correct as if made at the Closing Date; it being
understood that to the extent any such representation or warranty was made
as of a specified date, the same shall be required to be true and correct
as of the Closing Date, but only as to such specified date.
(b) Agreements. All covenants, agreements and obligations of BCEF and
Market Partners required to be performed hereunder at or prior to the
Effective Time shall have been theretofore performed in all material
respects.
(c) Conversion of Financed Area Developer Loans. BCI shall have
converted into equity of the Financed Area Developers at least that amount
of the aggregate principle amount of convertible loans to the Financial
Area Developers outstanding on December 28, 1997 sufficient to give BCI
majority control over those Financed Area Developers which have previously
waived the moratorium on conversion of such convertible loans contained in
the respective secured loan agreements governing such convertible loans.
(d) Execution of Letter of Transmittal. BCI shall have received
executed Letters of Transmittal, including the release set forth therein,
from the holders of at least 66 2/3% of each of the Market Partners LLC
Interests and the BCEF LLC Interests.
(e) Accreditation Status. The total number of holders of BCEF LLC
Interests and Market Partners LLC Interests from whom BCI has received a
properly executed Letter of Transmittal that does not include a
representation that such holder is an "accredited investor", as such term
is defined in Rule 501(a) of Regulation D under the 1933 Act, combined with
the total number of holders of BCEF LLC Interests and Market Partners LLC
Interests from whom BCI has not received a properly executed Letter of
Transmittal, does not exceed 26 in the aggregate.
SECTION 5.03 BCEF and Market Partners Conditions to the Merger". The
respective obligations of BCEF and Market Partners to effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions, any of which may be waived in whole or in part by BCEF and Market
Partners at or prior to the Closing Date:
(a) Certificate of Designations. The Certificate of Designations
shall have been duly filed with the Delaware Secretary of State in
accordance with the DGCL; and
15
(b) Representations and Warranties. The representations and
warranties of BCI and/or BCI Sub made herein are, at and as of the Closing
Date, true and correct as if made at the Closing Date; it being understood
that to the extent any such representation or warranty was made as of a
specified date, the same shall be required to be true and correct as of the
Closing Date, but only as to such specified date.
(c) Agreements. All covenants, agreements and obligations of BCI
and/or BCI Sub required to be performed hereunder at or prior to the
Closing Date shall have been theretofore performed in all material
respects.
(d) Legal Opinion. Either (i) ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ or (ii) ▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, shall have furnished to BCEF and
Market Partners their written opinion, dated as of the Closing Date, as to
the matters set forth in Sections 3.01, 3.02, 3.03, 3.04, 3.06, 3.08 and
3.09, which opinion shall be in substantially the form attached hereto as
Exhibit E.
(e) Certificates. BCI and BCI Sub shall have furnished or caused to
be furnished to BCEF and Market Partners at the Closing Date a certificate
of an appropriate senior officer of BCI on behalf of BCI and BCI Sub, the
latter executed by such Senior Officer on behalf of BCI in its corporate
capacity as Manager of BCI Sub, as to the matters set forth in Sections
5.03(a), (b) and (c).
(f) Registration Rights. The Registration Rights Agreement shall have
been entered into by all parties thereto.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
SECTION 6.01. Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned:
(a) At any time prior to the Effective Time, by mutual written consent
duly authorized by the Board of Directors of BCI and the respective
Managers of BCEF, Market Partners and BCI Sub; provided, however, that the
respective Managers of BCEF and Market Partners shall only be deemed to be
authorized to terminate this Agreement if such termination has been
consented to by the holders of 66-2/3% of each of the BCEF LLC Interests
and the Market Partners LLC Interests; or
(b) By any party hereto if (i) the Effective Time shall not have
occurred on or before 5:00 p.m., June 30, 1998; provided, however, that the
right to terminate this Agreement under this Section 6.01(b) shall not be
available to any party whose failure to fulfill any obligation or condition
precedent under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time
16
to occur on or before such date; provided, further, that in the event the
Company is required to pay the "break-up fee" provided for in Section 6.05
hereof, the Company may terminate this Agreement and abandon the Merger and
the other Transactions; (ii) any court of competent jurisdiction in the
United States or other United States governmental authority shall have
issued an order, decree, ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and nonappealable; or (iii)
the holders of 66-2/3% of either of the BCEF LLC Interests and Market
Partners LLC Interests fail to approve and adopt this Agreement.
SECTION 6.02. Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 6.01, this Agreement shall forthwith
become void, and there shall be no liability on the part of any party hereto,
except as set forth in Sections 4.06 and 6.05 hereto, if and as applicable.
SECTION 6.03. Amendment. This Agreement shall only be amended
pursuant to a written instrument executed prior to the Closing making specific
reference hereto authorized by the Board of Directors of BCI, the Manager of BCI
Sub and by the holders of 66-2/3% of each of the BCEF LLC Interests and the
Market Partners LLC Interests; provided, however, that, this Agreement may be
amended at any time by the parties hereto in a manner which does not (i) reduce
the amount or change the type of consideration into which each LLC Interest
shall be converted upon consummation of the Merger or (ii) in any other way
adversely affect the rights of BCI, BCEF, Market Partners or the holders of LLC
Interests hereunder.
SECTION 6.04. Waiver. At any time prior to the Effective Time, any
party hereto may (i) extend the time for the performance of any obligation or
other act of any other party hereto, (ii) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement or condition
contained herein; provided, however, that any such extension or waiver shall
only be valid as to the party or parties to be bound thereby if (x) in the case
of BCI or BCI Sub, such extension or waive is set forth in an instrument in
writing signed by BCI and/or BCI Sub and consented to in writing by the Special
Committee and (y), in the case of BCEF and/or Market Partners, such extension or
waiver is approved by holders of 66-2/3% of each of the BCEF LLC Interests and
the Market Partners LLC Interests.
SECTION 6.05. Break-up Fee. In the event the Effective Time shall
not have occurred on or before 5:00 p.m., June 30, 1998 as a result of the
wilful failure of the Company or BCI Sub to satisfy any of the conditions set
forth in Sections 5.01 or 5.03 which are within its reasonable ability and
control to satisfy, and provided that neither Market Partners nor BCEF is in
breach of this Agreement or has failed to satisfy a condition to the Merger, the
Company shall immediately pay to the holders of LLC Interests who are not BCI
Insiders, on a pro rata basis based on the proportion of LLC Interests held by
such holders relative to the total number of LLC Interests held by all such
holders, a penalty in the aggregate amount of $5,000,000 in cash. Any such
payments shall be delivered at such holder's address as it appears on the books
and records of BCI.
17
ARTICLE VII
TRANSFER RESTRICTIONS; RELEASE AND TOLLING
------------------------------------------
SECTION 7.01. (a) Transfer Restrictions. The securities received by
the holders of LLC Interests upon consummation of the Merger and the execution
and delivery to the Company of the Letters of Transmittal shall bear a
restrictive legend to the effect that (i) they have not been registered under
the 1993 Act, (ii) they have been issued as consideration pursuant to a Merger
Agreement dated as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) unless the holder of LLC Interests
has previously executed and delivered to BCI a Letter of Transmittal containing
the release set forth therein, removal of the legend requires the execution of a
release containing the terms set forth in Sections 7.01(c) and 7.01(d) of this
Agreement and provision of evidence satisfactory to the Company and/or the
transfer agent in respect of the BCI Preferred Stock or the BCI Common Stock
that such securities are being transferred in compliance with all applicable
securities laws. A form of such restrictive legend is attached hereto as
Exhibit B.
(b) Release. Subject to Section 7.01(d) hereof, Market Partners and
BCEF, (each a "Releasor") for good and valuable consideration exchanged between
the parties, the receipt and sufficiency of which are hereby acknowledged,
hereby unconditionally and irrevocably waive, release and discharge the Company
and the Financed Area Developers, and their respective direct and indirect
shareholders, partners, affiliates, subsidiaries, officers, directors,
employees, agents, representatives, heirs, legal representatives, successors and
assigns and any and all of the foregoing (collectively the "Released Parties")
from any and all "Claims", known and unknown, which Releasor or his or its
heirs, legal representatives, successors and assigns ever had, now have or
hereafter can, shall or may have (i) against the Released Parties for, upon, or
by reason of any matter, cause or thing whatsoever arising out of, in connection
with, or in any way related to Releasor's investment and interests in BCEF
and/or Market Partners and/or the Financed Area Developers and/or the holding
companies of such Financed Area Developers or (ii) against the Company that
arose up to the Closing Date, except in each case, for claims arising out of
this Agreement and the transactions contemplated hereby and except in the case
of a Releasor who was or is an officer or director of the Company, rights under
the Company's Director and Officer Insurance Policy, under the indemnification
provisions of the Company's Certificate of Incorporation and under the
provisions of Section 145 of the DGCL, in each case as they relate to his duties
and service as an officer and director of the Company.
"Claims" mean all actions, causes of action, suits, debts (including,
without limitation, indebtedness for borrowed money), dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
extents, executions, liabilities (statutory or otherwise), obligations, claims
(including, without limitation, claims brought by third parties claiming
subrogation), damages, penalties, losses, costs, expenses (including, without
limitation, attorneys' fees and disbursements) and demands whatsoever, at law,
in equity or otherwise.
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(c) Letter of Transmittal Release. Each Letter of Transmittal to be
signed by the holders of LLC Interests shall contain the following release
provisions:
"Subject to the tolling provision contained elsewhere in this
letter (which shall be as provided in Section 7.01(d) of the
Merger Agreement), the undersigned (a "Releasor") for good and
valuable consideration exchanged between the parties, the receipt
and sufficiency of which are hereby acknowledged, hereby
unconditionally and irrevocably waives, releases and discharges
the Company and the Financed Area Developers, and their
respective direct and indirect shareholders, partners,
affiliates, subsidiaries, officers, directors, employees, agents,
representatives, heirs, legal representatives, successors and
assigns and any and all of the foregoing (collectively the
"Released Parties") from any and all "Claims", known and unknown,
which Releasor or his or its heirs, legal representatives,
successors and assigns ever had, now have or hereafter can, shall
or may have (i) against the Released Parties for, upon, or by
reason of any matter, cause or thing whatsoever arising out of,
in connection with, or in any way related to Releasor's
investment and interests in BCEF and/or Market Partners and/or
the Financed Area Developers and/or the holding companies of such
Financed Area Developers or (ii) against the Company that arose
up to the Closing Date, except in each case, for claims arising
out of this Agreement and the transactions contemplated hereby
and except in the case of a Releasor who was or is an officer or
director of the Company, rights under the Company's Director and
Officer Insurance Policy, under the indemnification provisions of
the Company's Certificate of Incorporation and under the
provisions of Section 145 of the General Corporation Law of the
State of Delaware, in each case as they relate to his duties and
service as an officer and director of the Company, except in the
case of a Releaseor who was or is a member of the Pooled
Preferred Negotiating Committee, rights under that certain
Professional Services Errors and Ommissions Insurance Policy
issued for their benefit and under the indemnification provisions
of the Fee Letter." Capitalized terms which are used in this
release but not defined herein shall have the meanings given to
such terms in the Merger Agreement.
" `Claims' mean all actions, causes of action, suits, debts
(including, without limitation, indebtedness for borrowed money),
dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents,
executions, liabilities (statutory or otherwise), obligations,
claims (including, without limitation, claims brought by third
parties claiming subrogation), damages, penalties, losses, costs,
expenses (including, without limitation, attorneys' fees and
disbursements) and demands whatsoever, at law, in equity or
otherwise."
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(d) Tolling of Statute of Limitations. The Company, its officers and
directors and the Financed Area Developers, its officers and directors, agree to
toll the statute of limitations for any and all claims against them by holders
of LLC Interests (other than claims of BCI Insiders) which may have arisen in
connection with any matter related to the purchase of limited liability company
interests in Market Partners and BCEF (other than claims based on fraud in
connection with the Merger) until the earliest of (i) the expiration of all
statutes of limitations to avoid or recover any consideration transferred to
holders of LLC Interests in connection with the Merger, (ii) the entry of a
final and non-appealable order confirming a plan of reorganization or plan of
liquidation or closing a chapter 7 bankruptcy case so long as none of the
transactions contemplated by the Agreement shall have been avoided or objected
to pursuant to any provision of title 11 of the United States Code, 11 U.S.C.
sections 101 et. seq. (the "Bankruptcy Code") or other applicable law, and (iii)
the entry of a final order by a court of competent jurisdiction denying any and
all plaintiffs recovery of any consideration transferred to holders of LLC
Interests in connection with the Merger; provided, however, that if a bankruptcy
case or some other similar proceeding is commenced by or against the Company
and/or the Financed Area Developers within the period referred to in clause (i)
above, such toll period of the statute of limitations will be extended until the
latest date on which a trustee, including a debtor-in-possession, may commence
an action against any holder of limited liability company interests in Market
Partners and BCEF under the Bankruptcy Code or other applicable law.
Except as provided below, during the tolling period Market Partners
and BCEF and the holders of LLC Interests agree not to take any action
whatsoever against any Released Party in respect of any claim they may have had
and that is the subject of the release. The standstill provided for in the
immediately preceding sentence will no longer be applicable, and such persons
and entities shall be entitled to take any action that they were entitled to
take under applicable law immediately prior to the giving of the release, if a
court of competent jurisdiction enters a final order requiring such persons or
entities to disgorge or the court otherwise avoids or reduces (other than in
connection with a valuation of the holders' securities under a confirmed plan of
reorganization or plan of liquidation) the consideration received in connection
with the Merger pursuant to any provision of the Bankruptcy Code or other
applicable law; provided, however, that immediately upon the commencement of any
such action against one or more holders of LLC Interests, such holder(s) of LLC
Interests shall be entitled to assert and use such released claims as a defense,
set-off, recoupment, counterclaim and/or cross-claim against the person or
entity that has commenced such action in any action to recover or otherwise
avoid or reduce the consideration received in connection with the Merger; and
provided further, however, that in no circumstances shall any holder of LLC
Interests be entitled to a judgment or recovery in respect of any such claim or
action in excess of the sum of (i) the amount of any cash and the value of any
securities required to be disgorged or otherwise avoided or reduced (other than
in connection with a valuation of the holders of LLC Interests' securities under
a confirmed plan of reorganization or plan of liquidation) pursuant to a final
non-appealable order of a court of competent jurisdiction, and (ii) an amount
equal to the amount of their expenses (including without limitation attorney
fees) incurred in pursuing or defending any such action.
20
ARTICLE VIII
GENERAL PROVISIONS
------------------
SECTION 8.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement,
other than those contained in (i) Article Three, which shall survive for one
year from and including the Closing Date, and (ii) those contained in Article
One, Section 4.10, Section 6.05, Article Seven and Article Eight, shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 6.01, as the case may be.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 7.02):
if to BCI and BCI Sub:
Boston Chicken, Inc.
14103 Denver ▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
21
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
if to BCEF or Market Partners:
Negotiating Committee of
BC Equity Funding, L.L.C. and
Market Partners, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Block
SECTION 8.03. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 8.04. Entire Agreement; Assignment. Subject to [the Fee
Agreement, the Indemnification Agreements and the Confidentiality Agreements],
this Agreement, the Escrow Agreement and the Registration Rights Agreement and
any other document or instrument referred to herein or therein constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise, except that
BCI and BCI Sub may assign all or any of their rights and obligations hereunder
to any affiliate of BCI provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations; provided, however, that this sentence shall in no way
22
limit the rights of the holders of LLC Interests after the Effective Time with
respect to the matters set forth in the proviso contained in Section 8.05.
SECTION 8.05. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement; provided, however, that the holders of LLC Interests who
execute and deliver to BCI the Letter of Transmittal shall be third-party
beneficiaries to the agreements made hereunder between the Company and BCI Sub,
on the one hand, and BCEF and Market Partners, on the other hand, including,
without limitation, with respect to the representations and warranties made by
the Company and/or BCI Sub to BCEF and Market Partners herein, and any such
holder of LLC Interests shall have the right to enforce such agreements
(including, without limitation, to commence any legal proceeding in respect of
any inaccuracy in or breach, violation or nonobservance of the representations,
warranties, covenants or agreements made by the Company or BCI Sub herein)
directly to the extent such holder deems such enforcement necessary or
advisable.
SECTION 8.06. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 8.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware applicable
to contracts executed in and to be performed in that State.
SECTION 8.08. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 8.09. Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 8.10. Certain Definitional Provisions. (a) The words
"hereof", "herein" and "hereunder" and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
(b) Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.
SECTION 8.11. Obligation of BCI. Whenever this Agreement requires
BCI Sub to take any action such requirement shall be deemed to include an
undertaking on the part of BCI to cause BCI Sub to take such action.
23
SECTION 8.12. Attorney's Fees. In the event an action or
proceeding is commenced by the holders of LLC Interests (as "Plaintiff") to
determine a breach of this Agreement and to obtain damages therefor (an
"Action"), which Action was previously authorized by the members of the Pooled
Preferred Negotiating Committee (an "Authorized Action"), and to the extent such
Plaintiff is the prevailing party therein pursuant to the entry of a final order
of a court of competent jurisdiction in respect of such Authorized Action, such
Plaintiff shall be entitled to recover from the Company and/or BCI Sub (or any
successor to either such entity) all out-of-pocket costs and expenses thereof,
including, without limitation, all reasonable attorneys' fees of one counsel for
the Plaintiff, as well as disbursements and related charges; provided, however,
that the Company shall not be liable under this Section 8.12 for (i) any costs
and expenses until after the entry of a final order of a court of competent
jurisdiction, (ii) any costs and expenses in respect of more than one Authorized
Action or (iii) any Authorized Action which, in whole or in part, challenges,
questions or otherwise seeks to determine the enforceability of any provision in
this Agreement providing for the provision of a release or execution of a Letter
of Transmittal.
IN WITNESS WHEREOF, BCI, BCI Sub and BCEF and Market Partners have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
BOSTON CHICKEN, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
BCI ACQUISITION SUB, L.L.C.
By: Boston Chicken, Inc.,
as Manager
By /s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
BC EQUITY FUNDING, L.L.C.
By Boston Chicken, Inc.,
as Manager
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
24
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
25
MARKET PARTNERS, L.L.C.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇, as Manager
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Manager
26
EXHIBIT A
---------
27
BOSTON CHICKEN, INC.
CERTIFICATE OF DESIGNATIONS OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS
OF 10% SERIES A EXCHANGEABLE
PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------------------------
Boston Chicken, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Company" or the
"Corporation"), does hereby certify that, pursuant to authority conferred upon
the board of directors of the Company (or any committee of such board of
directors, the "Board of Directors") by its Certificate of Incorporation, as
amended (hereinafter referred to as the "Certificate of Incorporation"), and
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, said Board of Directors with full power and authority to act
on behalf of the Board of Directors, at a meeting held on March 6, 1998, duly
approved and adopted the following resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors does
hereby create, authorize and provide for the issuance of 3,572,637 shares of 10%
Series A Exchangeable Preferred Stock, par value $0.01 per share, with an
original liquidation preference of $50 per share, having the designations,
voting power, preferences and relative, participating, optional and other
special rights, qualifications, limitations and restrictions thereof that are
set forth in the Certificate of Incorporation and in this Resolution as follows
(the terms used herein, unless otherwise defined herein, are used herein as
defined in Section I hereof):
I. Certain Definitions.
-------------------
As used herein, the following terms shall have the following meanings
(with terms defined in the singular having comparable meanings when used in the
plural and vice versa), unless the context otherwise requires:
"Additional Preferred Stock" means any additional shares of preferred
stock issued by the Company after the issuance of the 10% Series A Exchangeable
Preferred Stock.
"Board of Directors" means the Board of Directors of the Company.
29
"Business Day" means a day other than a Saturday, Sunday, national or
New York State holiday or other day on which commercial banks in New York City
are authorized or required by law to close.
"Capital Stock" means any and all shares, interests, participation,
rights or other equivalents (however designated) of corporate stock.
"Change of Control" means any of the following:
(i) the acquisition by any "person" or "group" (as such terms are
defined in the Exchange Act) through a purchase, merger, or
other acquisition transaction or series of transactions, of
more than 50.0% of the total voting power of all shares of
Voting Stock of the Company; or
(ii) any consolidation of the Company with, or merger of the Company
into, any other Person or the merger of any other Person into
the Company or any series of related transactions other than
any such transaction where (x) the outstanding Voting Stock of
the Company is not converted or is converted or exchanged
solely for voting common stock of the surviving corporation, in
each case that would not result in a Change of Control pursuant
to clause (i) above, or (y) such transaction is effected
primarily to change the jurisdiction of incorporation of the
Company and results in a reclassification, conversion or
exchange of outstanding Common Stock solely into shares of
common stock of the surviving entity; or
(iii) if during any period of two years, individuals who were members
of the Board of Directors at the beginning of such period,
together with individuals nominated to the Board of Directors
or appointed to fill vacancies on the Board of Directors by a
majority of such initial directors still remaining, cease for
any reason to constitute at least a majority of the members of
the Board of Directors (excluding, for purposes of this
calculation, any director who dies during such period); or
(iv) any sale, lease or exchange (in one or a series of related
transactions) of all or substantially all of the property and
assets of the Company (other than any refinancing of any
indebtedness or lease obligations of the Company in existence
on the date hereof) to another "person" or "group".
"Change of Control Date" has the meaning specified in Section VII(A)
hereof.
"Change of Control Optional Redemption Price" has the meaning
specified in Section VII(A) hereof.
"Common Stock" means the common stock, par value $.01 per share, of
the Company.
30
"Corporation" or "Company" means Boston Chicken, Inc.
"Dividend Payment Date" means each January 1, April 1, July 1 and
October 1 of each year on which dividends shall be paid or are payable, any
Redemption Date and any other date on which dividends in arrears may be paid.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Quarterly Dividend Period.
"Dividend Record Date" means, with respect to the dividend payable on
each Dividend Payment Date, the close of business on the fifteenth day
immediately preceding such Dividend Payment Date, or such other record date as
may be designated by the Board of Directors with respect to the dividend payable
on such Dividend Payment Date; provided, however, that such record date may not
be more than 60 days or less than ten days prior to such Dividend Payment Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Exchange Date" has the meaning specified in Section IX(A) hereof.
"Exchange Debentures" shall mean the 10% Subordinated Debentures due
2005 of the Company into which the 10% Series A Exchangeable Preferred Stock are
exchangeable at the option of the Company.
"Exchange Indenture" has the meaning specified in Section VIII(D)
hereof.
"Exchange Notice" has the meaning specified in Section IX(A) hereof.
"Holder" means a registered holder of shares of 10% Series A
Exchangeable Preferred Stock.
"Immediate Family Members" means an individual's spouse, parents,
children and siblings.
"Initial Dividend Period" means the dividend period commencing on and
including the Original Issue Date and ending on and including October 1, 1998.
"Junior Securities" has the meaning specified in Section III(A)(i)
hereof.
"Liquidation Preference" means, at any time, the Original Liquidation
Preference, plus an amount equal to all accumulated and unpaid dividends thereon
to the date, if any, fixed for voluntary or involuntary liquidation, dissolution
or winding up of the Company. The Liquidation Preference of a share of 10%
Series A Exchangeable Preferred Stock will increase by the amount of accumulated
and unpaid dividends on such share and will decrease only to the extent such
dividends are actually paid, all as provided in Section IV hereof.
31
"Mandatory Redemption Date" means June [ ], 2005.
"Mandatory Redemption Price" has the meaning specified in Section
VI(B) hereof.
"Offer to Purchase" means a written offer (the "Offer") sent by the
Company by first class mail, postage prepaid, to each Holder at his registered
address as set forth on the books and records of the Transfer Agent on the date
of the Offer offering to purchase up to the Original Liquidation Preference of
10% Series A Exchangeable Preferred Stock specified in such Offer at the
purchase price specified in such Offer (as determined pursuant to this
Certificate of Designations). The Offer shall specify an expiration date (the
"Expiration Date") of the Offer to Purchase which shall be, subject to any
contrary requirements of applicable law, not less than 30 days or more than 60
days after the date of such Offer and a settlement date (the "Purchase Date")
for purchase of shares of Preferred Stock within three Business Days after the
Expiration Date. The Company shall notify the Transfer Agent at least 15 days
(or such shorter period as is acceptable to the Transfer Agent) prior to the
mailing of the Offer of the Company's obligation to make an Offer to Purchase,
and the Offer shall be mailed by the Company or, at the Company's request, by
the Transfer Agent, in the name and at the expense of the Company. The Offer
shall contain information concerning the business of the Company and its
Subsidiaries which, at a minimum, shall include (i) the most recent annual and
quarterly financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the documents
required to be filed with the Transfer Agent pursuant to this Certificate of
Designations (which requirements may be satisfied by delivery of such documents
together with the Offer), (ii) a description of material developments in the
Company's business subsequent to the date of the latest of such financial
statements referred to in clause (i) (including a description of the events
requiring the Company to make the Offer to Purchase), (iii) if required under
applicable law, pro forma financial information concerning, among other things,
the Offer to Purchase and the events requiring the Company to make the Offer to
Purchase and (iv) any other information required by applicable law to be
included therein. The Offer shall contain all instructions and materials
necessary to enable such Holders to tender their shares of 10% Series A
Exchangeable Preferred Stock pursuant to the Offer to Purchase. The Offer shall
also state: (l) the section of this Certificate of Designations pursuant to
which the Offer to Purchase is being made; (2) the Expiration Date and the
Purchase Date; (3) the aggregate Original Liquidation Preference of the
outstanding shares of 10% Series A Exchangeable Preferred Stock offered to be
purchased by the Company pursuant to the Offer to Purchase (the "Purchase
Amount"); (4) the purchase price to be paid by the Company for each $50
aggregate Original Liquidation Preference of 10% Series A Exchangeable Preferred
Stock accepted for payment (as specified pursuant to this Certificate of
Designations) (the "Purchase Price"); (5) the Holder may tender all or any
portion of the 10% Series A Exchangeable Preferred Stock registered in the name
of such Holder and that any portion of 10% Series A Preferred Stock tendered
must be tendered in an integral multiple of $50 of Original Liquidation
Preference; (6) the place or places where the shares of 10% Series A
Exchangeable Preferred Stock are to be surrendered for tender pursuant to the
Offer to Purchase; (7) that dividends on any shares of 10% Series A Exchangeable
Preferred Stock not tendered or tendered but not purchased by the Company
pursuant to the Offer to Purchase will continue to accrue; (8) that on the
Purchase Date the Purchase Price will become
32
due and payable upon each share of 10% Series A Exchangeable Preferred Stock
being accepted for payment pursuant to the Offer to Purchase; (9) that each
Holder electing to tender shares of 10% Series A Exchangeable Preferred Stock
pursuant to the Offer to Purchase will be required to surrender such 10% Series
A Exchangeable Preferred Stock at the place or places specified in the Offer
prior to the close of business on the Expiration Date (such 10% Series A
Exchangeable Preferred Stock being, if the Company or the Transfer Agent so
requires, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Transfer Agent duly executed by, the
Holder thereof or his attorney duly authorized in writing); (10) that Holders
will be entitled to withdraw all or any portion, in integral multiples of $50,
of the 10% Series A Exchangeable Preferred Stock tendered if the Company (or its
paying agent) receives, not later than the close of business on the Expiration
Date, a facsimile transmission or letter setting forth the name of the Holder,
the certificate number or numbers of the 10% Series A Exchangeable Preferred
Stock the Holder tendered and a statement that such Holder is withdrawing all or
a portion of his tender and, in the aggregate, the Original Liquidation
Preference of the amount being withdrawn thereunder, plus the amount equal to
all accumulated and unpaid dividends thereon (as specified in this Certificate
of Designations); (11) that the Company shall purchase all such shares of 10%
Series A Exchangeable Preferred Stock duly tendered and not withdrawn pursuant
to the Offer to Purchase; and (12) that in the case of any Holder whose shares
of 10% Series A Exchangeable Preferred Stock are purchased only in part, the
Company shall execute, and the Transfer Agent shall countersign and deliver to
the Holder of such 10% Series A Exchangeable Preferred Stock without service
charge, new shares of 10% Series A Exchangeable Preferred Stock of any
authorized denomination as requested by such Holder, in an aggregate Original
Liquidation Preference equal to and in exchange for the unpurchased portion of
the aggregate Original Liquidation Preference of the 10% Series A Exchangeable
Preferred Stock so tendered. Any Offer to Purchase shall be governed by and
effected in accordance with the Offer for such Offer to Purchase.
"Optional Redemption Price" has the meaning specified in Section
VI(A)(i) hereof.
"Original Issue Date" means the date on which shares of 10% Series A
Exchangeable Preferred Stock were first issued or were first required to be
issued by the Company.
"Original Liquidation Preference" means $50 per share of 10% Series A
Exchangeable Preferred Stock.
"Parity Securities" has the meaning specified in Section III(A)(ii)
hereof.
"Person" means any individual, partnership, corporation, business
trust, joint stock company, limited liability company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Purchase Date" has the meaning specified in Section I hereof under
"Offer to Purchase".
33
"Quarterly Dividend Period" means the quarterly period commencing on
and including a Dividend Payment Date and ending on and including the day
immediately preceding the next subsequent Dividend Payment Date.
"Redemption Date" has the meaning specified in Section VI(C)(i)
hereof.
"Redemption Notice" has the meaning specified in Section VI(C)(i)
hereof.
"Registration Rights Agreement" means the agreement, dated June [ ],
1998, among the Company, BCI Acquisition Sub, L.L.C., BC Equity Funding L.L.C.
and Market Partners, L.L.C. pursuant to which the Company has agreed to
register, among other Securities, [_____________] shares of 10% Series A
Exchangeable Preferred Stock with the SEC.
"SEC" means the Securities and Exchange Commission.
"Shelf Registration Statement" has the meaning given to such term in
the Registration Rights Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Senior Securities" has the meaning specified in Section III(A)(iii)
hereof.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%) of
the total voting power of shares of Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of such
Person or a combination thereof.
"Transfer Agent" means ▇▇▇▇▇▇ Trust and Savings Bank or any successor
transfer agent.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities (as compiled and published in the most
recent Federal Reserve Statistical Release H.15(519) which has become publicly
available at least two business days prior to the date fixed for redemption of
the 10% Series A Exchangeable Preferred Stock or, if such Statistical Release is
no longer published, any publicly available source of similar market data with a
constant maturity most nearly equal to the then remaining period to the
Mandatory Redemption Date of the 10% Series A Exchangeable Preferred Stock);
provided, however, that if such period of the 10% Series A Exchangeable
Preferred Stock is not equal to the constant maturity of a United States
Treasury security for which a weekly average yield is given, the Treasury Rate
shall be obtained by linear interpolation (calculated to the nearest one-twelfth
of a year) from the weekly average yields of United States Treasury securities
for which such yields are given.
6
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trustee" means [ ], as Trustee under the Exchange
Indenture, or any successor Trustee appointed in accordance with the terms of
the Exchange Indenture.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to vote in the general election of directors of the Company.
II. Designation.
-----------
The series of preferred stock authorized hereunder shall be designated
as the "10% Series A Exchangeable Preferred Stock". The number of shares
constituting such series shall be 3,572,637, consisting of an initial issuance
of 2,536,000 shares plus up to a maximum of 1,036,637 additional shares which
may be issued to pay dividends on 10% Series A Exchangeable Preferred Stock in
accordance with Section IV(A) hereof. The par value of the 10% Series A
Exchangeable Preferred Stock shall be $0.01 per share of 10% Series A
Exchangeable Preferred Stock, and the original liquidation preference of the 10%
Series A Exchangeable Preferred Stock shall be $50 per share.
III. Ranking.
-------
(A) The 10% Series A Exchangeable Preferred Stock shall rank, with
respect to dividends and distributions upon the liquidation, dissolution or
winding-up of the Company:
(i) senior to all classes or series of Common Stock of the
Company and any Capital Stock of the Company, including any series of Additional
Preferred Stock hereafter created by the Board of Directors after the issuance
of the 10% Series A Exchangeable Preferred Stock, the terms of which Capital
Stock or Additional Preferred Stock expressly provide that it ranks junior to
the 10% Series A Exchangeable Preferred Stock as to dividends and distributions
upon liquidation, dissolution or winding-up of the Company (collectively
referred to as "Junior Securities"); and
(ii) on a parity with any Capital Stock of the Company,
including any series of Additional Preferred Stock hereafter created by the
Board of Directors after the issuance of the 10% Series A Exchangeable Preferred
Stock, the terms of which expressly provide that it ranks on a parity with the
10% Series A Exchangeable Preferred Stock as to dividends and distributions upon
the liquidation, dissolution or winding-up of the Company (collectively referred
to as "Parity Securities"); and
(iii) junior to any Capital Stock of the Company, including any
series of Additional Preferred Stock hereafter created by the Board of Directors
after the issuance of the 10% Series A Exchangeable Preferred Stock, the terms
of which expressly provide that it ranks senior to the 10% Series A Exchangeable
Preferred Stock as to dividends and distributions upon the liquidation,
dissolution or winding-up of the Company ("Senior Securities").
7
IV. Dividends.
---------
(A) Beginning on the Original Issue Date, Holders shall be entitled
to receive, when, as and if declared by the Board of Directors, out of funds
legally available for the payment of dividends, dividends on each outstanding
share of 10% Series A Exchangeable Preferred Stock, at a rate per annum equal to
10% of the Liquidation Preference per share of the 10% Series A Exchangeable
Preferred Stock, payable with respect to each Dividend Period; provided,
however, that if the Shelf Registration Statement has not been declared
effective on or before the 150th day after the Original Issuance Date, such
dividend rate per annum will increase to 11% on the 151st day after such
Original Issuance Date and shall further increase by 0.5% for each period of 90
days thereafter (for greater certainty, if applicable, the first 90-day period
would commence on the 241st day after the Original Issuance Date and end on the
330th day after the Original Issuance Date and the next 90-day period would
commence on the 331st day after the Original Issuance Date) until the Shelf
Registration Statement is declared effective by the SEC, up to a maximum of 12%.
In the event the annual dividend rate increases pursuant to this Section IV(A),
on the date immediately following the date the Shelf Registration Statement is
declared effective by the SEC, such annual dividend rate will be reduced to 10%.
All dividends shall be cumulative, whether or not earned or declared for any
reason, on a daily basis from the Original Issuance Date and shall be payable in
arrears for each Dividend Period on each Dividend Payment Date, commencing on
October 1, 1998. Before June [__], 2001, dividends may, at the option of the
Company, be paid either in cash or additional shares of fully paid and non-
assessable shares (including fractional shares) of 10% Series A Exchangeable
Preferred Stock with an aggregate Liquidation Preference equal to the amount of
such dividend (or in any combination of cash and such shares). On or after June
[__], 2001, dividends shall be paid only in cash. The annual dividend rate will
permanently increase by 25 basis points per quarter for each quarter after June
[__], 2001 in which dividends are not paid in cash.
(B) Each dividend paid on the 10% Series A Exchangeable Preferred
Stock shall be payable to Holders of record as their names shall appear in the
stock ledger of the Company on the Dividend Record Date for such dividend,
except that dividends in arrears for any past Dividend Payment Date may be
declared and paid at any time without reference to such regular Dividend Payment
Date to Holders of record on a later dividend record date determined by the
Board of Directors.
(C) Dividends shall cease to accumulate in respect of shares of 10%
Series A Exchangeable Preferred Stock on the day prior to the Exchange Date or
on the day of their earlier redemption, unless the Company shall have failed to
issue the appropriate aggregate principal amount of Exchange Debentures in
respect of the 10% Series A Exchangeable Preferred Stock on the Exchange Date or
shall have failed to pay the relevant redemption price on the date fixed for
redemption.
(D) All dividends paid with respect to shares of the 10% Series A
Exchangeable Preferred Stock shall be paid pro rata to the Holders entitled
thereto based upon the number of shares of 10% Series A Exchangeable Preferred
Stock held by each such Holder on the relevant Dividend Record Date.
8
(E) No full dividends shall be declared by the Board of Directors or
paid or funds set apart for payment by the Company on the 10% Series A
Exchangeable Preferred Stock or any Parity Securities for any period unless full
cumulative dividends have been or contemporaneously are declared and paid, or
declared and (in the case of dividends payable in cash) a sum set apart
sufficient for such payment, on the 10% Series A Exchangeable Preferred Stock
and any Parity Securities for all Dividend Periods terminating on or prior to
the date of payment of such full dividends on the 10% Series A Exchangeable
Preferred Stock or such Parity Securities. If any dividends are not paid in
full, as aforesaid, upon the shares of the 10% Series A Exchangeable Preferred
Stock and any Parity Securities, all dividends declared upon shares of the 10%
Series A Exchangeable Preferred Stock and any other Parity Securities shall be
declared pro rata so that the amount of dividends declared per share on the 10%
Series A Exchangeable Preferred Stock and such Parity Securities shall in all
cases bear to each other the same ratio that accumulated and unpaid dividends
per share on the 10% Series A Exchangeable Preferred Stock and such Parity
Securities bear to each other. Except as contemplated herein, no interest or
additional dividends, or sum of money in lieu of interest or additional
dividends, shall be payable in respect of any dividend payment or payments on
the 10% Series A Exchangeable Preferred Stock or any Parity Securities which may
be in arrears.
(F) So long as any shares of the 10% Series A Exchangeable Preferred
Stock are outstanding, except with respect to (i) repurchases of Common Stock,
or warrants, rights, calls or options exercisable for or convertible into Common
Stock, issued under the Company's stock incentive programs, and (ii) dividends
or distributions payable in kind in additional shares of, or warrants, rights,
calls or options exercisable for or convertible into additional shares of,
Junior Securities, the Company shall not declare, pay or set apart for payment
any dividend on any Junior Securities (except dividends on Junior Securities
payable in additional shares of Junior Securities), or make any payment on
account of, or set apart for payment money for a sinking or other similar fund
for, the purchase, redemption or other retirement of, any of the Junior
Securities or any warrants, rights, calls or options exercisable for or
convertible into any of the Junior Securities (excluding any convertible debt
securities), and shall not permit any corporation or other entity directly or
indirectly controlled by the Company to purchase or redeem any of the Junior
Securities or any warrants, rights, calls or options exercisable for or
convertible into any of the Junior Securities, unless prior to or concurrently
with such declaration, payment, setting apart for payment, purchase, redemption
or distribution, as the case may be, all accumulated and unpaid dividends on
shares of the 10% Series A Exchangeable Preferred Stock not paid on the dates
provided for in Section IV(A) hereof (and, to the extent previously due but not
yet paid, any and all redemption payments on the 10% Series A Exchangeable
Preferred Stock) shall have been or are concurrently being paid.
(G) Dividends payable on shares of the 10% Series A Exchangeable
Preferred Stock for any period less than a year shall be computed on the basis
of a 360-day year of twelve 30-day months and the actual number of days elapsed
in the period for which payable. If any Dividend Payment Date occurs on a day
that is not a Business Day, any accumulated and unpaid dividends otherwise
payable on such Dividend Payment Date shall be paid on the next succeeding
Business Day.
9
(H) For federal income tax purposes, distributions with respect to
the 10% Series A Exchangeable Preferred Stock will not qualify as dividends and
will be treated as a return of capital until the Company has earnings and
profits.
V. Payment on Liquidation.
----------------------
(A) Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Company, Holders will be entitled to receive out of the assets
of the Company available for distribution to the holders of its Capital Stock,
whether such assets are capital, surplus or earnings, an amount in cash equal to
the Liquidation Preference, before any payment shall be made or any assets
distributed to the holders of any of the Junior Securities, determined as of the
date of such voluntary or involuntary liquidation, dissolution or winding-up.
Except as set forth in the preceding sentence, Holders shall not be entitled to
any distribution in the event of voluntary or involuntary liquidation,
dissolution or winding-up of the Company. If upon any voluntary or involuntary
liquidation, dissolution or winding-up of the affairs of the Company, the assets
of the Company are not sufficient to pay in full the liquidation payments
payable to the holders of outstanding shares of the 10% Series A Exchangeable
Preferred Stock and all Parity Securities, then the holders of all such shares
shall share equally and ratably in any distribution of assets in proportion to
the full liquidation preferences, determined as of the date of such voluntary or
involuntary liquidation, dissolution or winding-up, to which they are entitled.
(B) For the purposes of this Section V only, neither the sale, lease,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with or into one or more
corporations shall be deemed to be a liquidation, dissolution or winding-up of
the Company (unless such sale, conveyance, exchange or transfer is in connection
with a dissolution or winding-up of the business of the Company).
VI. Redemption.
----------
(A) Optional Redemption. (i) The Company may, at its option, redeem
(subject to contractual and other restrictions with respect thereto and the
legal availability of funds therefor), at any time, from any source of funds
legally available therefor, in whole or in part, in the manner provided in
Section VI(C) hereof, any or all of the shares of the 10% Series A Exchangeable
Preferred Stock, at the redemption prices (expressed as a percentage of the
Original Liquidation Preference thereof, determined as of such Redemption Date)
set forth below plus an amount in cash equal to all accumulated and unpaid
dividends per share, if any, to the Redemption Date (the "Optional Redemption
Price"):
Through the first anniversary
of the Original Issue Date.......................................50.0%
Thereafter for the next three
month period.....................................................52.5%
Thereafter for the next three
10
month period..................................... 55.0%
Thereafter for the next three
month period..................................... 57.5%
Thereafter for the next three
month period..................................... 60.0%
Thereafter for the next three
month period..................................... 62.5%
Thereafter for the next three
month period..................................... 65.0%
Thereafter for the next three
month period..................................... 67.5%
Thereafter for the next three
month period..................................... 70.0%
Thereafter through the fourth
anniversary of the Original Issue Date........... 80.0%
Thereafter through the fifth
anniversary of the Original Issue Date........... 90.0%
Thereafter through but not including the
seventh anniversary of the Original Issue Date... 100.0%
Thereafter....................................... 110.0%
(ii) In the event of a redemption pursuant to this Section VI(A) of
only a portion of the then outstanding shares of 10% Series A Exchangeable
Preferred Stock, the Company shall effect such redemption pro rata according to
the number of shares held by each Holder of such 10% Series A Exchangeable
Preferred Stock or by lot, as determined by the Company, except that the Company
may redeem such shares held by any Holders of fewer than 1000 shares (or shares
held by Holders who would hold less than 100 shares as a result of such
redemption), as determined by the Company in its sole discretion.
(B) Mandatory Redemption. On the Mandatory Redemption Date, the
Company shall redeem from any source of funds legally available therefor, in the
manner provided in Section VI(C) below, all of the shares of the 10% Series A
Exchangeable Preferred Stock then outstanding at a redemption price equal to
110% of the Original Liquidation Preference thereof, plus an amount in cash
equal to all accumulated and unpaid dividends per share, if any, to the
Redemption Date (the "Mandatory Redemption Price").
11
(C) Procedure for Redemption. (i) Not more than sixty (60) and not
less than thirty (30) days prior to the date fixed for any redemption of the 10%
Series A Exchangeable Preferred Stock, written notice (the "Redemption Notice")
shall be given by first-class mail, postage prepaid, to each Holder of record of
shares to be redeemed on the record date fixed for such redemption of the 10%
Series A Exchangeable Preferred Stock at such Holder's address as the same
appears on the stock ledger of the Company, provided, however, that no failure
to give such notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of 10% Series A Exchangeable
Preferred Stock to be redeemed except as to the Holder or Holders to whom the
Company has failed to give such notice or except as to the Holder or Holders
whose notice was defective. The Redemption Notice shall state:
(a) whether the redemption is pursuant to Section VI(A)(i) or VI(B)
hereof;
(b) the Optional Redemption Price or Mandatory Redemption Price, as
the case may be;
(c) whether all or less than all the outstanding shares of the 10%
Series A Exchangeable Preferred Stock are to be redeemed and the total number of
shares of such 10% Series A Exchangeable Preferred Stock being redeemed;
(d) the number of shares of 10% Series A Exchangeable Preferred Stock
held by the Holder that the Company intends to redeem;
(e) the date fixed for redemption (the "Redemption Date");
(f) that the Holder is to surrender to the Company, at the place or
places, which shall be designated in such Redemption Notice, its certificates
representing the shares of 10% Series A Exchangeable Preferred Stock to be
redeemed;
(g) that dividends on the shares of the 10% Series A Exchangeable
Preferred Stock to be redeemed shall cease to accumulate on the day of such
Redemption Date unless the Company defaults in the payment of the Optional
Redemption Price or Mandatory Redemption Price, as the case may be; and
(h) the name of any bank or trust company performing the duties
referred to in Section VI(C)(v) below.
(ii) On or before the Redemption Date, each Holder of 10% Series A
Exchangeable Preferred Stock to be redeemed shall surrender the certificate or
certificates representing such shares of 10% Series A Exchangeable Preferred
Stock to the Company, in the manner and at the place designated in the
Redemption Notice, and on the Redemption Date the full Optional Redemption Price
or Mandatory Redemption Price, as the case may be, for such shares shall be
payable in cash to the Person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate shall be
returned to authorized but unissued shares in accordance with Section XI. In the
event that less than all of the shares
12
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
(iii) Unless the Company defaults in the payment in full of the
applicable redemption price, dividends on the 10% Series A Exchangeable
Preferred Stock called for redemption shall cease to accumulate on the
Redemption Date, and the Holders of such shares shall cease to have any further
rights with respect thereto on the Redemption Date, other than the right to
receive the Optional Redemption Price or Mandatory Redemption Price, as the case
may be, without interest.
(iv) If a Redemption Notice shall have been duly given, and if, on or
before the Redemption Date specified therein, all funds necessary for such
redemption shall have been set aside by the Company, separate and apart from its
other funds, in trust for the pro rata benefit of the Holders of the 10% Series
A Exchangeable Preferred Stock called for redemption so as to be and continue to
be available therefor, then, notwithstanding that any certificate for shares so
called for redemption shall not have been surrendered for cancellation, all
shares so called for redemption shall no longer be deemed outstanding, and all
rights with respect to such shares shall forthwith on such Redemption Date cease
and terminate, except only the right of the Holders thereof to receive the
Optional Redemption Price or Mandatory Redemption Price, as the case may be,
without interest.
(v) If a Redemption Notice shall have been duly given or if the
Company shall have given to the bank or trust company hereinafter referred to
irrevocable authorization promptly to give such notice, and if on or before the
Redemption Date specified therein the funds necessary for such redemption shall
have been deposited by the Company with such bank or trust company in trust for
the pro rata benefit of the Holders of the 10% Series A Exchangeable Preferred
Stock called for redemption, then, notwithstanding that any certificate for
shares so called for redemption shall not have been surrendered for
cancellation, from and after the time of such deposit, all shares so called, or
to be so called pursuant to such irrevocable authorization, for redemption shall
no longer be deemed to be outstanding and all rights with respect of such shares
shall forthwith cease and terminate, except only the right of the Holders
thereof to receive from such bank or trust company at any time after the time of
such deposit the funds so deposited, without interest. The aforesaid bank or
trust company shall be organized and in good standing under the laws of the
United States of America or of the State of New York, shall be doing business in
the Borough of Manhattan, The City of New York, shall have capital, surplus and
undivided profits aggregating at least $100,000,000 according to its last
published statement of condition, and shall be identified in the Redemption
Notice. Any interest accrued on such funds shall be paid to the Company from
time to time. Any funds so set aside or deposited, as the case may be, and
unclaimed at the end of three years from such Redemption Date shall, to the
extent permitted by law, be released or repaid to the Company, after which
repayment the Holders of the shares so called for redemption shall look only to
the Company for payment thereof.
VII. Change of Control.
-----------------
13
(A) Upon the occurrence of a Change of Control, the Company shall be
required (subject to any contractual and other restrictions with respect thereto
and the legal availability of funds therefor) to make an Offer to Purchase (as
provided for herein) to each Holder of shares of 10% Series A Exchangeable
Preferred Stock to repurchase all or any part of such Holder's shares of 10%
Series A Exchangeable Preferred Stock at the prevailing "Change of Control
Optional Redemption Price" at the time of the event (the "Change of Control
Date"). "Change of Control Optional Redemption Price" means the following
percentages of Original Liquidation Preference plus an amount in cash equal to
all accumulated and unpaid dividends thereon to the Change of Control Date as
set forth below:
Through the first anniversary of
the Original Issue Date....................... 65.0%
Thereafter through the second
anniversary of the Original Issue Date ....... 75.0%
Thereafter through the third
anniversary of the Original Issue Date........ 85.0%
Thereafter through the fourth
anniversary of the Original Issue Date........ 92.0%
Thereafter through the fifth
anniversary of the Original Issue Date........ 99.0%
Thereafter through the sixth
anniversary of the Original Issue Date........ 105.0%
Thereafter through the seventh
anniversary of the Original Issue Date........ 110.0%
(B) Within 30 days following any Change of Control Date, the Company
shall mail an Offer to Purchase to such Holder.
(C) On the Purchase Date, (i) the Company shall, to the extent lawful,
(a) accept for payment shares of 10% Series A Exchangeable Preferred Stock
tendered pursuant to the Offer to Purchase, (b) promptly mail to each Holder of
shares of 10% Series A Exchangeable Preferred Stock so accepted payment in an
amount equal to the Change of Control Optional Redemption Price for such shares
and (c) arrange to have promptly authenticated and mailed (or cause to be
transferred by book entry) to each Holder a new share certificate representing
any unpurchased shares of the 10% Series A Exchangeable Preferred Stock
represented by the certificate tendered pursuant to the Offer, if any, and (ii)
unless the Company defaults in the payment for the shares of 10% Series A
Exchangeable Preferred Stock tendered pursuant to the Offer to Purchase,
dividends shall cease to accrue with respect to the shares of 10% Series A
Exchangeable Preferred Stock tendered and all rights of Holders of such tendered
14
shares shall terminate, except for the right to receive payment therefor, on the
Purchase Date. The Company shall publicly announce the results of the Offer to
Purchase on or as soon as practicable after the Purchase Date.
(D) The Company shall comply with Rule 14e-1 under the Exchange Act
and any securities laws and regulations to the extent such laws and regulations
are applicable to the repurchase of shares of the 10% Series A Exchangeable
Preferred Stock in connection with a Change of Control.
(E) In the event a Change of Control occurs within six months
following an optional redemption under Section VI(A)(i), the Company shall be
required to immediately pay the Holders of the 10% Series A Exchangeable
Preferred Stock whose shares were so redeemed the difference between (i) the
Change of Control Optional Redemption Price that would have been paid if the
Series A Preferred Stock had been redeemed on the date of the Change of Control
and (ii) the Optional Redemption Price previously paid.
VIII. Voting Rights.
-------------
(A) Holders, except as otherwise required under Delaware law and as
set forth in paragraphs (B) and (C) below, shall not be entitled or permitted to
vote on any matter required or permitted to be voted upon by the stockholders of
the Company.
(B) Without the approval of Holders of at least a majority of the
shares of 10% Series A Exchangeable Preferred Stock then outstanding, voting or
consenting, as the case may be, separately as a single class, given in person or
by proxy, either in writing or by resolution adopted at an annual or special
meeting called for the purpose, the Company will not amend, modify or repeal the
Certificate of Designations so as to adversely affect the specified
designations, rights, preferences, privileges or voting rights of the 10% Series
A Exchangeable Preferred Stock. The authorization or consummation of a
transaction that results in the 10% Series A Exchangeable Preferred Stock being
converted or exchanged for or becoming shares of a resulting entity shall not
constitute an amendment, modification or repeal of this Certificate of
Designations for purposes of this Section VIII.
(C) Without the approval of the Holders of the 10% Series A
Exchangeable Preferred Stock, the Company shall be permitted to issue Senior
Securities only if such Senior Securities are issued (i) in exchange for
securities that are senior to the 10% Series A Exchangeable Preferred Stock,
(ii) for cash in a public offering of securities offered and sold pursuant to an
effective registration statement or pursuant to Rule 144A under the Securities
Act (a "Public Offering"), or (iii) for cash in a sale of securities that is not
a Public Offering, provided that if any of the purchasers in such private
placement are, or are "controlled" by (as such term is defined in Rule 405 under
the Securities Act), the Company, its officers or directors or their Immediate
Family Members, the Company will obtain an opinion from a nationally recognized
investment banking firm that the transaction is fair to the Company from a
financial point of view
15
(D) Prior to the exchange of 10% Series A Exchangeable Preferred
Stock for Exchange Debentures in accordance with Section IX, the Company shall
not amend or modify the indenture dated June [__], 1998 between the Company and
the Trustee for the Exchange Debentures (the "Exchange Indenture"), a copy of
which is on file at the principal executive offices of the Company, without the
affirmative vote or consent of Holders of at least a majority of the shares of
10% Series A Exchangeable Preferred Stock then outstanding, voting or
consenting, as the case may be, separately as a single class, given in person or
by proxy, either in writing or by resolution adopted at an annual or special
meeting called for the purpose; provided that the Company and the Trustee shall
be permitted, without any vote or consent of the Holders, to effect any
amendments to the Exchange Indenture that could have been effected under the
Exchange Indenture without the consent of holders of Exchange Debentures if any
Exchange Debentures were then outstanding.
(E) The Holders of at least a majority of the shares of 10% Series A
Exchangeable Preferred Stock then outstanding, voting or consenting, as the case
may be, separately as a single class, whether voting in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting
called for the purpose, may waive compliance with any provision of this
Certificate of Designations.
(F) Notwithstanding anything herein to the contrary, (i) the
creation, authorization or issuance of any shares of any Parity Securities or
Junior Securities or (ii) the increase or decrease in the amount of authorized
Capital Stock of any class, including any preferred stock, shall not require the
consent of the Holders of 10% Series A Exchangeable Preferred Stock and shall
not be deemed to affect adversely the rights, preferences, privileges or voting
rights of Holders of 10% Series A Exchangeable Preferred Stock.
IX. Exchange.
(A) The Company may, at its option, at any time, exchange the shares
of 10% Series A Exchangeable Preferred Stock, in whole but not in part, for the
Exchange Debentures to be issued pursuant to an Exchange Indenture (such date,
the "Exchange Date"). Notwithstanding the foregoing, the Company may not
exercise such exchange option unless all accumulated and unpaid dividends in
respect of shares of 10% Series A Exchangeable Preferred Stock surrendered to
the Company upon exchange shall have been paid either in cash or, in respect of
accumulated and unpaid dividends prior to June [__], 2001, at the option of the
Company, in cash or a principal amount of Exchange Debentures equal to such
amount in lieu of a payment in cash; provided that, the Company may elect to set
aside Exchange Debentures (in respect of accumulated and unpaid dividends prior
to June [__], 2001) or funds to provide for the payment in full of such
dividends. At least thirty (30) and not more than sixty (60) days prior to the
date fixed for exchange, the Company shall send a written notice (the "Exchange
Notice") of exchange by mail to each Holder, which notice shall state: (a) that
the Company has elected to exchange the 10% Series A Exchangeable Preferred
Stock into Exchange Debentures pursuant to this Certificate of Designations; (b)
the Exchange Date; (c) that the Holder is to surrender to the Company, at the
place or places and in the manner designated in the Exchange Notice, its
certificate or certificates representing the shares of 10% Series A Exchangeable
Preferred Stock;
16
(d) that dividends on the shares of 10% Series A Exchangeable Preferred Stock to
be exchanged shall cease to accumulate at the close of business on the day prior
to the Exchange Date, whether or not certificates for shares of 10% Series A
Exchangeable Preferred Stock are surrendered for exchange on the Exchange Date,
unless the Company shall default in the delivery of Exchange Debentures; and (e)
that interest on the Exchange Debentures shall accrue from the Exchange Date
whether or not certificates for shares of 10% Series A Exchangeable Preferred
Stock are surrendered for exchange on the Exchange Date. On the Exchange Date,
if the conditions set forth in clauses (i) through (iv) below are satisfied and
if the exchange is then permitted under the Exchange Indenture, the Company
shall issue Exchange Debentures in exchange for the 10% Series A Exchangeable
Preferred Stock as provided in the next paragraph, provided that on the Exchange
Date: (i) there shall be legally available funds sufficient for the exchange to
occur (including, without limitation, legally available funds sufficient
therefor under Sections 160 and 170 (or any successor provisions), to the extent
applicable, of the General Corporation Law of the State of Delaware); (ii)
either (a) a registration statement relating to the Exchange Debentures shall
have been declared effective under the Securities Act prior to such exchange and
shall continue to be in effect on the Exchange Date or (b)(1) the Company shall
have obtained a written opinion of counsel acceptable to the Company that an
exemption from the registration requirements of the Securities Act is available
for such exchange and (2) such exemption is relied upon by the Company for such
exchange; (iii) the Exchange Indenture and the Trustee shall have been qualified
under the Trust Indenture Act or the Company shall have obtained a written
opinion of counsel that such qualification is not required; and (iv) immediately
after giving effect to such exchange, no Default or Event of Default (each as
defined in the Exchange Indenture) would exist under the Exchange Indenture. In
the event that any of the conditions set forth in clauses (i) through (iv) of
the preceding sentence are not satisfied on the Exchange Date, then no shares of
10% Series A Exchangeable Preferred Stock shall be exchanged, and in order to
effect an exchange as provided for in this Section IX, the Company shall be
required to fix another date for the exchange and issue a new Exchange Notice.
(B) Upon any exchange pursuant to Section IX(A), Holders shall be
entitled to receive a principal amount of Exchange Debentures equal to the
Liquidation Preference of 10% Series A Exchangeable Preferred Stock, plus,
without duplication, an amount in cash equal to all accumulated and unpaid
dividends thereon, if any, to the Exchange Date; provided that the Company shall
pay cash in lieu of issuing an Exchange Debenture in a principal amount of less
than $1,000 and provided further that the Exchange Debentures will be issuable
only in denominations of $1,000 and integral multiples thereof. If any amount is
owed by the Company in respect of accumulated and unpaid dividends relating to
any Dividend Period prior to June [__], 2001, such amount may, at the option of
the Company, be paid in a principal amount of Exchange Debentures equal to such
amount in lieu of a payment in cash.
(C) On or before the Exchange Date, each Holder shall surrender the
certificate or certificates representing such shares of 10% Series A
Exchangeable Preferred Stock, in the manner and at the place designated in the
Exchange Notice. The Company shall cause the Exchange Debentures to be executed
on the Exchange Date and, upon surrender in accordance with the Exchange Notice
of the certificates for any shares of 10% Series A Exchangeable Preferred Stock
so exchanged (properly endorsed or assigned for transfer, if the
17
Exchange Notice shall so state), such shares shall be exchanged by the Company
into Exchange Debentures as aforesaid. The Company shall pay interest on the
Exchange Debentures at the rate and on the dates specified therein from the
Exchange Date.
(D) If the Exchange Notice has been mailed as aforesaid, and if
before the Exchange Date all Exchange Debentures necessary for such exchange
shall have been duly executed by the Company and delivered to the Trustee with
irrevocable instructions to authenticate the Exchange Debentures necessary for
such exchange, then the rights of the Holders as stockholders of the Company
shall cease (except the right to receive Exchange Debentures and accumulated and
unpaid dividends (in cash or, in respect of accumulated and unpaid dividends
relating to any Dividend Payment Date prior to July 1, 2001, at the option of
the Company, in cash or a principal amount of Exchange Debentures equal to such
amount in lieu of a payment in cash) to the Exchange Date), and the Person or
Persons entitled to receive the Exchange Debentures issuable upon exchange shall
be treated for all purposes as the registered holder or holders of such Exchange
Debentures as of the date of exchange. Upon the exchange of the 10% Series A
Exchangeable Preferred Stock for Exchange Debentures, the rights of Holders as
stockholders of the Company shall cease (except the right to receive the
Exchange Debentures and accumulated and unpaid dividends (in cash or, in respect
of accumulated and unpaid dividends relating to any Dividend Payment Date prior
to July 1, 2001, at the option of the Company, in cash or a principal amount of
Exchange Debentures equal to such amount in lieu of a payment in cash) to the
Exchange Date), and the Person or Persons entitled to receive the Exchange
Debentures issuable upon exchange shall be treated for all purposes as
registered holder or holders of such Exchange Debentures as of the date of
exchange. The Company will pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of notes evidencing
Exchange Debentures on exchange of the 10% Series A Exchangeable Preferred Stock
pursuant hereto; provided that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issue or
delivery of notes evidencing Exchange Debentures in a name other than that of
the record holder of the 10% Series A Exchangeable Preferred Stock to be
exchanged and no such issue or delivery shall be made unless and until the
Person requesting such issue or delivery has paid to the Company the amount of
any such tax or has established, to the satisfaction of the Company, that such
tax has been paid.
X. Mutilated or Missing 10% Series A Exchangeable Preferred Stock
Certificates.
If any of the 10% Series A Exchangeable Preferred Stock certificates
shall be mutilated, lost, stolen or destroyed, the Company shall issue, in
exchange and in substitution for and upon cancellation of the mutilated 10%
Series A Exchangeable Preferred Stock certificate, or in lieu of and
substitution for the 10% Series A Exchangeable Preferred Stock certificate lost,
stolen or destroyed, a new 10% Series A Exchangeable Preferred Stock certificate
of like tenor and representing an equivalent amount of shares of 10% Series A
Exchangeable Preferred Stock, but only upon receipt of evidence of such loss,
theft or destruction of such 10% Series A Exchangeable Preferred Stock
certificate and indemnity or bond, if requested, satisfactory to the Company and
the Transfer Agent (if other than the Company).
18
Upon the issuance of any replacement 10% Series A Exchangeable
Preferred Stock under this Section, the Company may require the payment of a sum
sufficient to pay all documentary, stamp or similar issue or transfer taxes or
other governmental charges that may be imposed in relation thereto and any other
expenses connected therewith.
XI. Reissuance; Conversion; Preemptive Rights.
(i) Shares of 10% Series A Exchangeable Preferred Stock that have
been issued and reacquired in any manner, including shares purchased or redeemed
or exchanged, shall (upon compliance with any applicable provisions of the laws
of the State of Delaware) have the status of authorized and unissued shares of
preferred stock undesignated as to series and may be redesignated and reissued
as part of any series of Additional Preferred Stock other than the 10% Series A
Exchangeable Preferred Stock.
(ii) The Holders of 10% Series A Exchangeable Preferred Stock shall
not have any rights hereunder to convert such shares into or exchange such
shares for shares of any other class or classes or of any other series of any
class or classes of Capital Stock of the Company.
(iii) No shares of 10% Series A Exchangeable Preferred Stock shall
have any rights of preemption whatsoever as to any securities of the Company, or
any warrants, rights or options issued or granted with respect thereto,
regardless of how such securities or such warrants, rights or options may be
designated, issued or granted.
XII. Business Day.
If any payment or redemption shall be required by the terms hereof to
be made on a day that is not a Business Day, such payment, redemption or
exchange shall be made on the immediately succeeding Business Day and no further
dividends shall accumulate after the day payment was required.
XIII. Headings of Subdivisions.
The headings of various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
XIV. Severability of Provisions.
If any right, preference or limitation of the 10% Series A
Exchangeable Preferred Stock set forth in these resolutions and the Certificate
of Designations filed pursuant hereto (as such Certificate of Designations may
be amended from time to time) is invalid, unlawful or incapable of being
enforced by reason of any rule or law or public policy, all other rights,
preferences and limitations set forth in such Certificate of Designations, as
amended, which can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation shall, nevertheless remain in full
force and effect, and no right, preference or limitation herein set forth shall
be deemed dependent upon any other such right, preference or limitation unless
so expressed herein.
19
XV. Notice to the Company.
All notices and other communications required or permitted to be given
to the Company hereunder shall be made by first-class mail, postage prepaid, to
the Company at its principal executive offices (currently located on the date of
the adoption of these resolutions at the following address: Boston Chicken,
Inc., 14103 Denver ▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: General Counsel). Minor imperfections in any such notice shall not
affect the validity thereof.
XVI. Limitations.
Except as may otherwise be required by law, the shares of 10% Series A
Exchangeable Preferred Stock shall not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth in this resolution (as such resolution may be amended from time to
time) or otherwise in the Certificate of Incorporation of the Company.
IN WITNESS WHEREOF, this Certificate has been signed on this [ ] day
of June, 1998.
BOSTON CHICKEN, INC.
By:
-----------------------------
Name:
Title:
Attested by:
20
EXHIBIT B
28
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED AS CONSIDERATION
PURSUANT TO AN AGREEMENT AND PLAN OF MERGER (THE "MERGER AGREEMENT") DATED MARCH
16, 1998 AMONG BOSTON CHICKEN, INC. (THE "COMPANY") AND BCI ACQUISITION SUB,
L.L.C., ON THE ONE HAND, AND BC EQUITY FUNDING, L.L.C. AND MARKET PARTNERS,
L.L.C., ON THE OTHER HAND. PURSUANT TO SECTION 7.01(a) OF THE MERGER AGREEMENT,
UNLESS THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS
PREVIOUSLY EXECUTED AND DELIVERED TO THE COMPANY A PROPERLY EXECUTED LETTER OF
TRANSMITTAL (AS DEFINED IN THE MERGER AGREEMENT) CONTAINING THE RELEASE SET
FORTH THEREIN, REMOVAL OF THIS LEGEND REQUIRES THE EXECUTION OF A RELEASE
CONTAINING THE TERMS SET FORTH IN SECTIONS 7.01(c) AND 7.01(d) OF THE MERGER
AGREEMENT. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, OR OTHERWISE DISPOSED OF (A
"TRANSFER"), AND THE COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES,
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (B)
UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
THE COMPANY, THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT.
EXHIBIT C
29
ESCROW AGREEMENT, dated as of March 16, 1998 (this "Agreement"),
among, BOSTON CHICKEN, INC., a Delaware corporation (the "Company"), BC EQUITY
FUNDING, L.L.C., a Delaware limited liability company ("BCEF"), MARKET PARTNERS,
L.L.C., a Delaware limited liability company ("Market Partners") and LaSalle
National Bank (the "Escrow Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company, BCI ACQUISITION SUB, L.L.C., a Delaware limited
liability company and a wholly-owned subsidiary of the Company ("BCI Sub"), BCEF
and Market Partners have entered into a Merger Agreement, dated as of the date
hereof (the "Merger Agreement"; terms defined in the Merger Agreement and not
otherwise defined herein have the meanings ascribed to them in the Merger
Agreement), pursuant to which BCEF and Market Partners have agreed to merge with
and into BCI Sub, with BCI Sub being the surviving corporation;
WHEREAS, as a result of the Merger, holders of limited liability
company interests in BCEF and Market Partners ("LLC Interests") will receive (i)
$126.8 million aggregate liquidation preference of 10% Series A Exchangeable
Preferred Stock, (ii) 3,500,000 shares of common stock, $.01 par value per
share, of the Company and (iii) $10,000,000 in cash (to be divided among only
those holders of LLC Interests who are not BCI Insiders);
WHEREAS, Section 1.08 of the Merger Agreement requires the Company to
deposit or cause to be deposited into escrow the sum of $10,000,000 in cash (the
"Escrow Amount"), which Escrow Amount is to be held and disbursed by the Escrow
Agent in accordance with Section 4 of this Agreement;
WHEREAS, a copy of the Merger Agreement has been delivered to the
Escrow Agent, and the Escrow Agent is willing to act as the Escrow Agent
hereunder; and
WHEREAS, the Escrow Agent will hold the Escrow Amount in Trust Account
No. 62-7904-00-6 at LaSalle National Bank, Chicago, Illinois, ABA No. ▇▇▇▇▇▇▇▇▇
(the "Escrow Account");
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein and in the Merger Agreement, and intending to be
legally bound hereby, the parties hereby agree as follows:
1. Appointment and Agreement of Escrow Agent; Paying Agent. The
Company, BCEF and Market Partners hereby appoint the Escrow Agent to serve as,
and the Escrow Agent hereby agrees to act as, escrow agent and paying agent (in
such latter capacity, the "Paying Agent") upon the terms and conditions of this
Agreement.
2. Establishment of the Escrow Funds. (a) Pursuant to Section 1.08
of the Merger Agreement, the Company shall deliver to the Escrow Agent on the
date hereof the Escrow Amount. The Escrow Agent shall hold the Escrow Amount
and all interest and other
amounts earned thereon (the "Escrow Fund") in escrow pursuant to this Agreement,
in the Escrow Account.
(b) The Company confirms to the Escrow Agent and to BCEF and Market
Partners that the Escrow Funds are free and clear of all encumbrances except as
may be created by this Agreement.
3. Purpose of the Escrow Fund. The Escrow Amount will be deposited
with the Escrow Agent and will be held by the Escrow Agent in the Escrow Account
to secure and fulfill the obligation of the Company to pay the $10,000,000 cash
portion of the Merger Consideration pursuant to Section 1.06 of the Merger
Agreement in the event of the consummation of the Merger.
4. Payments from the Escrow Fund. (a) Immediately upon the filing of
a Certificate of Merger in the office of the Secretary of State of the State of
Delaware pursuant to Section 1.02 of the Merger Agreement (the "Effective
Time"), the Company shall promptly notify the Escrow Agent in writing to such
effect, and the Escrow Agent shall, as promptly as practicable, but in no event
later than the next business day, after its receipt of such notice, liquidate
all investments in the Escrow Account and pay $10,000,000 in immediately
available funds to the Paying Agent, which will then distribute such amount to
each of the holders of LLC Interests on a pro rata basis, and otherwise in
accordance with Article One of the Merger Agreement, reflecting the number of
LLC Interests held by such holders. At least 7 business days prior to the
Effective Time, the Company shall deliver a written notice (which written notice
may be subject to minor change at any time prior to the Closing Date) to the
Paying Agent, countersigned by the respective Managers of each BCEF and Market
Partners, setting forth the names and addresses of holders of LLC Interests who
are entitled to receive cash consideration pursuant to the Merger, as well as
the exact amount of such cash consideration each such holder is entitled to
receive. Any amounts on deposit in the Escrow Account at the Effective Time in
excess of $10,000,000 shall promptly be paid by the Escrow Agent to the Company
in immediately available funds.
(b) In the event that (i) the Effective Time has not occurred on or
before June 30, 1998 or (ii) the Merger Agreement is otherwise terminated
according to its terms, the Company shall promptly notify the Escrow Agent in
writing to such effect, a copy of which notice shall be delivered to BCEF,
Market Partners and the Pooled Preferred Negotiating Committee (as defined in
the Merger Agreement), and the Escrow Agent shall, as promptly as practicable
after receipt of such notice, liquidate all investments in the Escrow Account
and pay all amounts to the Company in immediately available funds.
5. Maintenance of the Escrow Funds; Termination of the Escrow Funds.
The Escrow Agent shall continue to maintain the Escrow Fund until the earlier of
(i) the time at which there shall be no funds in such Escrow Fund and (ii) the
termination of this Agreement.
6. Investment of Escrow Funds. The Escrow Agent shall invest and
reinvest moneys on deposit in the Escrow Fund as instructed in writing by the
Company from time to time in any combination of the following: (a) readily
marketable direct obligations of the
2
Government of the United States or any agency or instrumentality thereof or
readily marketable obligations unconditionally guaranteed by the full faith and
credit of the Government of the United States with maturities not to exceed 30
days, (b) insured certificates of deposit of or time deposits with, any
commercial bank that is a member of the Federal Reserve System and which issues
(or the parent of which issues) commercial paper holding a Standard & Poor's or
▇▇▇▇▇'▇ rating of at least A1/P1 or AAA/Aaa, is organized under the laws of the
United States or any State thereof and has combined capital and surplus of at
least $1 billion, such certificates of deposit or time deposits to have
maturities not to exceed 30 days, (c) commercial paper holding a Standard &
Poor's or ▇▇▇▇▇'▇ rating of at least A1/P1 or AAA/Aaa issued by any corporation
organized under the law as of any State of the United States with maturities not
to exceed 30 days, or (d) mutual funds investment in securities or obligations
that are permissible investments under this Escrow Agreement, including any
mutual fund from which the Escrow Agent or any of its affiliates may receive
compensation. The Escrow Agent shall not be permitted to invest more than
$2,500,00 in the aggregate at any one time in any one issuer. It is expressly
agreed that any permitted investments may be purchased by the Escrow Agent
notwithstanding that an affiliate of the Escrow Agent has underwritten,
privately placed or made a market for, any such permitted investment, or may in
the future underwrite, private placed or make a market in any such permitted
investments.
7. Assignment of Rights to the Escrow Fund; Assignment of
Obligations; Successors. This Agreement may not be assigned by operation of law
or otherwise without the express written consent of the other parties hereto
(which consent may be granted or withheld in the sole discretion of such other
parties); provided, however, that this sentence shall in no way limit the rights
of the holders of LLC Interests under Section 16 hereof following the Effective
Time. This Agreement shall be binding upon and inure solely to the benefit of
the parties hereto and their permitted assigns.
8. Escrow Agent. (a) Except as expressly contemplated by this
Agreement or by joint written instructions from the Company and the negotiating
committee for the holders of the LLC Interests (the "Pooled Preferred
Negotiating Committee") and authorized by the holders of 66_% of each of the
BCEF LLC Interests and the Market Partners LLC Interests, the Escrow Agent shall
not sell, transfer, disburse or otherwise dispose of in any manner all or any
portion of the Escrow Fund, except pursuant to an order, which shall be final
and non-appeable, of a court of competent jurisdiction; provided, however, that
the Escrow Agent shall not have any duties to determine whether the holders of
66 2/3% of each of the BCEF LLC Interests and the Market Partners LLC Interests
have authorized such joint instructions, and the Escrow Agent is entitled to
rely on the execution of such instructions by the Pooled Preferred Negotiating
Committee as affirmative proof that such authorization by such holders has been
duly solicited and received.
(b) The duties and obligations of the Escrow Agent shall be determined
solely by this Agreement, and the Escrow Agent shall not be liable except for
the performance of such duties and obligations as are specifically set forth in
this Agreement.
3
(c) In the performance of its duties hereunder, the Escrow Agent shall
be entitled to rely upon any document, instrument or signature believed by it in
good faith to be genuine and signed by any party hereto or an authorized officer
or agent thereof, and shall not be required to investigate the truth or accuracy
of any statement contained in any such document or instrument. The Escrow Agent
may assume that any person purporting to give any notice in accordance with the
provisions of this Agreement has been duly authorized to do so.
(d) The Escrow Agent shall not be liable for any error of judgment, or
any action taken, suffered or omitted to be taken, hereunder except in the case
of its gross negligence, bad faith or willful misconduct. The Escrow Agent may
consult with counsel of its own choice and shall have full and complete
authorization and protection for any action taken or suffered by it hereunder in
good faith and in accordance with the opinion of such counsel.
(e) The Escrow Agent shall have no duty as to the collection or
protection of the Escrow Fund or income thereon, nor as to the preservation of
any rights pertaining thereto, beyond the safe custody of any such funds
actually in its possession.
(f) The Company shall reimburse and indemnify the Escrow Agent for,
and hold it harmless against, any loss, liability or expense, including, without
limitation, reasonable attorneys' fees, incurred without gross negligence, bad
faith or willful misconduct on the part of the Escrow Agent arising out of, or
in connection with the acceptance of, or the performance of, its duties and
obligations under this Agreement.
(g) The Escrow Agent may at any time resign by giving twenty business
days prior written notice of resignation to the Company. The Company, BCEF and
Market Partners may at any time jointly remove the Escrow Agent by giving ten
Business Days' written notice signed by each of them to the Escrow Agent. If
the Escrow Agent shall resign or be removed, a successor Escrow Agent, which
shall be a bank or trust company having its principal executive offices in New
York, New York or Chicago, Illinois and assets in excess of $100 million, shall
be appointed by the Company by written instrument executed by the Company, BCEF
and Market Partners and delivered to the Escrow Agent and to such successor
Escrow Agent and, thereupon, the resignation or removal of the predecessor
Escrow Agent shall become effective and such successor Escrow Agent, without any
further act, deed or conveyance, shall become vested with all right, title and
interest to all cash and property held hereunder of such predecessor Escrow
Agent, and such predecessor Escrow Agent shall, on the written request of the
Company, BCEF or Market Partners or the successor Escrow Agent, execute and
deliver to such successor Escrow Agent all the right, title and interest
hereunder in and to the Escrow Funds of such predecessor Escrow Agent and all
other rights hereunder of such predecessor Escrow Agent. If no successor Escrow
Agent shall have been appointed within twenty Business Days of a notice of
resignation by the Escrow Agent, the Escrow Agent's sole responsibility shall
thereafter be to hold the Escrow Funds until the earlier of its receipt of
designation of a successor Escrow Agent, a joint written instruction by the
Company, BCEF and Market Partners and termination of this Agreement in
accordance with its terms.
4
9. Escrow Agent Fees. The Company shall promptly pay all
administration fees of the Escrow Agent, including such reasonable attorneys'
fees, out-of-pocket expenses and other costs as may be incurred by the Escrow
Agent in connection with the administration of this Agreement.
10. 1099 Reporting. The Escrow Agent shall not be responsible for
1099 reporting on behalf of any party to this Agreement or in respect of the
Escrow Funds.
11. Termination. This Escrow Agreement shall terminate on the later
of: (a) the date on which there are no funds remaining in the Escrow Funds and
(b) the date on which the Merger Agreement is terminated in accordance with
Section 6.01 thereof.
12. Notices. All notices and other communications provided for or
permitted hereunder shall be in writing and shall be given or made (and shall be
deemed) by delivery by hand, by courier service, by cable, by telecopy, by
telegram, by telex or by first-class mail (postage prepaid, return receipt
requested) to the respective parties at the addresses set forth in Section 8.02
of the Merger Agreement (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 10).
13. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed and to be performed entirely within that State.
14. Amendments. This Agreement, shall only be amended pursuant to a
written instrument authorized by the respective board of directors of each of
BCI and BCI Sub and by the holders of 66_% of each of the BCEF LLC Interests and
the Market Partners LLC Interests; provided, however, that, this Agreement may
be amended at any time by the parties hereto in a manner which does not (i)
reduce the amount or change the type of consideration into which each LLC
Interest shall be converted upon consummation of the Merger or (ii) in any other
way adversely affect the rights of BCEF, Market Partners or the holders of LLC
Interests hereunder.
15. Waiver. At any time prior to the Effective Time, any party
hereto may (i) extend the time for the performance of any obligation or other
act of any other party hereto and (ii) waive compliance with any agreement or
condition contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party or parties to be bound
thereby. Notwithstanding the foregoing, no waiver of Section 3, 4, 5, 6, 8(a),
8(f), 9 or 12 hereof shall be valid unless it is pursuant to a written
instrument authorized by the holders of 66_% of each of the BCEF LLC Interests
and the Market Partners LLC Interests.
16. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated by this Agreement is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in
5
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated by this Agreement be consummated as originally
contemplated to the fullest extent possible.
17. Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and undertakings, both
written and oral, among the parties hereto with respect to the subject matter
hereof.
18. Third Party Beneficiaries. Holders of LLC Interests shall be
third party beneficiaries to the agreements made hereunder between the Company,
on the one hand, and BCEF and Market Partners, on the other hand, and any such
holder shall have the right to enforce such agreements directly to the extent it
deems such enforcement necessary or advisable to protect its rights or the
rights of such holders hereunder.
19. Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
20. Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
BOSTON CHICKEN, INC.
By
----------------------------------------
Name:
Title:
LASALLE NATIONAL BANK,
as Escrow Agent and Paying Agent
By
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
6
BC EQUITY FUNDING, L.L.C.
By Boston Chicken, Inc., as Manager
By
----------------------------------
Name:
Title:
MARKET PARTNERS, L.L.C.
By
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇, as Manager
By
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Manager
7
EXHIBIT D
30
===============================================================================
REGISTRATION RIGHTS AGREEMENT
Dated June [ ], 1998
among
BOSTON CHICKEN, INC.
BCI ACQUISITION SUB, L.L.C.
and
BC EQUITY FUNDING, L.L.C.
MARKET PARTNERS, L.L.C.
===============================================================================
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into on June [ ], 1998, among BOSTON CHICKEN, INC., a Delaware
corporation (the "Company"), BCI ACQUISITION SUB, L.L.C., a Delaware limited
liability company and a wholly owned subsidiary of the Company ("BCI Sub"), BC
EQUITY FUNDING, L.L.C., a Delaware limited liability company ("BCEF"), and
MARKET PARTNERS, L.L.C., a Delaware limited liability company ("Market
Partners").
This Agreement is made pursuant to the Agreement and Plan of Merger
dated March 16, 1998, between the Company, BCI Sub, BCEF and Market Partners
(the "Merger Agreement"), which provides for the merger (the "Merger") of BCEF
and Market Partners with and into BCI Sub, with BCI Sub as the surviving
corporation. As a result of the Merger, holders of limited liability company
interests in BCEF or Market Partners (the "Holders") will receive, in the
aggregate, (i) $126.8 million aggregate liquidation preference 10% Series A
Exchangeable Preferred Stock of the Company (the "Preferred Stock"), (ii)
3,500,000 shares of Common Stock, par value $0.01 per share, of the Company (the
"Common Stock") and (iii) $10,000,000 in cash (to be divided among only those
Holders who are not BCI Insiders). As part of the consideration provided for in
the Merger Agreement and, with respect only to Holders who have not previously
executed and delivered to BCI a Letter of Transmittal containing the release set
forth therein, in consideration of such Holders providing the Release
substantially in the form set forth in the Letter of Transmittal, the Company
has agreed to provide to the Holders who are not BCI Insiders the registration
rights set forth in this Agreement. The execution of this Agreement is a
condition to the closing under the Merger Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
to time, and the rules and regulations of the SEC promulgated thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"BCEF" shall have the meaning set forth in the preamble to this
Agreement and shall also include BCEF's successors.
"BCI Insiders" shall have the meaning set forth in the Merger
Agreement.
"Certificate of Designations" shall mean the Certificate of
Designations relating to the Preferred Stock dated as of the date hereof,
executed by the Company and duly filed on the
date hereof with the Delaware Secretary of State, and as the same may be amended
from time to time.
"Closing Date" shall mean the "Closing Date" as defined in the Merger
Agreement.
"Common Stock" shall have the meaning set forth in the preamble to
this Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement and shall also include the Company's successors.
"Counsel for the Holders" shall mean Weil, Gotshal & ▇▇▇▇▇▇ LLP, or
such other counsel as shall be selected by the Majority Holders.
"Exchange Debentures" shall mean the exchange debentures into which
the Preferred Stock is exchangeable, at the option of the Company, pursuant to
the Certificate of Designations.
"Exchange Indenture" shall mean the indenture relating to the Exchange
Debentures dated as of the date hereof among the Company and [ ],
as trustee, and as the same may be amended from time to time in accordance
with the terms thereof.
"Holders" shall mean any holders of limited liability company
interests in BCEF or Market Partners who are not BCI Insiders, for so long as
they own any Registrable Securities, and each of their successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities.
"Letter of Transmittal" shall have the meaning set forth in the Merger
Agreement.
"Majority Holders" shall mean the Holders of a majority of the (a)
aggregate liquidation preference of outstanding shares of Preferred Stock or the
aggregate principal amount of the outstanding Exchange Debentures (as
applicable) and (b) the outstanding shares of Common Stock issued pursuant to
the Merger, in each case that are also Registrable Securities; provided that
whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company or any of its affiliates (as such term is defined in Rule 405 under the
▇▇▇▇ ▇▇▇) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage or amount.
"Market Partners" shall have the meaning set forth in the preamble to
this Agreement and shall also include Market Partners' successors.
"Merger Agreement" shall have the meaning set forth in the preamble to
this Agreement.
"Merger" shall have the meaning set forth in the preamble to this
Agreement.
2
"Original Issuance Date" shall have the meaning set forth in the
Certificate of Designations.
"Person" shall mean an individual, partnership, corporation, business
trust, joint stock company, limited liability company, trust or unincorporated
association, joint venture, government authority or other entity of whatever
nature.
"Preferred Stock" shall have the meaning set forth in the preamble to
this Agreement and any additional shares of Preferred Stock issued as a dividend
thereon pursuant to the Certificate of Designations in respect thereof.
"Prospectus" shall mean the prospectus included in the Shelf
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement, and
including all material incorporated by reference therein.
"Registrable Securities" shall mean all Securities held by Holders who
are not BCI Insiders; provided, however, that such Securities shall cease to be
Registrable Securities (i) when a Shelf Registration Statement with respect to
such Securities shall have been declared effective under the 1933 Act and such
Securities shall have been disposed of pursuant to such Shelf Registration
Statement, (ii) when such Securities have been sold to the public pursuant to
Rule 144 (or any similar provision then in force, but not Rule 144A) under the
1933 Act, (iii) when such securities are permitted to be sold pursuant to Rule
144 (k) (or any similar provision then in force) or (iv) when such Securities
shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration, listing and filing fees, (ii) all fees
and expenses incurred in connection with compliance with state securities or
blue sky laws (including reasonable fees and disbursements of counsel for any
Holders in connection with blue sky qualification of any of the Registrable
Securities), (iii) all expenses of the Company in preparing, word processing,
printing and distributing any Shelf Registration Statement, any Prospectus, any
amendments or supplements thereto, any underwriting agreements, securities sales
agreements and other documents relating to the performance of and compliance
with this Agreement, (iv) all fees and disbursements relating to the
qualification of the Exchange Indenture under applicable securities laws, (v)
the fees and disbursements of the Trustee and its counsel, (vi) the fees and
disbursements of counsel for the Company and the fees and disbursements of
Counsel for the Holders through the date on which the Shelf Registration
Statement is initially declared effective by the SEC and (vii) the fees and
disbursements of the independent public accountants of the Company, including
the expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall mean, collectively, the Preferred Stock, the
Exchange Debentures and the Common Stock.
3
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(a) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(a) of this
Agreement which covers all of the Registrable Securities (which may include
other securities of the Company held by persons or entities having been
previously granted registration rights by the Company) on an appropriate form
under Rule 415 under the 1933 Act, or any similar rule that may be adopted by
the SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
"Trustee" shall mean the trustee with respect to the Exchange
Debentures under the Indenture.
2. Registration Under the ▇▇▇▇ ▇▇▇.
(a) Within 60 days after the Original Issuance Date the Company shall
file a Shelf Registration Statement providing for the sale by the Holders of all
of the Registrable Securities. The Company shall use its reasonable best
efforts to cause such Shelf Registration Statement to be declared effective by
the SEC within 150 days after the Original Issuance Date. The Company agrees to
use its reasonable best efforts to keep the Shelf Registration Statement
continuously effective until two years after the Original Issuance Date or such
shorter period that will terminate when all of the Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement in order to permit the Prospectus to be usable by the
Holders. The Company further agrees to supplement or amend the Shelf
Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the 1933 Act or by any other rules and regulations
thereunder for shelf registration and to use its reasonable best efforts to
cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as practicable thereafter. The Company
agrees to furnish Counsel for to the Holders of Registrable Securities copies of
any such supplement or amendment promptly after its being used or filed with the
SEC.
(b) The Company shall pay all Registration Expenses in connection with
the registration pursuant to Section 2(a). Each Holder shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to the
Shelf Registration Statement.
(c) A Shelf Registration Statement pursuant to Section 2(a) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that, if, after it has been declared
effective, the offering of Registrable Securities pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, the
Company
4
shall extend the period during which the Shelf Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
of such interference, to and including the date on which the offering of
Registrable Securities pursuant to such Shelf Registration Statement may
legally resume. In the event the Shelf Registration Statement is not filed with
the SEC within 60 days after the Original Issuance Date, the Company will
immediately be required to pay a penalty in the aggregate amount of $2,500,000
in cash to the Holders on a pro rata basis based on the Registrable Securities
held by each Holder. In the event the Shelf Registration Statement is not
declared effective on or before the 150th day after the Original Issuance Date,
commencing on the 151st day after the Original Issuance Date the annual dividend
rate on the Preferred Stock (or the interest rate on the Exchange Debentures, if
applicable) will increase to 11% and shall further increase by 0.5% for each
period of 90 days thereafter (for greater certainty, if applicable the first 90-
day period would commence on the 241st day after the Original Issuance Date and
end on the 330th day after the Original Issuance Date and the next 90-day period
would commence on the 331st day after the Original Issuance Date) until the
Shelf Registration Statement is declared effective, up to a maximum rate of 12%.
In the event the annual dividend rate on the Preferred Stock (or the interest
rate on the Exchange Debentures) increases pursuant to this Section 2(c), on the
date immediately following the date on which the Shelf Registration Statement is
declared effective by the SEC, such annual dividend rate (or interest rate) will
be reduced to 10%. Any payments to be made to Holders pursuant to this Section
2(c) shall be delivered to the Holders at their address in accordance with
Section 5(c) hereof.
3. Registration Procedures.
In connection with the obligations of the Company with respect to the
Shelf Registration Statement pursuant to Section 2(a) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by
the Company and (y) shall be available for the sale of the Registrable
Securities by the selling Holders thereof and (z) shall comply as to form
in all material respects with the requirements of the applicable form, and
use its reasonable best efforts to cause such Shelf Registration Statement
to become effective and remain effective in accordance with Section 2
hereof;
(b) promptly prepare and file with the SEC post-effective
amendments to such Shelf Registration Statement as may be necessary to keep
such Shelf Registration Statement effective for the applicable period
provided for in Section 2 hereof and cause each Prospectus to be
supplemented by any required prospectus supplement and, as so supplemented,
to be filed pursuant to Rule 424 under the 1933 Act;
(c) furnish to each Holder and Counsel for the Holders, without
charge, as many copies of the Prospectus, including the preliminary
Prospectus, and any amendment or supplement thereto and such other
documents as such
5
Holder may reasonably request, in order to facilitate the public sale or
other disposition of the Registrable Securities; and the Company consents
to the use of such Prospectus and any amendment or supplement thereto in
accordance with applicable law by each of the selling Holders in connection
with the offering and sale of the Registrable Securities covered by and in
the manner described in the Prospectus or any amendment or supplement
thereto in accordance with applicable law;
(d) use its reasonable best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue sky"
laws of such jurisdictions as any Holder of Registrable Securities covered
by a Shelf Registration Statement shall reasonably request in writing by
the time the applicable Shelf Registration Statement is declared effective
by the SEC, to cooperate with such Holders in connection with any filings
required to be made with the National Association of Securities Dealers,
Inc. and do any and all other acts and things which may be reasonably
necessary to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder; provided,
however, that the Company shall not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(d), (ii) file
any general consent to service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not so subject;
(e) notify each Holder and Counsel for the Holders promptly and,
if requested by any such Holder or Counsel for the Holders, confirm such
advice in writing (i) when the Shelf Registration Statement has become
effective and when any post-effective amendment thereto has been filed and
becomes effective, (ii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of the Shelf
Registration Statement or the initiation of any proceedings for that
purpose, (iii) of the happening of any event during the period the Shelf
Registration Statement is effective which, in the good faith determination
of the Board of Directors of the Company upon the advice of counsel, makes
any statement made in such Shelf Registration Statement or the related
Prospectus untrue in any material respect or which requires the making of
any changes in such Shelf Registration Statement or Prospectus in order to
make the statements therein not misleading and (iv) of any determination by
the Company that a post-effective amendment to the Shelf Registration
Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration Statement at
the earliest possible moment and provide to each Holder immediate notice of
the withdrawal of any such order;
6
(g) furnish to Counsel for the Holders, without charge, at least
one conformed copy of the Shelf Registration Statement and any post-
effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
(h) upon the occurrence of any event contemplated by Section
3(e)(iii) hereof, use its reasonable best efforts to prepare and file with
the SEC as promptly
as practicable a supplement or post-effective amendment to the Shelf
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(i) a reasonable time prior to the filing of the Shelf
Registration Statement, the Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus or any document which
is to be incorporated by reference into the Shelf Registration Statement or
the Prospectus after the initial filing of the Shelf Registration
Statement, provide copies of such document to the Counsel for the Holders
and make such of the representatives of the Company as shall be reasonably
requested by Counsel for the Holders available for discussion of such
document, and shall not at any time file or make any amendment to the Shelf
Registration Statement, the Prospectus or any amendment of or supplement to
the Shelf Registration Statement or the Prospectus or any document which is
to be incorporated by reference into the Shelf Registration Statement or
the Prospectus of which Counsel for the Holders shall not have previously
been advised and furnished a copy;
(j) obtain a CUSIP number for all Registrable Securities not
later than the effective date of the Shelf Registration Statement;
(k) cause the Exchange Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Debentures, cooperate with the Trustee and the
Holders to effect such changes to the Exchange Indenture as may be required
for the Exchange Indenture to be so qualified in accordance with the terms
of the TIA and execute, and use its reasonable best efforts to cause the
Trustee to execute, all documents as may be required to effect such changes
and all other forms and documents required to be filed with the SEC to
enable the Exchange Indenture to be so qualified in a timely manner;
(l) use its reasonable best efforts to cause all Registrable
Securities to be listed on any securities exchange or any automated
quotation system on which
7
similar securities issued by the Company are then listed to the extent such
Registrable Securities satisfy applicable listing requirements;
(m) maintain a transfer agent and registrar, which may be the
same entity, for the Registrable Securities, not later than the effective
date of the Shelf Registration Statement; and
(n) if reasonably requested by any Holder of Registrable
Securities covered by the Shelf Registration Statement, (i) to the extent
counsel for the Company deems the inclusion of such information reasonably
necessary in order to enable such Holder to be able to sell Registrable
Securities, promptly incorporate in a Prospectus supplement such
information with respect to such Holder as such Holder reasonably requests
to be included therein and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to
be incorporated in such filing.
The Company may require each Holder to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable Securities as the Company may from time to time reasonably
request in writing.
Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(e)(iii) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the Shelf Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 3(i)
hereof, and, if so directed by the Company, such Holder will deliver to the
Company (at its expense) all copies in its possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. The
Company agrees to notify the Holders to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and the Holders
hereby agree to suspend use of the Prospectus until the Company has amended or
supplemented the Prospectus to correct such misstatement or omission. If the
Company shall give any such notice to suspend the disposition of Registrable
Securities pursuant to the Shelf Registration Statement, the Company shall
extend the period during which the Shelf Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date when the Holders shall have received copies of the supplemented or
amended Prospectus necessary to resume such dispositions. Any such suspensions
may not exceed 50 days (whether or not consecutive) during any 365-day period.
4. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Holder and
each person, if any, who controls any Holder within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under common
control with, or is controlled by, any Holder, from and against all losses,
claims, damages, liabilities and expenses (including, without
8
limitation, any legal or other expenses reasonably incurred by any Holder or any
such controlling or affiliated person in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Shelf Registration
Statement (or any amendment thereto) pursuant to which Registrable Securities
were registered under the 1933 Act, including all documents incorporated therein
by reference, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or caused by any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any such untrue
statement or omission or alleged untrue statement or omission (i) based upon
information relating to any Holder furnished to the Company in writing by any
selling Holder or Counsel for the Holders expressly for use therein or (ii)
included or omitted from a preliminary Prospectus, but corrected in the final
Prospectus (or an amendment or supplement thereto), if the Holder did not
deliver a copy of the final Prospectus (and any then current amendment or
supplement thereto) to the person asserting such loses, claims, damages,
liabilities or expenses at or prior to the written confirmation of the sale of
the Registrable Securities to such person.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company and the other selling Holders, and each of their
respective directors, officers who sign the Shelf Registration Statement and
each Person, if any, who controls the Company and any other selling Holder
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act to the same extent as the foregoing indemnity from the Company to the
Holders, but only with reference to information relating to such Holder
furnished to the Company in writing by such Holder or Counsel for the Holders
expressly for use in the Shelf Registration Statement (or any amendment thereto)
or the Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
to represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding; provided, however, that the failure of any
indemnified party to give notice shall not relieve the indemnifying party of its
obligations under paragraph (a) or (b) above, except to the extent that the
indemnifying party is prejudiced by reason of such failure. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) in the
opinion of counsel of the indemnified party a conflict of interest may exist
between the indemnified and indemnifying parties. It is understood that the
indemnifying party shall not, in
9
connection with any proceeding or related proceedings, be liable for (a) the
fees and expenses of more than one counsel (in addition to any local counsel)
for the Company, its directors, its officers who sign the Registration Statement
and each person, if any, who controls the Company within the meaning Section 15
of the 1933 Act or Section 20 of the 1934 Act and (b) the fees and expenses of
more than one counsel (in addition to any local counsel) for all Holders and all
persons, if any, who control any Holders within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In such case involving the Holders and such persons who control any
Holders, such firm shall be designated in writing by the Majority Holders. In
all other cases, such firm shall be designated by the Company. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent (which consent may be withheld in its sole discretion) but,
if settled with such consent, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which such indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) If the indemnification provided for in this Section 4 is
unavailable to hold harmless an indemnified party under paragraph (a) or (b)
above in respect of any losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) in such proportion as is appropriate to reflect (i) the
relative benefits received by the indemnifying and indemnified party from the
registration of the Registrable Securities or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, the relative fault of the
indemnifying party and the indemnified party in connection with the statements
or omissions which resulted in such losses, claims, damages, liabilities or
expenses (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this paragraph (d) were determined by
pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this paragraph (d). No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇
▇▇▇) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The obligations of the Holders in this
Section (d) to contribute shall be several in proportion to the percentage of
Registrable Securities registered by them and not joint.
(e) Notwithstanding the provisions of this Section 4, no Holder shall
be required to indemnify or contribute any amount in excess of the amount by
which the total price
10
at which Registrable Securities were sold by such Holder exceeds the amount of
any damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
The indemnity provisions contained in this Section 4 shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Holder or any
person controlling any Holder, or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) any sale of
Registrable Securities pursuant to the Shelf Registration Statement.
5. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered into, and
on or after the date of this Agreement will not enter into, any agreement which
is inconsistent with the rights granted to the Holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of the
Majority Holders affected by such amendment, modification, supplement, waiver or
consent; provided, however, that whenever the written consent of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by Insiders shall not be counted in determining
whether such consent was given by the Holders of such required percentage of
amount.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a
Holder, at the address of such Holder on the books and records of the Company or
its transfer agent on the date hereof or at the most current address given by
such Holder to the Company by means of a notice given in accordance with the
provisions of this Section 5(c), and (ii) if to the Company, initially at the
Company's address set forth in the Merger Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 5(c).
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt is acknowledged, if telecopied; and on the next
business day if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustee, at the
address specified in the Indenture.
11
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders. If any transferee of any Holder shall acquire
Registrable Securities, in any manner, whether by operation of law or otherwise,
such Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such person shall be entitled to
receive the benefits hereof.
(e) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and BCI Sub,
on the one hand, and BCEF and Market Partners, on the other hand, and any Holder
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
12
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BOSTON CHICKEN, INC.
By
---------------------------------------------
Name:
Title:
BCI ACQUISITION SUB, L.L.C.
By
---------------------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
BC EQUITY FUNDING, L.L.C.
By Boston Chicken, Inc., as Manager
By
--------------------------
Name:
Title:
MARKET PARTNERS, L.L.C.
By
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇, as Manager
By
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Manager
13
EXHIBIT E
31
[Date]
BC Equity Funding, L.L.C.
Market Partners, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel for Boston Chicken, Inc., a Delaware corporation
(the "Company"), and BCI Acquisition Sub, L.L.C., a Delaware limited liability
company ("Acquisition Sub"), in connection with certain of the transactions
contemplated by the Agreement and Plan of Merger, dated as of _______ __, 1998
(the "Merger Agreement"), among the Company, Acquisition Sub, and BC Equity
Funding, L.L.C., a Delaware limited liability company, and Market Partners,
L.L.C., a Delaware limited liability company. Capitalized terms used herein and
not defined herein have the respective meanings given those terms in the Merger
Agreement. This opinion is being furnished to you at the request of the Company
and Acquisition Sub pursuant to Section 5.03(d) of the Merger Agreement.
In this connection we have examined originals, or copies certified or
otherwise identified to our satisfaction, of (i) the Merger Agreement, (ii) the
Escrow Agreement, (iii) the Registration Rights Agreement, (iv) the Certificate
of Incorporation, as amended (the "Certificate of Incorporation") and Bylaws of
the Company, (v) the Certificate of Formation and Limited Liability Company
Agreement of Acquisition Sub, (vi) the Certificate of Designations relating to
the BCI Preferred Stock as filed with the Secretary of State of Delaware [on the
date hereof], (vii) certified resolutions of the Board of Directors of the
Company and of the manager and the sole member of Acquisition Sub relating to
the Merger Agreement and the transactions contemplated thereby, (viii) the Joint
Information Statement/Offering Memorandum of the Company, dated _______ __, 1998
(as amended or supplemented through the date hereof, and including the
information deemed to be incorporated therein as set forth under the heading
"Incorporation by Reference," the "Offer Document"), (ix) the Letters of
Transmittal submitted by holders of LLC Interests who have consented to the
Merger, and (x) such corporate or other records, certificates, documents,
opinions and other papers as we deemed it necessary to examine; and we have made
such other examination and investigation as we considered necessary for the
purpose of rendering this opinion. The Merger Agreement, the Escrow Agreement
and the Registration Rights Agreement are herein called the "Principal
Agreements."
BC Equity Funding, L.L.C.
Market Partners, L.L.C.
_______ __, 1998
Page 2
In such examination and investigation, we have assumed the following:
the genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified, photostatic,
reproduced or conformed copies, and the authenticity of the originals of such
copies; and that there are no extrinsic agreements or understandings among the
parties to the Principal Agreements, other than the Company and Acquisition Sub,
that would modify or interpret any terms of any of the Principal Agreements or
the respective rights or obligations of the parties thereunder. As to any facts
material to the opinions hereinafter expressed which we did not independently
establish or verify, we have relied, without investigation, upon the
representations of the Company and Acquisition Sub in the Principal Agreements
and certificates of public officials, officers and representatives of the
Company and Acquisition Sub, and representatives of the Company's transfer
agent. We have provided you, at your request, with a copy of each such
certificate on which we have relied.
In making our examination of any document executed by a person or
entity other than the Company and Acquisition Sub, we have assumed without
independent investigation (i) that each such other person or entity had the
power to enter into and perform all its obligations thereunder, (ii) the due
authorization, execution and delivery of such document by each such other person
or entity, and (iii) that such document constitutes a legal, valid and binding
obligation of each such other person or entity and is enforceable against each
such other person or entity in accordance with its terms.
The opinions expressed herein are made immediately prior to the Effective
Time.
Based upon the foregoing, and subject to the assumptions, exceptions and
qualifications set forth herein, it is our opinion that:
1. The Company is a corporation duly incorporated and validly existing in
good standing under the Delaware General Corporation Law ("DGCL").
2. Acquisition Sub is a limited liability company duly organized and
validly existing in good standing under the Delaware Limited Liability Company
Act ("DLLCA").
3. The Company has all necessary corporate power and authority under the
DGCL to (i) own, lease and operate its properties, (ii) carry on its business as
described in the Offering Document, and (iii) execute and deliver the Principal
Agreements, perform its obligations thereunder, and consummate the transactions
contemplated to be consummated by the Company thereunder (the "Company
Transactions").
4. Acquisition Sub has all necessary limited liability company power and
authority under the DLLCA to (i) own, lease and operate its properties, (ii)
carry on its business as
BC Equity Funding, L.L.C.
Market Partners, L.L.C.
_______ __, 1998
Page 3
described in the Offering Document, and (iii) execute and deliver the Principal
Agreements to which Acquisition Sub is a party, perform its obligations
thereunder, and consummate the transactions contemplated to be consummated by
Acquisition Sub thereunder (the "Acquisition Sub Transactions").
5. The execution and delivery of each of the Principal Agreements by the
Company and the consummation by the Company of the Company Transactions has been
duly authorized by all necessary corporate action of the Company, and no other
corporate proceedings on the part of the Company are necessary to authorize the
Principal Agreements or to consummate the Company Transactions (other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by the DLLCA). Each Principal Agreement has been duly and
validly executed and delivered by the Company.
6. The execution and delivery by Acquisition Sub of each of the Principal
Agreements to which Acquisition Sub is a party and the consummation by
Acquisition Sub of the Acquisition Sub Transactions has been duly authorized by
all necessary limited liability company action of Acquisition Sub, and no other
limited liability company proceedings on the part of Acquisition Sub are
necessary to authorize the Principal Agreements to which Acquisition Sub is a
party or to consummate the Acquisition Sub Transactions (other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by the DLLCA). Each Principal Agreement to which
Acquisition Sub is a party has been duly and validly executed and delivered by
Acquisition Sub.
7. The shares of BCI Preferred Stock and BCI Common Stock to be issued
and delivered by BCI to the holders of LLC Interests pursuant to the Merger
Agreement have been duly and validly authorized by BCI and, when issued in
accordance with the terms and conditions of the Merger Agreement, will be
validly issued, fully paid and nonassessable and will not be subject to any
preemptive rights of subscription or purchase arising under the DGCL, the
Certificate of Incorporation or By-laws of the Company or, to our knowledge and
except as otherwise provided in the Merger Agreement, otherwise. The shares of
BCI Preferred Stock that may be issued in payment of dividends in lieu of cash
as provided in the Certificate of Designations have been validly reserved for
issuance by BCI and, when issued in accordance with the terms and conditions of
the Certificate of Designations, will be validly issued, fully paid and
nonassessable and will not be subject to any preemptive rights of subscription
or purchase arising under the DGCL, the Certificate of Incorporation or By-laws
of the Company or, to our knowledge and except as otherwise provided in the
Merger Agreement, otherwise.
8. The execution and delivery by the Company of each Principal Agreement,
the performance by the Company of its obligations thereunder, and the
consummation by the Company of the Company Transactions do not (i) conflict with
or violate the Certificate of Incorporation or Bylaws of the Company, (ii)
violate any applicable law, rule or regulation of the
BC Equity Funding, L.L.C.
Market Partners, L.L.C.
_______ __, 1998
Page 4
United States or the State of Illinois or any provision of the DGCL, (iii) to
our knowledge, result in a violation of or default under any provisions of any
order, writ, injunction or decree of any governmental entity binding upon the
Company or to which the Company is subject, or (iv) result in any breach or
constitute a default (or an event which with notice or lapse of time would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any lien or other
encumbrance upon any property or asset of the Company pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company is a party or
by which the Company or any of its property or assets is bound or affected and
that has been filed as an exhibit to any registration statement or report filed
by the Company with the Securities and Exchange Commission (the "Company Opinion
Contracts"), in each case after giving effect to all waivers, consents and
approvals of the parties to Company Opinion Contracts obtained through the date
hereof, and except for any such conflicts, violations, breaches, defaults or
other occurrences which would not (x) prevent or delay consummation of the
Merger, or otherwise prevent the Company from performing its obligations under
the Principal Agreements or (y) in the case of clauses (ii), (iii) and (iv)
above, individually or in the aggregate, have a Material Adverse Effect with
respect to the Company and its subsidiaries taken as a whole.
9. The execution and delivery by Acquisition Sub of each Principal
Agreement to which it is a party, the performance by Acquisition Sub of its
obligations thereunder, and the consummation by Acquisition Sub of the
Acquisition Sub Transactions do not (i) conflict with or violate the Certificate
of Formation or Limited Liability Company Agreement of Acquisition Sub, (ii)
violate any applicable law, rule or regulation of the United States or the State
of Illinois or any provision of the DLLCA, (iii) to our knowledge, result in a
violation of or default under any provisions of any order, writ, injunction or
decree of any governmental entity binding upon Acquisition Sub or to which
Acquisition Sub is subject, or (iv) result in any breach or constitute a default
(or an event which with notice or lapse of time would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any lien or other encumbrance upon
the property or asset of Acquisition Sub pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation known to us to which Acquisition Sub is a party or by
which Acquisition Sub or any its property or assets is bound or affected (the
"Acquisition Sub Opinion Contracts"), in each case after giving effect to all
waivers, consents and approvals of the parties to the Acquisition Sub Opinion
Contracts obtained through the date hereof, and except for any such conflicts,
violations, breaches, defaults or other occurrences which would not (x) prevent
or delay consummation of the Merger, or otherwise prevent Acquisition Sub from
performing its obligations under the Principal Agreements to which it is a party
or (y) in the case of clauses (ii), (iii) and (iv) above, individually or in the
aggregate, have a Material Adverse Effect with respect to the Company and its
subsidiaries taken as a whole.
BC Equity Funding, L.L.C.
Market Partners, L.L.C.
_______ __, 1998
Page 5
10. No consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority of the United States
of America, the State of Illinois or under the DGCL or the DLLCA is required for
the execution and delivery by the Company and Acquisition Sub of the Principal
Agreements to which they are a party or the performance by the Company and
Acquisition Sub of the Principal Agreements to which they are a party, which
consent, approval, authorization or permit has not been obtained or which filing
or notification has not been made, except (i)(x) for applicable requirements, if
any, of the 1933 Act, the 1934 Act, state securities or "blue sky" laws and
state takeover laws, and the HSR Act, (y) filing and recordation of appropriate
merger documents as required under the DLLCA , and (z) consents, approvals,
authorizations, permits, filings and notifications required to be obtained from,
or made with, governmental and regulatory authorities necessary to effect the
transactions contemplated by the Registration Rights Agreement, and (ii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay consummation of
the Merger, or otherwise prevent the Company or Acquisition Sub from performing
their respective obligations under the Principal Agreements to which they are a
party, and would not, individually or in the aggregate, have a Material Adverse
Effect with respect to the Company and its subsidiaries, taken as a whole.
11. The authorized, issued and outstanding capital stock of the Company as
of the date of the Offer Document was as set forth in the Offer Document in the
column "Actual" under the caption "Capitalization." To our knowledge, except as
set forth in Section 3.06 of the Merger Agreement, in the instruments pursuant
to or under which the securities described Section 3.06 of the Merger Agreement
were issued, as otherwise contemplated by the Merger Agreement or pursuant to
the terms of existing indebtedness of the Company to Progressive Food Concepts,
Inc., Einstein/Noah Bagel Corp., Financed Area Developers of the Company or
employees, (x) there are no options, warrants, preemptive or other rights,
agreements, arrangements or commitments of any character to which the Company is
a party requiring it to issue or sell any securities of the Company and (y)
there are no outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any securities of the Company or to provide funds
to, or make any investment (in the form of a loan, capital contributions or
otherwise) in any person. Under the Certificate of Incorporation of the Company,
there are no shares of capital stock of BCI that by their terms rank, with
respect to dividends and distributions upon the liquidation, dissolution or
winding up of the Company, senior to the BCI Preferred Stock.
12. The issuance and sale of the BCI Preferred Stock and BCI Common Stock
pursuant to the Merger Agreement is exempt from the registration requirements of
the 1933 Act.
[Delaware counsel reasonably acceptable to counsel for the Pooled Preferred
Negotiating Committee will render enforceability opinion with respect to
Principal Agreements, subject to
BC Equity Funding, L.L.C.
Market Partners, L.L.C.
_______ __, 1998
Page 6
such assumptions, exceptions, qualifications and legal reasoning as is
reasonably acceptable to counsel for the Pooled Preferred Negotiating
Committee.]
Except as specifically noted above, we have not independently verified the
accuracy, completeness or fairness of the statements (including, without
limitation, the financial statements and other financial and statistical
information) contained in the Offer Document and take no responsibility
therefor. However, during the preparation of the Offer Document, we examined
various documents and other papers and participated in conferences with
representatives of the Company and with other counsel and the independent public
accountants to the Company, at which conferences the contents of the Offer
Document and related matters were discussed. We have also examined the
certificates and other documents delivered at the Closing. On the basis of our
examination and the above-mentioned conferences, we state that nothing has come
to our attention that would lead us to believe that the Offer Document (other
than (i) the financial statements and schedules and other financial and
statistical information included or incorporated by reference therein or omitted
therefrom, (ii) any information included in the Offer Document relating to the
consideration and approval of the Merger and related Transactions by the Special
Committee of the Board of Directors of the Company, the Board of Directors of
the Company and the Pooled Preferred Negotiating Committee, including any advice
or opinion rendered by any person or entity to any of the foregoing, and (iii)
any statement included or incorporated by reference in the Offer Document that
purports to be a "forward looking statement" within the meaning of the Private
Securities Litigation Reform Act of 1995, as to each of which we express no
belief) at the date thereof or at the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Whenever our opinion herein with respect to the existence or absence
of facts is indicated to be based upon our knowledge (or like terms), such
expression means that in the course of the representation of the Company and
Acquisition Sub by the attorneys of this Firm having primary responsibility for
the preparation and review of the Offer Document, nothing has come to such
persons' attention that would give them actual knowledge of the existence or
absence of such facts. Except for obtaining the certificates of public officials
and officers and representatives of the Company referred to above and except as
set forth in the immediately preceding paragraph of this letter, we have
undertaken no independent factual investigation to determine the existence or
absence of such facts.
With respect to the opinions set forth in numbered paragraph 12. and in
numbered paragraphs 8.(ii) and 9.(ii) insofar as they relate to compliance with
the 1933 Act, we have relied, without independent verification, upon (a) the
accuracy of the representations and warranties of the holders of the LLC
Interests contained in their respective Letters of Transmittal, and (b) the
accuracy of the Officers' Certificate of the ________ of the Company, dated the
date hereof, with
BC Equity Funding, L.L.C.
Market Partners, L.L.C.
_______ __, 1998
Page 7
respect to certain factual matters relating to the offer and sale by the Company
and Acquisition Sub of BCI Preferred Stock and BCI Common Stock pursuant to the
Merger. In addition, we have assumed, with your permission, that (i) none of the
Company, Acquisition Sub nor any person on behalf of either of them has engaged
in any form of general solicitation or general advertising (as such terms are
used in Rule 502(c) promulgated pursuant to the ▇▇▇▇ ▇▇▇) in connection with the
offer and sale of the BCI Preferred Stock and BCI Common Stock pursuant to the
Merger, (ii) neither the Company nor Acquisition Sub has made or will in the
future make any offer or sale of securities that would be integrated (as
contemplated by Rule 502(a) promulgated pursuant to the ▇▇▇▇ ▇▇▇) with the offer
and sale of the BCI Preferred Stock and BCI Common Stock pursuant to the Merger,
and (iii) the Company will file a Form D as contemplated by Rule 503 promulgated
pursuant to the 1933 Act within fifteen days of the Effective Time.
[Counsel shall be entitled to include such other assumptions, exceptions
and qualifications as are reasonably acceptable to counsel for the Pooled
Preferred Negotiating Committee.]
We are admitted to the Bar of the State of Illinois and express no opinion
as to the laws of any other jurisdiction other than the federal laws of the
United States of America and the DGCL and DLLCA to the extent specifically
referred to herein.
The opinions expressed herein have been rendered solely for your benefit in
connection with the transactions contemplated by the Merger Agreement, and may
not be used or relied upon in any manner by any other person or by you for any
other purpose, and may not be communicated or published by you to any other
person or for any other purpose, in either case without our prior written
approval. The opinions expressed herein relate only to laws, rules, regulations
and orders thereunder which are in effect on the date hereof, and we disclaim
any responsibility to advise you of any changes thereto, or of any other facts
or circumstances of which we may hereafter become aware that may affect any of
the opinions expressed herein, after the date hereof.
Very truly yours,
Schedule 2.06
BCEF and MARKET PARTNERS ASSETS
BCEF
Financial Area Developers Pooled Preferred Interests Warrants
------------------------- -------------------------- --------
B.C.B.M. Southwest, LP $10,000,000 invested 4/95 Warrant to acquire 158,000 of the common units in B.C.B.M.
Southwest for $20.00 per unit
BC Boston, LP $5,000,000 invested 8/95 None
BCE West, LP $2,500,000 invested 8/95 (Class A) None
$1,000,000 invested 8/96 (Class B)
BC GoldenGate, LLC $7.500,000 invested 7/95 (Class A) Warrant to acquire $1,700,000 invested 9/96 (Class B) 3,750,000
of the common units in BC GoldenGate for $1.00 per unit (held by
BC GoldenGate Holdings, Inc.)
BC Northwest, LP $2,500,000 invested 12/95 None
BC Superior, LLC $2,500,000 invested 4/96 (Series B) None
Finest Foodservice, LLC $7,500,000 invested 4/95 (into Warrant to acquire 4,750,000 of the common units in Finest for
Northstar) (Class A) $1.00 per unit (held by Finest Holdings, Inc.)
$2,500,000 invested 12/95 (Class B)
P&L Food Services, LLC $2,500,000 invested 9/95 (Class A) None
$1,500,000 invested 3/96 (Class B)
82
R&A Food Service, LP $10,000,000 invested 4/95 (Series A) None
Market Partners
Financial Area Developers Pooled Preferred Interests Warrants
------------------------- -------------------------- --------
B.C.B.M. Southwest, LP $4,433,115 invested 4/97 Warrant to acquire 7% of BCBM SW, exercisable upon a conversion
or acquisition of BCBM SW by BCI; BCI has a call right
BC Boston, LP $4,433,115 invested 9/96 Warrant to acquire 7% of BC Boston, exercisable upon a
conversion or acquisition of BC Boston by BCI; BCI has a call
right
BCE West, LP $5,541,394 invested 10/96 Warrant to acquire 7% of BCE West, exercisable upon a conversion
$5,541,394 invested 2/97 or acquisition of BCE West by BCI; BCI has a call right
BC Golden Gate, LLC $4,433,115 invested 3/97 Warrant to acquire 7% of BC GoldenGate, exercisable upon a
conversion or acquisition of BC GoldenGate by BCI; BCI has a
call right
BC Great Lakes, LLC None Warrant to acquire 7% of BC Great Lakes, exercisable upon a
conversion or acquisition of BC Great Lakes by BCI; BCI has a
call right
33
BC Heartland, LLC $1,625,000 invested 10/96 None
$450,000 invested 2/97
$3,103,433 invested 3/97
BC Northwest, LP $4,433,115 invested 10/96 Warrant to acquire 7% of BC Northwest, exercisable upon a
$2,216,558 invested 3/97 conversion or acquisition of BC Northwest by BCI; BCI has a
call right
BC Superior, LLC $2,2126,558 invested 4/97 (Series C) Warrant to acquire 7% of BC Superior, exercisable upon a
conversion or acquisition of BC Superior by BCI; BCI has a
call right
BC Tri-States, LLC $5,541,394 invested 3/97 Warrant to acquire 7% of BC Tri-States, exercisable upon a
conversion or acquisition of BC Tri-States by BCI; BCI has a
call right
Finest Foodservice, LLC $3,324,837 invested 4/97 Warrant to acquire 7% of Finest, exercisable upon a conversion or
acquisition of Finest by BCI; BCI has a call right
P&L Food Services, LLC $5,541,394 invested 10/96 Warrant to acquire 7% of P&L, exercisable upon a conversion or
$5,541,394 invested 3/97 acquisition of P&L by BCI; BCI has a call right
34
Platinum Rotisserie, LLC None Warrant to acquire 7% of Platinum, exercisable upon a conversion
or acquisition of Platinum by BCI; BCI has a call right
R&A Food Service, LP $13,299,346 invested 10/96 (Series C) Warrant to acquire
$3,324,837 invested 3/97 (Series C) 7% of R&A, exercisable upon a conversion or acquisition of R&A
by BCI; BCI has a call right
35
Schedule 3.10
--------------------------------------------------------------------------------
BCI Insider Ownership Summary as of March 16, 1998
BCEF MPLLC
▇▇▇▇▇▇▇▇▇ $ 18,750 ▇▇▇▇▇▇▇▇▇ $ 500,000
▇▇▇▇▇▇▇/▇▇▇▇ 7,500 ▇▇▇▇▇▇▇ 250,000
▇▇▇▇/1/ 1,266,750 ▇▇▇▇▇▇▇▇ 2,500,000
Dodge 52,500 ▇▇▇▇▇ 150,000
▇. ▇▇▇▇▇ 37,500 Jordan 40,000
Ley 187,500 Ley 500,000
Link 7,500 Link 250,000
Nadhir 75,000 Marsden 250,000
▇▇▇▇▇▇▇▇ et. al/2/ 3,130,479 ▇▇▇▇▇▇ 250,000
Rugen 45,000 ▇▇▇▇▇▇▇▇ 2,500,000
▇▇▇▇▇▇▇▇ 375,000 Rugen 100,000
Wurfel/1/ 75,000 ▇▇▇▇▇▇▇▇ 1,000,000
Total BCI Investments $5,278,479 $8,290,000
▇. ▇▇▇▇▇/3/ 232,875 335,000
Total $5,511,354 $8,625,000
---------- ----------
--------------------------------------------------------------------------------
-------------------
/1/Represents indirect investment through EE L.P.
/2/Represents holdings through ▇▇▇▇▇▇▇▇ Bagel Joint Venture of Peer ▇▇▇▇▇▇▇▇
($1,173,929.57), ▇▇▇▇ ▇▇▇▇▇▇▇▇ ($652,183.10), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Trust No. 1
($652,183,10) and ▇▇▇▇▇ ▇▇▇▇ ($652,183.10)
/3/Although not a BCI Insider (as defined in the Merger Agreement) ▇▇. ▇▇▇▇▇
has voluntarily agreed to be included on this Schedule 3.10. The amounts
shown represent indirect investments through Morgan, Lewis, ▇▇▇▇▇▇▇ & ▇▇▇
Schedule 3.11
NAME
----
No. of Registrable Common Shares
--------------------------------
AT&T Commercial Finance Corporation
45,290
Sanwa Business Credit Corporation
40,761
General Electric Capital Corporation
69,600
Market Partners, L.L.C. Investors
750,000
▇▇▇▇▇▇▇ ▇▇▇▇
100,000
▇▇▇▇▇ ▇▇▇▇▇
Up to $1 million divided by market price
▇▇▇▇▇ ▇▇▇▇▇▇
Up to $1 million divided by market price
36